Vondran Legal® Civil Counterfeit Defense & Customs and Border Patrol Issues - Call us if you are facing a legal issue involving counterfeit Intellectual Property - (877) 276-5084.
Our law firm helps clients, including individuals and companies that are being accused of selling, transporting, or distributing counterfeit products in the United States. Many cases we handle will involve Apple products. Given the growth of the iPhone and the need for chargers, lighting cables, and other Apple products (and due to the drop in semiconductor production) many fake iPhones and related products are being sold. For example, you can go into any local gas station or truck stop and see products that resemble Apple's branded products and which may infringe on their copyrights, trademarks, and design patents. If you receive a letter from Kilpatrick Townsend & Stockton LLP, we can usually assist in getting your matter resolved without expensive court proceedings. Call us if you receive a demand letter that requests quite a bit of cooperation and may be requesting a high settlement figure.
We can also help with other civil counterfeit cases involving consumer products, apparel, sporting goods, watches, electronics and other consumer goods.
The problem with counterfeits
Selling counterfeit products infringes a company's brand and trademark by selling goods that appear to be from them, but the source of goods is actually not. The counterfeit product may also be inferior causing safety or health problems (for example, selling bootleg pharmaceutical products that people think are coming from a reputable company or a defective Dyson hairdryer that may have electrical problems). Naturally, counterfeit purchases can take the place of legitimate sales and lead to significant financial damages to the original product creator.
This chart shows the main countries where counterfeit or "gray goods" come from.
This chart shows some of the main types of goods that are victims of counterfeiting. These include things like fake shoes, fake Rolex watches, fake pharmaceutical products, and fake consumer products.
This chart shows how the products get to the United States (basically through 1 of 328 different ports of entry.
What is an exclusion order? According to the United States Internation Trade Commission:
"An exclusion order is a type of order that the USITC is authorized to issue as a remedy in an investigation under section 337 of the Tariff Act of 1930 (19 U.S.C. § 1337) when it determines that a violation of section 337 has occurred. Such orders bar the named product or products from entry into the United States. There are two types of exclusion orders under the statute:
(1) a limited exclusion order that bars the importation of products by specific respondents determined by the Commission to be violating section 337;
(2) a general exclusion order that bars the importation of all violative products, regardless of source, where it is necessary to prevent circumvention of an exclusion order limited to violative products of named persons or when there is a pattern of violation and it is difficult to ascertain the source of the violative products. The USITC's exclusion orders are enforced by U.S. Customs and Border Protection."
According to the CBP:
Exclusion Orders CBP enforces exclusion orders issued by the International Trade Commission (ITC). Most ITC exclusion orders are patent based. The ITC issues both limited and general exclusion orders. Limited exclusion orders apply only to infringing articles of named respondents. General exclusion orders bar the entry of infringing articles by all. Exclusion orders prohibit the entry of all covered articles, even if they were not specifically accused and found to infringe by the ITC. Once excluded, subsequent importations of the same articles by the same importer are subject to seizure.
Exclusion Orders – for FY 2021:
■ Seizures correctly citing 19 USC 1337(i): 81 cases
■ Seizure Est. MSRP: $1,930,683.
■ Total Active Exclusion Orders: ”At the end of FY 2021, CBP was administering 128 active exclusion orders issued by the U.S. International Trade Commission following investigations of unfair import practices in the importation of articles into the United Sates in violation of 19 U.S.C. § 1337.”
Per ChatGPT here is a list of companies believed to have been granted exclusion orders from the ITC
1. Apple Inc.
2. Samsung Electronics Co.
3. Microsoft Corporation
4. Google LLC
5. Amazon.com, Inc.
6. Intel Corporation
7. NVIDIA Corporation
8. Qualcomm Incorporated
9. Ford Motor Company
10. General Motors Company
11. Toyota Motor Corporation
12. Honda Motor Co., Ltd.
13. BMW Group
14. Volkswagen Group
15. Daimler AG
16. The Procter & Gamble Company
17. The Coca-Cola Company
18. PepsiCo, Inc.
19. Johnson & Johnson
20. Pfizer Inc.
21. Merck & Co., Inc.
22. Exxon Mobil Corporation
23. Chevron Corporation
24. BP plc
25. Royal Dutch Shell plc
26. General Electric Company
27. Siemens AG
28. AT&T Inc.
29. Verizon Communications Inc.
30. T-Mobile US, Inc.
31. CVS Health Corporation
32. Walgreens Boots Alliance, Inc.
33. The Boeing Company
35. Lockheed Martin Corporation
36. Northrop Grumman Corporation
37. Raytheon Technologies Corporation
38. 3M Company
39. The Home Depot, Inc.
40. Walmart Inc.
41. Target Corporation
42. The Walt Disney Company
43. Comcast Corporation
44. Netflix, Inc.
45. Adobe Systems Incorporated
46. IBM Corporation
47. Oracle Corporation
48. Facebook, Inc.
49. Twitter, Inc.
50. Uber Technologies, Inc.
Potential penalties for counterfeiting
According to the United States Department of Justice ("DOJ"):
"The Trademark Counterfeiting Act of 1984, Pub. L. No. 98-473, Tit. II, § 1502(a), 98 Stat. 2178 (1984), and the Anticounterfeiting Consumer Protection Act of 1996, Pub.L. No. 104-153, 110 Stat. 1386 (1996), address the growing problem of trafficking in counterfeit trademark goods, which has primarily involved the clandestine manufacture and distribution of imitations of well-known trademarked merchandise. The 1984 Act created an offense, codified at 18 U.S.C. § 2320, which provides that "(w)hoever intentionally traffics or attempts to traffic in goods and services and knowingly uses a counterfeit mark on or in connection with such goods or services" shall be guilty of a felony. 18 U.S.C. § 2320(a). Section 2320(b) enables the United States to obtain an order for the destruction of articles in the possession of a defendant in a prosecution under this section upon a determination by the preponderance of the evidence that such articles bear counterfeit marks.
These Acts also amend the Lanham Act, 15 U.S.C. § 1501 et seq., to create stronger remedies in civil cases involving the intentional use of a counterfeit trademark. They provide mechanisms for obtaining statutory damages, treble damages and attorney's fees. 15 U.S.C. § 1117. The Lanham Act also provides for ex parte application by a trademark owner for a court order to seize counterfeit materials and instrumentalities where it can be shown that the defendant is likely to conceal or transfer the materials. Id. § 1116(d). New amendments permit the seizure order to be served and executed either by federal law enforcement officers or by state or local law enforcement officers. Id. § 1116(d)(9). The Lanham Act also requires applicants to file a notice of application for an ex parte seizure order with the United States Attorney, who may participate in such proceedings if they appear to affect evidence of a federal crime. See this Manual at 1719."
What needs to be proven for a Counterfeit Conviction?
In order to establish the criminal offense under 18 U.S.C. § 2320, the government must prove:
(1) that the defendant trafficked or attempted to traffic in goods or services;
(2) that such trafficking, or attempt to traffic, was intentional;
(3) that the defendant used a "counterfeit mark" on or in connection with such goods or services;
(4) that the defendant knew that the mark so used was counterfeit.
Are there any defenses to Counterfeiting?
"All defenses, affirmative defenses, and limitations on remedies which would be applicable in an action under the Lanham Act for trademark infringement are applicable in a criminal prosecution for trademark counterfeiting under 18 U.S.C. § 2320. See 18 U.S.C. § 2320(c). As a result, no person can be found guilty of the criminal offense of trademark counterfeiting who could have prevailed on a defense to an infringement action brought by the trademark owner. The Joint Statement, which was intended to be the final and authoritative explanation of legislative intent, states that only those defenses "that are relevant under the circumstances will be applicable in a prosecution under this chapter." See Joint Statement on Trademark Counterfeiting Legislation, 130 Cong., Rec. H12076, H12078 (daily ed. Oct. 10, 1984)(hereinafter "Joint Statement").
Among the defenses to a civil infringement suit which are arguably available in a criminal prosecution are the defenses to the incontestability of a trademark owner's exclusive right to use the trademark in commerce set forth at 15 U.S.C. § 1115(b). These include fraud, abandonment, use to misrepresent source, fair use, innocent adoption, prior registration and use, and the so-called "antitrust" defense. 15 U.S.C. § 1115(b)(7). Also arguably relevant to a criminal prosecution are equitable defenses to an infringement action, such as laches or acquiescence. As a practical mater, factual situations which give rise to prima facie criminal cases with prosecutive merit are unlikely to give rise to viable defenses."
Learn more about Apple Infringement cases
I have written other blogs about Apple infringement. I also did a podcast about cases with Kilpatrick Townsend:
Civil Damages for Counterfeiting
15 U.S. Code § 1117 - Recovery for violation of rights
(a)Profits; damages and costs; attorney fees
When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction.
In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty.
The court in exceptional cases may award reasonable attorney fees to the prevailing party.
(b) Treble damages for use of counterfeit mark. In assessing damages under subsection (a) for any violation of section 1114(1)(a) of this title or section 220506 of title 36, in a case involving use of a counterfeit mark or designation (as defined in section 1116(d) of this title), the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages, whichever amount is greater, together with a reasonable attorney's fee, if the violation consists of—
(1) intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark (as defined in section 1116(d) of this title), in connection with the sale, offering for sale, or distribution of goods or services;
(2) providing goods or services necessary to the commission of a violation specified in paragraph (1), with the intent that the recipient of the goods or services would put the goods or services to use in committing the violation. In such a case, the court may award prejudgment interest on such amount at an annual interest rate established under section 6621(a)(2) of title 26, beginning on the date of the service of the claimant's pleadings setting forth the claim for such entry of judgment and ending on the date such entry is made, or for such shorter time as the court considers appropriate.
(c) Statutory damages for use of counterfeit marksIn a case involving the use of a counterfeit mark (as defined in section 1116(d) of this title) in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a), an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of—
(1) not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just;
(2) if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.
(d) Statutory damages for violation of section 1125(d)(1). In a case involving a violation of section 1125(d)(1) of this title, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just.
(e)Rebuttable presumption of willful violation. In the case of a violation referred to in this section, it shall be a rebuttable presumption that the violation is willful for purposes of determining relief if the violator, or a person acting in concert with the violator, knowingly provided or knowingly caused to be provided materially false contact information to a domain name registrar, domain name registry, or other domain name registration authority in registering, maintaining, or renewing a domain name used in connection with the violation. Nothing in this subsection limits what may be considered a willful violation under this section.
Did Customs and Border Patrol seize your goods at a Point of Entry?
There are over 325 "ports of entry" in the United States where the CBP may find and seize illicit goods. Click here for a full map. If a company, like Apple, or Nike or Sony registers its intellectual property with the IPR recording system the Customs and Border Patrol will monitor incoming shipments looking for infringing products. If they find infringing products, the shipment may be seized and the shipper or shippee may receive notice of infringement. Watch this video for more information about the IPRR
What to do if you receive notice of violation
If you receive a notice from CPB called "Notice of Seizure and Information for Claimants" you will receive notice of the seizure and given 4 options to respond. NOTE: there are strict deadlines so it is important to speak with a customs counterfeit defense lawyer promptly upon receiving the notice. Basically, you will have 4 options to choose from:
1. Petition to cancel pending forfeiture and explain why there should be no seizure and the products released from the bonded warehouse where the products are stored. Your petition must be persuasive, both factually and legally.
2. Offer in Compromise (make an offer to settle with the Government, basically, this is like a civil settlement seeking the government to compromise). Offers to compromise are governed by 19 U.S.C. 1617
3. Abandon all rights in the shipment/delivery in which case the government will have the legal right to sell or dispose as needed.
4. Post a bond and seek judicial recourse in the federal courts. The bond will be 10% of the appraised value or $5,000.
If you need help with your response, this is another good time to seek out an intellectual property lawyer where your issue concerns violation of copyrights, trademark, trade dress or design patents.
ALSO NOTE: The CPB has what's called "mitigation guidelines" which can potentially help your case.
Ports of Entry in California/Arizona
|Port Name||Location Address||Field Operation Office|
|Andrade - Class A, California - 2502||
235 Andrade Road
|Calexico East - Class A, California - 2507||
1699 East Carr, Rd
|Calexico West - Class A, California - 2503||
200 East First Street
|Eureka, California - 2802||
317 3rd Street, Suite 6
|Fresno (2803/2882), California - 2803||
5177 E. Clinton Way
|Los Angeles International Airport-Cargo Operations, California - 2720||
11099 South La Cienega Blvd.
|Los Angeles/Long Beach Seaport, California - 2704||
301 E. Ocean Blvd.
|Ontario Airport, California - 2721||
2222 E. Airport Drive
|Otay Mesa, California - 2506||
9777 Via De La Amistad
|Palm Springs, California - 2781||
210 N. El Cielo Road
|Port Hueneme, California - 2713||
720 W. Hueneme Road
|Sacramento, California - 2835||
6900 Airport Boulevard
|San Bernardino International Airport, California - 2782||
265 N. Leland Norton Way
|San Diego, California - 2501||
3835 N. Harbor Drive
|San Francisco International Airport, California - 2801||
555 Battery Street
|San Francisco, California - 2809||
555 Battery Street, Room 319
|San Jose International Airport, California - 2834||
2065 Airport Blvd.
|San Ysidro - Class A, California - 2504||
720 East San Ysidro Blvd
|Tecate - Class A, California - 2505||
405 Tecate Rd
|Victorville - S. California Logistics Airport, California - 2783||
18374 Readiness Street
NOTE: California has 2 out of 10 "Centers of Excellence and Expertise" these are located in San Francisco, and Los Angeles. Los Angeles is known for electronics counterfeits whereas San Francisco is known for counterfeit shirts, handbags, wallets watches, jewelry and pharmaceuticals.
|Port Name||Location Address||Field Operation Office|
|Douglas, Arizona - 2601||
First Street and Pan American Avenue
|Lukeville, Arizona - 2602||
Highway 85 & Border
|Naco, Arizona - 2603||
3867 S. Towner Avenue
|Nogales, Arizona - 2604||
9 North Grand Ave.
|Phoenix, Arizona - 2605||
3002 E. Old Tower Road, Suite 400
|Phoenix-Mesa Gateway Airport, Arizona - 2682||
5803 S. Sossaman Rd.
|San Luis, Arizona - 2608||
Highway 95 & International Border
|Sasabe, Arizona - 2606||
Highway 286 and International Border
|Scottsdale Airport, Arizona - 2681||
15000 N. Airport Drive
|Tucson, Arizona - 2609||
7081 South Plumer Ave
Contact a Civil Counterfeit Defense Law Firm
If you are facing legal issues with counterfeit products, seizures, or forfeitures, contact us at (877) 276-5084 or leave us a message through our contact form, and we will reach out to you.