This time we have an interview with Brian W. Brokate, an anti-counterfeiting litigator from NY, and we tell you more about the problem with fakes on Alibaba. Brian is stressing how technologically advanced the counterfeiters of today are and that enforcement has to keep up with the pace of technological advances. Also, we tell you about the 140 Mio product listings removed from Taobao in the first 10 months of 2013 and how Alibaba is struggling with fake products.
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Rolf Claessen and Kenneth Suzan
Episode 12 – October 3, 2014
BB = Brian Brokate of Gibney, Anthony & Flaherty, LLP
RC = Rolf Claessen
KS = Kenneth Suzan
Hi. This is Alex Butterman at Staas & Halsey LLP in Washington, D.C. I love podcasts because they help me survive my long commute and I love a podcast by a couple of colleagues who are helping me stay up-to-date with IP Law. You are listening to IP Fridays. Thank you Rolf and Ken.
KS: Hello and welcome to this episode of IP Fridays. Our names are Ken Suzan and Rolf Claessen and this is THE podcast dedicated to Intellectual Property. It does not matter where you are from, in-house or private practice, novice or expert, we will help you stay up-to-date with current topics in the fields of trademarks, patents, design and copyright, discover useful tools and much more.
RC: Welcome to Episode 12. We currently have around 1,200 downloads of MP3 files which means hopefully that 1,200 people listened to our show last month so that makes us really happy and if you like the show, you can subscribe on iTunes at www.ipfridays.com/itunes, or you can listen to us on Stitcher. Stitcher is an app that runs on the iPhone or Android or Blackberry or even in some cars – I think Ford and BMW also support Stitcher. You can subscribe to Stitcher at www.ipfridays/stitcher and if you really like us you can leave us a review at either iTunes or Stitcher or wherever you find our podcast in any directory. We are listed in many, many directories. Today we have a very special guest, Brian Brokate. He is a litigator in New York and handles mostly anti-counterfeiting cases. We also will be telling you about Alibaba and their fake problem. But we will start this time with the interview and Ken had the chance to interview Brian Brokate, so take it away…
KEN SUZAN’S INTERVIEW WITH BRIAN BROKATE, OF GIBNEY, ANTHONY AND FLAHERTY, LLP
KS: Thank you Rolf. I’m speaking to Brian Brokate of Gibney,Anthony and Flaherty in New York City. Brian is the head of Gibney Anthony and Flaherty’s intellectual property practice group. He has extensive experience in the areas of intellectual property law and in investigation and enforcement procedures to combat the infringement and counterfeiting of trademarks and copyrights. Brian focuses on anti-counterfeiting and anti-piracy and handles all stages of civil, anti-counterfeiting and infringement litigation. He also has had extensive involvement in state and federal criminal actions. Brian is also the treasurer, a member of the board of directors, and on the executive committee of the International AntiCounterfeiting Coalition. He is also the treasurer of the New York Task Force, a coalition of brand owners affected by counterfeiting. Finally, Brian is a member of the International Trademark Association where he serves as a board member and is on the Anti-Counterfeiting Committee. Brian, welcome to the program.
BB: Oh, thank you so much Ken. Thank you so much and thank you for having me as your guest today.
KS: Thank you, indeed. Brian, can you tell our listeners a little bit about your practice? How long have you been battling the counterfeiters?
BB: Well, it certainly doesn’t seem this long, except when I look back and I listen to your introduction like that, I guess I have been at this for a while. I actually started my IP practice in 1984 which just happened to be the same year as the initial passage of the amendments to the Lanham Act which codified seizures and it was the 1984 Anti-Counterfeiting Act. So that’s how long I have been doing it. So I really sort of grew up in the business and our practice today has evolved into I think what you might call, on one side, a fairly traditional IP practice in terms of trademark clearance and registration, but also we have a true specialty on the enforcement side, not only in trademark and copyright infringement, but specifically trademark counterfeiting and copyright piracy.
KS: Yes, and I bet that is a big problem these days with the Internet as popular as it is.
BB: And that has been a huge change since I started practicing, Ken. My initial lawsuits were against traditional brick and mortar counterfeiters where you showed up with U.S. Marshals and you showed up with seizure orders and you sought the physical seizure of counterfeit goods from fixed locations. But as you already hinted, Ken, the Internet has changed the game. It wasn’t a gradual change either. It certainly found that once the Internet became as popular a way to communicate and to convey goods and to advertise, as they wanted to do, the counterfeiters quickly caught on as how to use the Internet as a tool to sell their wares.
KS: Yes. Now how would you say that counterfeiters are different today as they were 10 or 20 years ago?
BB: Okay. They are a lot more sophisticated. Counterfeiters today, of course, are taking full advantage of every advance in technology and as a result in terms of enforcement efforts to stay one step ahead of the counterfeiters or even even with the counterfeiters you also have to quickly adapt your investigative and your enforcement methods also using every bit of technology that you can muster. So, I would say as a group the counterfeiters today are much more organized, much more technologically advanced, and much more efficient in terms of how they go about their business. As a result, I think the counterfeiting organizations have gotten larger and larger and they are probably very profitable as a result.
KS: Can you tell me about a recent victory you have had? I know you have been practicing for a long time but I am interested in a recent victory against counterfeiters in the U.S. or abroad and what did it take to get that victory?
BB: Ken, my most recent victory occurred in the Central District of Los Angeles and that was about six or seven months ago when we got a final judgment and injunction against a counterfeiter, again an Internet counterfeiter. But wasn’t selling the so-called run-of-the-mill Chinese knockoff watches, they were actually selling genuine watches that had been converted with non-genuine parts into a watch that was portrayed as a more expensive model. So these were altered watches and I spent a good part of my career, in the late 90’s and the 2000’s pushing for decisions which basically said even when you have a product that starts out life a genuine, and so the trademarks on the product are genuine, if that product has been altered to such an extent that it can no longer be called the original product, then that product is counterfeit. The reason we were so anxious to get that type of relief was because we got all the enhanced remedies that you get under the Counterfeiting Act in terms of the defendant’s profits and the costs and attorney’s fees and, of course, the possibility always of statutory damages because as you well know Ken if counterfeiters do everything well except keep books and records.
KS: Sure. Is that case reported out in the public?
BB: I think you could probably access it on LEXIS. The name of the case is Rolex Watch USA vs. Melrose Jewelers in the Central District of California. If your listeners probe around the Ninth Circuit, Ken, they are going to see several Rolex cases, beginning in the mid-1990’s, which stand for that proposition – that a genuine good, once it is altered to such an extent that it affects the quality and the functioning of the original product, is no longer the original product and is counterfeit despite the presence of genuine marks on the product.
KS: That is a great case to read and something I think our listeners will want to look at. You know, with these days with money being tight, one question comes to mind is that if a company has a limited budget for legal, how could they still effectively monitor and enforce their trademarks in the marketplace, both on the Internet and off line in the non-virtual world:
BB: Well that is a circumstance that exists probably more times than we think and that is because some companies, you know, are very creative and they develop a great product and they develop a great trademark and they put their product out there and they advertise and low and behold the next thing they know they are being counterfeited by either brick and mortar or on the Internet. But these are young companies and they haven’t had years and years of enforcement, they haven’t built up case law, they probably don’t even have in-house counsel. The best way to go about that Ken, for companies of this nature, they have to be vigilant. So from in-house they have to establish a so called monitoring department which is going to look at all the possible venues of the counterfeit products in terms of their own product, you know, be that brick and mortar, be that the Internet and they are going to first have to define their problem. They are going to have to first define where their own customers go for the legitimate brand and where the customer for the legitimate brand might be encountering the counterfeit goods and they should start there. They can’t do it all. But they have to start where it’s most visible. Many companies initially have a certain level of excitement that they have become popular enough to become counterfeited but then Ken what happens is that they realize the amount of resources they have to put into a counterfeiting program can sometimes significantly cut into the profits of that new company so they have to start small and start selective and I can’t stress enough these young companies, these young brands to become part of a coalition. To become a part of an entity like the IACC or INTA where they can share some of their problems with some of their peers and get some good knowledge as to what resources are out there to affect the proper remedy to fight their problem.
KS: For those liseners who are not familiar with those organizations, do you know the websites where people can go for those?
BB: The IACC is IACC.ORG and I believe it is INTA.ORG for the INTA website. Your listeners should know, as you do Ken, that if your brand, or one of your client’s brands, is suffering from counterfeiting, you start with those organizations as a great resource because it is a huge body of knowledge that exists in the membership of those organizations and in their existing programs.
KS: Now, as part of the Internet, social media is a very big piece of today’s economy and marketing and advertising and I assume counterfeiters have taken to it as well. What would you recommend for stopping counterfeiting problems that are on social media sites?
BB: Well Ken, you are exactly right. Social media has become very popular with the counterfeiters. They have managed to infiltrate deeply many of the social media sites that we are all familiar with on a daily basis – Facebook, Twitter, Pinterest, and Instagram – and they quickly took to social media, not as a forum to share ideas, but as a forum in which to sell their products. Again, I am going to have to emphasize this concept of monitoring. The brand owner, or the lawyer, has to set up a process whereby all the social media sites are regularly monitored to look for the sellers of counterfeit goods. Of course, it’s very tricky because some of these social media sites, a lot of times there is trademark use from fans, there’s trademark use from people who love the product. You have to be very careful not to alienate the consumer of the legitimate goods. But truly focus on the people selling counterfeit goods. Establish great relationships, great alliances with the operators of these social media sites. They all have pretty responsive take-down programs where you can just send them notice as to a particular infringing problem and they will go and take that problem down. This concept of alliances, you know more and more Ken you know like with the eBays of the world and the Alibaba’s and the Taobao’s, rather than treating these entities as a so called adversary because it is a marketplace for the sale of counterfeited goods, establish alliances, establish cooperation with these marketplace platforms with the social media sites because together you can significantly attack the problem of counterfeiting that might exist on any one of those mediums.
KS: Yes, that is well said. Is there anything that the government in the United States needs to be doing to tighten the laws or enforcement efforts and what are your thoughts about overseas?
BB: In terms of the U.S. Government, I think all the laws in the United States are in place to effectively go after counterfeit goods. Both at the state criminal level, the local criminal level and the federal criminal level and as well, of course, in terms of the civil remedies that are out there, primarily in the federal courts, I think all the laws are there. In terms of enforcement with law enforcement, it requires a fair amount of education, a fair amount of educating law enforcement such as U.S. Customs as to your particular counterfeiting problem and you set up contacts with all the enforcement agencies to make sure that they know where you are when they encounter a counterfeit good. So, the trademark owner, the brand owner, the copyright owner, has to be extremely vigilant in maintaining those law enforcement contacts. Make sure they know you are out there. If they know you are out there, and you have educated them as to the account of aversion of the product that is out there, they will take action.
In terms of overseas, I think for sure we have heard, I’ll take China for example, what we have heard is that China has all of the requisite laws that are required to effectively deter the manufacture of counterfeit goods but of course the enforcement over there, because of its very localized nature, continues to be a very big challenge. But certainly anything you can do from a lobbying standpoint both in the U.S. and also abroad to tighten laws to address loopholes that might exist, every brand owner should be very active in that realm.
KS: That’s right. I agree 100% with that analysis. Brian, how can people reach you after listening to the podcast?
BB: Well, I’d be happy to share my e-mail address which is email@example.com. They can visit me on our Website which is http://www.gibney.com and they will see the full breadth of the personnel we have devoted to fighting infringement and they will see exactly what types of cases that we get involved in. So, Ken, probably the best way to start is a visit to our Website and to reach out to whichever attorney in our group you feel will most effectively deal with your type of problem.
KS: Brian, thank you so much for joining us today. It has been a pleasure, as always.
BB: Well, Ken, thank you so much for making me part of your program and, of course, thank you for all the support over the years. You’ve been a wonderful colleague and continue to be.
KS: Thank you Brian.
RC: Thank you Ken. So I promised to tell you more about Alibaba and we will focus on the fakes and counterfeit products on Alibaba. Alibaba is actually comprised of a couple of different sites. One of the sites is Alibaba.com and another one is Taobao.com. There is a recent article on CNN Money that suggests that about 80% of the articles and goods found on Taobao.com are counterfeit products. From my own experience, I would say that it could be true that even on Alibaba.com a similar thing is true. I mean, if you are searching on Alibaba.com for let’s say Nike and at the same time for Adidas, so you put both names in the search box, you will find plenty of hits where you get vendors in China telling you that you can order shoes there and they just put any label on the shoes that you would like. So, this is a pretty big problem and Alibaba is trying to find a fix, at least on paper, and you can file a take-down request for any of the goods listed on Alibaba or Taobao and then they will likely be removed. But the problem is just the sheer number of articles listed there. In the first 10 months of 2013, Taobao alone removed 114 million product listings. So you just have to see the sheer number, 114 million product listings from Taobao. That is by far more than on Amazon or ebay. So this is really a big problem and now they are listed in the U.S. and now people might be able to sue Taobao or Alibaba more easily because of the fake products. So if you want to learn more about this story, you can just head over to the show notes and I will have the link in the show notes to this particular article on CNN Money.
With that, I say goodbye and I hope you will listen to us next time.
KS: That’s it for this episode. If you liked what you heard, please show us your love by visiting ipfridays.com/love and tweet a link to this show. We would be so grateful if you would do that. It would help us out to get the word out. Also, please subscribe to our podcast at ipfridays.com or on iTunes or Stitcher.com. If you have a question or want to be featured in one of the upcoming episodes, please send us your feedback at http://ipfridays.com/feedback. Also, please leave us a review on iTunes. You can go to http://ipfridays.com/itunes and it will take you right to the correct page on iTunes. If you want to get mentioned on this podcast or even have comments within the next episode, please leave us your voicemail at http://ipfridays.com/voicemail.
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