What is Trademark Counterfeiting?

M. Lupica

Trademark counterfeiting is defined as any knowing manufacture, distribution, or intent to distribute items bearing a counterfeit trademark. The item will be considered to bear a counterfeit trademark if it contains any mark that identifies it as coming from a source that is normally associated with the distribution of the product, but it in fact does not come from that source. Generally, any person having possession of 25 or more items bearing a counterfeit mark will be presumed to possess those items with intent to distribute them.

An application to register a trademark.
An application to register a trademark.

The enforcement of trademark counterfeiting laws is to protect potential consumers, as is the case with all trademark policy. Though trademark law generally extends protection to marks that have not been registered as long as they have been used in commerce, the enforcement of trademark counterfeiting laws is contingent upon that mark having been registered with the governing office. This provides extra incentive to trademark holders to register their marks.

Finding an intent to distribute is often an essential element to establish a trademark counterfeiting claim. Intent to distribute generally requires a subjective determination based on the facts at hand, though being in possession of 25 or more of any given item is a common benchmark across regions. Of course, this number can change depending on the surrounding circumstances as well as the type of item. If the item is something people do not typically have on hand in high numbers, it will be easier for the prosecutor to show intent to distribute.

Benchmarks vary from region to region, but the cumulative value of the items will usually determine the level of the penalty. If the cumulative value of the goods bearing the counterfeit trademark is low, the crime is typically considered a misdemeanor. It may be considered a second or third degree felony if the cumulative value of the goods bearing the counterfeit trademark is significant.

Often, the benchmarks for determining the penalties will be in the volume of infringing goods. In other words, the greater the number of infringing items in the possession of the alleged counterfeiter, the greater the penalties will be. Typically, there will be a fine with the potential to serve time in prison for anywhere up to a year, though judges have discretion to vary the penalties based on the egregiousness of the facts. Further, the items bearing the counterfeit trademarks will be seized by the proper authorities.

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