When you hear the word “Counterfeit”, most people instantly
think of someone printing money and trying to pass it off as the real
thing. In the franchise world a
Counterfeiter is someone who has taken your registered trademarks and changed
them ever so slightly with the intent to trade off your good will for financial
Most people who have travelled to a major city or to a local
flee market have seen Rolex watches for $25 and Gucci purses for even
less. For luxury brands,
counterfeiters erode the status-symbol allure of such goods. Today, brands are striking back with
police involvement to crack down on such thieves.
The rampant practice of trademark counterfeiting can cost
owners of the marks millions of dollars in the form of lost sales, damage to
reputation, and legal costs. But,
for owners of federally registered trademarks, and now service marks, there is
salvation under the laws of the Lanham Act.
For example, no longer can an ex-franchisee take a logo they
formally operated under, change the color and adjust the font and try to
mislead the general public. This
in fact happened to the author, when our distinctive logo was
counterfeited. It was tragic and
laughable at the same time. In our
case the initials in our name (logo) were kept, the color was changed and the
oval that surrounded our initials was rotated 45 degrees and sliced to create the
letter “G”. What must people be
Under the Lanham Act, the term “counterfeit” trademark means
a “spurious mark which is identical with, or substantially indistinguishable
from, a registered mark”. In a
typical case consumers are deceived into buying or using a service thinking
they are buying or dealing with the real thing.
Before proceeding with a lawsuit for counterfeiting, the
trademark owner must answer a couple of important questions: 1) what are the
goals for the bringing litigation? and 2) what enforcement strategy will work best
to achieve those goals? In the
franchising world, when you combine federally registered trademarks with in
term or post term competition covenants, the Lanham Act supplies the necessary
substance to help prove and possibly calculate damages.
Counterfeiting litigation generally moves forward very
quickly. The complaint,
application for relief, brief in support of the application for relief, and the
proposed order are all essential.
Undoubtedly, the trademark owner will want the counterfeiter enjoined
from future counterfeiting.
Expedited discovery has the defendant producing documents and/or
appearing for depositions quicker than most litigation.
Once the trademark owner can prove the amount of actual
damages suffered, and/or the amount of the alleged counterfeiter’s profits, the
trademark owner is entitled to treble damages. As a result of recent amendments to the Lanham Act, a
plaintiff is now entitled to seek statutory damages as an alternative to actual
damages. In cases of willful infringement,
the court has the discretion to award up to $1,000,000 per counterfeit mark as
Trademark owners must aggressively pursue counterfeiters to protect
their investments. No matter the
State, the Lanham Act will give you the power to go after those who seek to
steal and then benefit from your hard work and commitment.