Viewpoint: Take action to fight counterfeits

By Matthew D. Kohel

Counterfeiting has become the largest underground industry in the world. Fake goods can be found in nearly all types of products, including gold and silver coins and bars. Counterfeiting operations are often sophisticated criminal enterprises with global distribution networks. The sale of counterfeit goods has exploded in recent years and has been dubbed the “crime of the 21st century,” and the anonymity of the Internet can make identifying and stopping these criminals very difficult.

The Organization for Economic Cooperation and Development estimated in 2016 that counterfeiting was a $461 billion industry. That number is likely to continue growing, along with improvements in counterfeiting technology and the means and methods by which counterfeiters attempt to trick even the most experienced handlers of coins and bars.

“We are seeing highly deceptive counterfeits of U.S. circulating, commemorative, and precious metals bullion coins as well as the plastic holders used by the top-tier grading services and the packaging and certificates used by the U.S. Mints for its products. Coins from other nations, such as the gold and silver bullion coins produced by leading world mints, are also the targets of counterfeiters,” said Beth Deisher, director of anti-counterfeiting at the Industry Council for Tangible Assets.

Customers swindled out of their money are not the only victims of counterfeiting. The sale of counterfeit goods damages the reputations of companies that invest significant resources to grow their brand and customer base. Counterfeiting invariably leads to dissatisfied customers, the association of a company with low-quality products and services, and as a result, lost sales. It is therefore imperative for companies that value their brand to be proactive in the fight against counterfeit coins and bars.

To protect itself, a company can take several steps to reduce the likelihood that its products will be counterfeited. First, a company should register its trademarks with the United States Patent & Trademark Office (PTO). A trademark is a word, logo, or design that identifies the seller of a particular good or service. Trademarks are a form of intellectual property and can be a valuable intangible asset. Trademark registration allows a company to take advantage of the Lanham Act, the federal statute that gives trademark owners the ability to sue in federal court for trademark infringement and the sale of counterfeit goods. A trademark owner that prevails in a Lanham Act case may be awarded a substantial amount of money, including the potential to recover treble damages as well as an injunction that forbids a counterfeiter from further acts of infringement and sales of counterfeit goods.

After a company’s trademarks have been registered with the PTO, consideration should be given to also recording that intellectual property with United States Customs and Border Patrol (CBP) to obtain another layer of protection. CBP is authorized to search for and seize counterfeit goods in order to prevent their importation into the United States and can serve as a trademark owner’s eyes and ears at the border.

Registering and recording your trademarks is generally not sufficient to completely deter counterfeiters, so companies must be vigilant and monitor the marketplace for knock-offs of their products. Employees can be trained to search for, identify, and request that counterfeit products found on websites, such as Ali Baba and Amazon, be taken down. Submitting a “take-down notice” is a straightforward process, and websites offer helpful explanations of what is required. The diligent submission of take-down notices is an inexpensive way to discourage counterfeiters from knocking off your products.

Communication is another important tool for combatting counterfeiting. Companies can put notifications on their websites alerting consumers that counterfeits of a particular coin or bar have been discovered. This is a cost-effective way to maintain the confidence of your customers and show them that you value their patronage. Communication with the public can also serve to deter counterfeiters. Publicize successful seizures of counterfeit goods, and issue press releases about lawsuits where you obtained substantial awards of money damages from counterfeiters. This is another economical and effective way to disincentivize counterfeiters.

The growth of the digital marketplace has led to a rapid increase in the sale of counterfeit goods, including fake gold and silver coins and bars. This increase has come not only at the expense of consumers but also of companies that invest significant resources to develop their brand and customer relationships. Companies that value these important business assets should be committed to protecting them. Although the fight against counterfeiting may be daunting, outlined above are actions that a company should take to protect its intellectual property and maintain its reputation as a trusted source of high-quality products and services.

This “Viewpoint” was written by Matthew D. Kohel, who is a partner at the law firm of Goodell, DeVries, Leech & Dann in Baltimore. His practice focuses on commercial litigation, including matters involving the sale of counterfeit goods. Mr. Kohel handles cases in a variety of jurisdictions, and he is a member of ICTA’s Anti-Counterfeiting Task Force. His email address is mkohel@gdldlaw.com.

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