IP IN DEPTH: Protecting Intellectual Property Rights at Home

My last "IP In Depth" column (February 2004) addressed protecting intellectual property rights (IPRs) in China. While doing business in China exposes companies to technology theft, clandestine production runs that are diverted to the black market, and other direct risks, U.S. companies that are not doing business in China are not immune from having their products copied and manufactured in China (or some other country) and sold in the U.S. In 2002 alone, more than $98 million in counterfeit goods were seized on their way into the U.S. market-49% of which originated from China.

What can a U.S. company do when it becomes aware that copies of its products are being imported and sold in the U.S.?

Determine Your Enforceable Rights

One of the first steps a company needs to take is to determine what enforceable rights are associated with the products. If patent, trademark, copyright or tradedress rights exist, the holder of such rights can take action against distributors in the U.S., even if the foreign manufacturer cannot be located or identified. Often sending a carefully worded "cease and desist" letter from a reputable law firm advising a distributor of possible infringement liability is enough to convince the distributor to stop offering the products for sale in the U.S. The potential liability for infringing IPRs is far greater than any profit the distributor is likely to receive from sales of the products.

If the foreign manufacturer can be located and identified, it is possible to take legal action directly against the foreign manufacturer. However, this process can take a long time, particularly if the foreign manufacturer does not have an agent located in the U.S. Additionally, once a judgment is entered against the foreign manufacturer, it can be very difficult to enforce the judgment outside the U.S. Such a strategy might also be futile at the onset if the manufacturer is able to easily change its identity and open shop under a new name. However, if the process results in a holding of infringement against the manufacturer, that holding can be used to obtain an injunction against distributors in the U.S. and can expose the distributors to infringement liability.

Get Customs Involved

Products that are imported into the U.S. are subject to inspection by the U.S. Customs Service (Customs) at their port of entry. Customs focuses its border enforcement efforts on trademarks, copyrights and trade names, and is vested with the legal authority to make infringement determinations relating to these protections.

If trademarks or copyrights exist, or if a trade name has been established and used for six months, it is possible to record such trademarks, copyrights and/or trade names with Customs. Once these have been recorded, Customs can and will detain, seize and forfeit counterfeit, piratical and infringing products and notify the owner of the trademark, copyright and/or trade name of the detention or seizure.

The recording process is simple and relatively inexpensive. Trademarks must be registered with the Principal Register of the U.S. Patent and Trademark Office, while copyrights must be registered with the U.S. Copyright Office (or, for foreign copyrights, the Berne Convention). Trade names that have been used to identify a product or manufacturer for at least six months can be registered with Customs and enforced after being published for opposition in the Federal Register and Customs Bulletin.

Recordation with Customs involves providing information required by regulations and must be done carefully. Inaccurate or insufficient information can result in the products of authorized users of the trademarks, copyrights and trade names-including the owner's own products-being detained at the port of entry.

Protect Your IP Assets

If a U.S. company does not have any enforceable IPRs, it may find itself competing in a global market setting on price, quality, service, etc. Customer loyalty, reputation and goodwill tend to diminish in value as the economy turns global. It is therefore more important than ever for companies to evaluate and secure IPRs.

A step as simple as registering a copyright or trademark for a product design can provide a basis for enforcement against counterfeit imports by the U.S. Customs Service.

Patents, trademarks, copyrights, trade names and tradedress can be used to protect virtually any type of product. More importantly, these intellectual property assets provide the owner with IPRs that can be used to prevent the importation and sale of infringing counterfeit goods in the U.S. from foreign manufacturers.