Launching and developing a successful product in the U.S. certainly has its rewards, but also creates new challenges for innovative companies and start-ups. With new product developments and strong consumer interest, some budding companies find themselves quickly the victims of an onslaught of counterfeit products shipped from overseas and sold here in the U.S. for a fraction of the retail sales price.
Nearly all of these counterfeit products come from jurisdictions that have no reciprocity or regard for U.S. copyright laws, trademark laws, and patent protections, and distribute through a lone-man staffed distribution company with scant assets or capitalization. Suing can be expensive, distracting, and fruitless. This is not a problem that plagues only up-and-coming startups and ventures. According to US government reports, counterfeit products cost US companies up to $250 billion annually and are directly responsible for the loss of 750,000 US jobs. What Can Be Done? The solution to counterfeiting threats lies in enlisting the aid of the the U.S. Customs and Border Protection to help stop counterfeit products or supplies from entering the U.S. market. The process begins with registering the copyright with the U.S. Copyright Office or the patent/trademark with the U.S. Patent & Trademark office. Copyright and trademark owners can then record their registrations with Customs and Border Protection for a relatively low recording fees. Once recorded, CBP will keep an eye out for any imports of products which appear to contain recorded copyrights, trademarks or trade names to spot any counterfeit or pirated goods.
Excluding Patented Inventions The process for patents is somewhat different. The U.S. International Trade Commission issues “exclusion orders” pursuant to the U.S. Tariff Act of 1930, if it is established that certain trade practices are infringing upon patents. The procedure begins with a Complaint made to the ITC, in Washington D.C. The ITC will have 30 days to determine whether an investigation should be instituted. Once the investigation begins, it is assigned to an administrative law judge, and a hearing will be set. To prove a violation, a complainant must establish (1) unfair competition or an unfair act, e.g., patent or trademark infringement, (2) importation, sale for importation, or sale after importation into the United States of the accused products, and (3) the existence of a domestic industry relating to the product in question. In investigations that are not based upon alleged infringement of federal statutory intellectual property rights, a complainant also must prove (4) that the alleged unfair act has caused or threatens to cause injury. Usually, these investigations are complete within 12-18 months, although a preliminary injunction can be requested. The Court may also issue a cease-and-desist order, enforced by the Commission, requiring a party to stop all commercial activity relating to the infringing products (e.g., selling from inventory) subject to substantial civil penalties for violation. The Commission may also issue temporary exclusion and cease and desist orders, using guidelines similar to those for preliminary injunctions in civil court, to curb infringing activity through the imposition of a bond pending formal resolution of the investigation. Once the ITC issues an exclusion order, U.S. Customs & Border Protection has the authority to exclude from entry articles that infringe the patent.
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SOOFI | Legal Counsel counsels numerous startups, ventures, businesses, and companies on a variety of issues including intellectual property rights, litigation, and enforcement. For questions or concerns, or for a confidential consultation, contact (213) 403-0130 or firstname.lastname@example.org.