Fake goods, also called counterfeit goods, are products that are generic but have been illegally modified to make consumers believe that they are brand-name products. Fake goods may include the use of labels, logos, or trademarks.
For example, a creator of a fake item may sew a logo on a sweatshirt to make it appear to be an authentic item. Common examples of fake goods include:
- Handbags; and
- Other articles of clothing.
Shoes, in particular, are commonly associated with counterfeit problems. Fake goods are usually cheap-grade products that are sold under the trademark of another business.
A trademark is the legally identified logo of a business that is typically used on the products it sells. A trademark protects the standing of a business and allows customers to differentiate between products that are sold in the marketplace.
Once a trademark is registered with the U.S. Patent and Trademark Office, a business can use its mark exclusively in the U.S. Having a trademark allows a company to legally prevent other entities from using even a similar looking pattern if there was a possibility it may confuse consumers.
It is important to note that counterfeit goods are different from knock-off goods which involve similar products but do not have labels that infringe on another company’s trademark. Counterfeit goods exist in nearly every industry and may include:
- Clothing, apparel, and accessories, especially:
- wallets; or
- Electronics, including cell phones and computers;
- Baby food and formula;
- Automotive parts; and
Generally, for a manufacturer of fake goods to be held liable, they must intend to deceive the public into thinking that their goods are brand name products. The product must lead to consumer confusion regarding the product or the brand name.
The trademark has to be exploited without permission from the actual trademark owner.
Are All Knockoffs Goods Considered Counterfeits?
The term knockoff is commonly used as a replacement for the term counterfeit, although the phrases are not strictly interchangeable. There are some knockoffs that may mimic an established product without overstepping a trademark.
This may be the case because the underlying product, for example, a skirt, cannot be protected under the law, which would indicate that a knockoff of that item does not break any legal limitations.
How Harmful Is the Counterfeiting Situation?
The marketplace has millions of counterfeit products, especially those associated with brands such as Louis Vuitton, Gucci, and Dolce & Gabbana. These rip offs cut into the company’s sales, often causing revenues to drop by approximately 25% and causing a business to lay off 15% of its employees.
What Are the Legal Consequences of Selling or Distributing Fake Goods?
It is challenging to hold an individual responsible for purchasing fake goods. This is especially true when the consumer did not comprehend that they were purchasing counterfeit items.
On the other hand, if an individual purchases a large number of fake goods and intends to distribute them, they may be charged with a violation. In general, distributing fake goods for profit is illegal.
Although it may vary by state, typically the wholesale acquisition of large amounts of illegally faked goods can lead to the assumption that the individual intended to deal, or sell, those fake goods. The legal consequences for selling fake goods can be strict.
The consequences may include criminal penalties such as:
- Criminal fines, commonly in the tens of thousands of dollars;
- Jail sentences, in some cases, ranging from 5-10 years, depending on the severity of the violation; and
- Seizure of the fake goods.
Additionally, an individual who is caught selling or distributing fake goods will likely face a civil lawsuit from the business whose brand was being used. The party may be required to pay the business monetary damages for the economic losses that they suffered resulting from the illegal use of the trade name.
What Happens When You Get Caught Selling Fake Goods?
Selling counterfeit goods has a negative effect on a business. There are three major issues that it causes, including:
- If the trademark owner pursues an individual, they can quickly forfeit all of their business investments, assets, and much more. An individual may be pursued for their personal property and home;
- There is no predictability to the business because its success is tied to not being realized by the trademark owner; and
- The counterfeiter will need an illegal link to acquire or import these products.
What will occur when an individual gets caught selling fake goods will depend on the goods, the quantity of the goods, and the jurisdiction. If an individual has any questions or concerns, they should consult with a counterfeit attorney in their area.
How Do People Get Caught Selling Fake Goods?
The majority of illegal distributors are caught by online sales. For example, eBay is a company with strict anti-counterfeiting rules. eBay will ban violators of these rules.
In some cases, a disgruntled competitor or consumer will report the illegal distributor. If the owner of a trademark finds out about a counterfeiter, they will likely attempt to find them and make an example of them.
What Is the Trademark Counterfeiting Act of 1984?
The Trademark Counterfeiting Act of 1984 allows for significant monetary fines and prison time for businesses and individuals who violate the law. The generic phrase used that applies to all forms of illegal trade is trafficking in illicit goods, which includes:
- Piracy, or copyright infringements;
- Counterfeiting, or trademark infringements;
- Smuggling of legitimate products; and
- Tax evasion.
Although the majority of individuals think of fake merchandise when they think of counterfeit products, this also involves selling the actual item on the black market in order to avoid paying taxes. Criminals selling fake merchandise may also evade standard regulatory controls.
This means that they may be selling products that are harmful without regard for the health and safety of consumers who buy the illicit goods or services. These cause harm as well as danger to society and to the global economy.
Why Should I Care About Illicit Sales?
There are several reasons individuals should be concerned about illicit sales. In addition to the immediate damage to businesses as well as their employees, counterfeit goods also:
- Introduces harmful products into the market;
- Dilutes environmental, health, and safety regulations;
- Decreases tax revenues;
- Supports organized crime; and
- Encourages child labor.
How Can You Pinpoint and Report Counterfeit Goods?
One common indicator of counterfeit goods is an unreasonably low cost. Counterfeit products can also be identified by the quality of their packaging and the location where they are sold.
If an individual suspects an entity is making or selling counterfeit foods, they can submit a statement online to the National Intellectual Property Rights Coordination Center. Other federal agencies that examine reports of counterfeit goods include:
- The U.S. Consumer Product Safety Commission;
- The Food and Drug Administration;
- The Office of Intellectual Property Rights;
- The Federal Bureau of Investigation; and
- U.S. Customs and Border Protection.
When dealing with fake goods online, the International Trademark Association provides a valuable list of best methods for search engines, businesses with websites, credit card companies or payment service providers, and trademark owners to help locate counterfeit goods and stop their distribution.
Do I Need a Lawyer if I’m Facing Charges Involving Fake Goods?
If you have any legal issues or disputes that involve counterfeit goods, it is important to consult with a counterfeit goods attorney as soon as you can. If you have been accused of selling or making fake goods, you should consult with a criminal lawyer.
Your criminal counterfeit lawyer can advise you of the federal, state, and local laws that may apply in your case. Your attorney will also provide you with representation during any court appearances.