Beware Bogus Buys: Counterfeiting and Trade Marks
Counterfeiting comes in many forms, and is nothing new in business or in the law of intellectual property. However, where counterfeit goods are becoming nearly imperceptible, they pose a real risk to the owners of the trademarked goods being “knocked off”, and the buyers who believe they are getting the real thing. In recent times, counterfeiting has come to the fore, as the Counter-Terrorism and Organised Crime Investigation (C-TOC) branch of the Jamaica Constabulary Force, has raided several businesses and seized counterfeit goods in an effort to clamp down on this illegitimate market. This enhanced vigilance and enforcement in relation to counterfeit goods has been greeted with much commendation from the owners of trade marks that have been infringed by the counterfeit goods.
Counterfeiting of goods under Registered Trade Marks and Passing Off
Under trade mark law in Jamaica, counterfeiting of a trade mark, particularly a famous trade mark, affects the mark, though the degree of harm to the mark may vary. The harm that can arise is usually where there is confusion because of the similarity of the goods, one counterfeit and one genuine. Take for example, where a consumer purchases a counterfeit luxury brand handbag under its well-known registered trade mark, the harm arises where:
- The public views the counterfeit handbag as the genuine thing;
- It is discovered that the handbag is a fake, and the market is flooded with the counterfeit handbags, causing consumers may be apprehensive as to whether they are purchasing the genuine handbag, and further causing the sale of the genuine handbag to decline;
- The value of the genuine handbag, which is derived from considerations such as quality or limited supply, is significantly reduced by all the imitations; and
- The counterfeit handbags are of a poor or discernibly lower quality.
In the example above therefore, the harm in relation to a registered trade mark, includes harm to the owner of the mark, due to reduced sales, the fear of prospective consumers that the goods that they are purchasing may be bogus, and the actual loss to owner of the mark as a result of a lack of scarcity.
While counterfeiting affects registered trade marks, it may also affect unregistered trade marks. However, even an unregistered trade mark is protected against counterfeiting, by the law of passing off, because of the damage, and harm that counterfeit goods can cause to a trader. In the law concerning passing off, the general principle is that a person should not be allowed to pass his goods off as those of another trader’s. Where the very essence of counterfeiting is to imitate a product, originating from another trader, the general principle of the law of passing off seems to be a clear shot at counterfeiting. This is important to note, as where there is passing off, there is harm, and when a trader commits passing off, he for all intents and purposes, steals another trader’s patron and his reputation, which is not permissible.
Counterfeiting Dilutes a Trade Mark
Another problem with counterfeiting is that it may dilute a trade mark. In the United States (US), there is a clear statutory concept of dilution in relation to famous marks, and dilution arises in two forms, namely, (i) dilution by blurring, and (ii) dilution by tarnishment. In the US, dilution by blurring arises where the marks are so similar that the distinctiveness of the famous mark is impaired by the other mark. Cases on this type of dilution have determined the marks need not even be identical or substantially similar for there to be blurring, thus, in a circumstance where a counterfeit good is intended to be a replica, this would almost certainly cause blurring. Dilution by tarnishment arises where there is a similarity of the marks which gives rise to an association between the marks, and which harms the reputation of the famous mark. Therefore, one scenario where tarnishment is possible is where the counterfeit product, similar to one bearing the famous mark, is of poorer quality. In the general instance, where counterfeits are cheaper and of poorer quality than famous, more expensive brands, a counterfeit good could very easily cause dilution by tarnishment.
In Jamaica, while the word “dilution” is not mentioned in the Trade Marks Act, the concept of dilution is clear. The Trade Marks Act provides that a registered trade mark is infringed where a person, who is not the owner of the trade mark, or authorised by the trade mark proprietor, uses a sign which is identical or similar to the registered trade mark and this use, in relation to the well-known mark, takes unfair advantage of, or is detrimental to the distinctive character or reputation of the well-known trade mark. Where the sign is detrimental to the distinctive character of the registered trade mark, this is similar to dilution by blurring in the US. In Jamaica, the sign would need to be same or similar to that of the registered mark, and this same or similar qualification is often met by a counterfeit item which can be indiscernibly similar. Under the Trade Marks Act, in the circumstances where the sign is detrimental to the reputation of the well-known registered trade mark, this is similar to the concept of dilution by tarnishment, and in such a case, the characteristics of the counterfeit goods have not only the result of “watering down” the effectiveness of the trade mark, but actually have the consequence of damaging the perception of the well-known trade mark. A good example of this is with counterfeit health products which, where ineffective, can cause the reputation of the genuine products to be lowered, but also, in the worst case, can cause or exacerbate illnesses with detrimental consequences. Similarly, with other products such as counterfeit airline or car parts, such products can not only ruin the reputation of the genuine parts, but also pose a real threat to physical safety where they are, or become faulty.
Beating Bogus Buys
Counterfeiting is a grievous offence against genuine products, as a counterfeit good can steal a customer from a trademarked brand, kill its reputation and destroy the business of the proprietor of the trade mark. Intellectual property law, and trade mark law in particular, must be proactive in addressing counterfeiting, whether through the policing of brands, bringing actions against counterfeiters, or imposing other sanctions including heavy fines, and imprisonment. Trade mark law must also therefore, be vigilant and steadfast in ensuring that bogus buys are prevented from being a detriment to authentic products, and the creative and monetary investments made to bring them to fruition.
Lisa Rhooms is an Associate at Myers, Fletcher & Gordon, and is a member of the firm’s Commercial Department. Lisa may be contacted via email@example.com or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.