If Something Is Advertised As A Knockoff Product... Is It No Longer Counterfeiting?

from the likelihood-of-amusing dept

People throw around a variety of terms that sometimes need to have more specific meanings. When talking about physical goods, when people talk about "knockoffs" or "counterfeits" they're usually referring to a trademark issue. And, in some sense, this is what trademark is supposed to be about. For many years we've argued that trademark should not be lumped in with patents and copyrights, as the concept, purpose, intent, and even Constitutional underpinnings are entirely different. It's extremely frustrating to see people lump in patents, copyrights, and trademarks as "intellectual property" as if they were all similar. They are not. And trademarks are especially different.

Indeed, we've always said that (unlike with the other two) trademarks are mostly a consumer protection law, so that you know who is actually making the things you're buying, and you know the origin of it. That is, we let Coke have a trademark on the Coca-Cola branding so that consumers don't get tricked into buying something that isn't Coke, while believing it is. This is why a key part of trademark law has always been the "likelihood of confusion." If there's no likelihood of confusion, than there isn't a trademark violation.

But here's an interesting question: if someone is making a counterfeit product... is it still violating trademark laws against counterfeiting if buyers know it's counterfeit? A recent 9th Circuit Court ruling suggests... perhaps not. The case is not about this issue directly, but is about two separate companies who each (independently it appears) came up with products called "Eye Dew." One, Arcona, created an eye cream that in a tall cylindrical silver bottle. Arcona registered a trademark on the name. Around the same time (or even possibly a bit earlier), a different company, Farmacy Beauty, developed its own eye cream, also named EYE DEW. The packaging of the two products looks very, very different:


The ruling in the case finds that because the Lanham Act requires there to be a likelihood of confusion, and people are unlikely to be confused between these two products, then there's no counterfeiting claim. The court notes that while it has been recognized that a pure trademark infringement claim requires a likelihood of confusion, the 9th Circuit had never ruled directly on the question of whether or not a counterfeiting claim does, even though both stem from the Lanham Act. However, noting that everyone agrees that trademark claims require it, and the plain language of the statute says so, the court confirms:

We thus hold that a counterfeit claim requires a showing of likelihood of confusion under Section 1114.

And while the case is not about this, it raises a somewhat fascinating question first posed by law professor Mark Lemley. He notes that under this ruling, brands may not be able to go after obvious knockoffs if the knockoffs don't confuse anyone:

This is interesting on a few levels. First off, we've highlighted many studies showing that the vast majority of people buying knockoff products know they're knockoffs, and they buy them aspirationally -- knowing they can't afford the real thing, but wanting to build themselves up to buying the real thing, by first buying a knockoff. We've used those studies to question the common wisdom (often used by customs and border patrol and ICE) about the "dangers" of counterfeits. If no consumers are fooled or harmed, then what's the issue? And that's especially true if they weren't going to purchase a legitimate version in the first place.

But this raises an even more interesting question to me: under this ruling, could a company not just make cheap knockoffs of a famous brand's products, but then avoid some level of liability by clearly advertising them as knockoffs? I wouldn't suggest doing that without a huge legal budget, but a strong argument can be made that if you made it abundantly clear that your fake Louis Vuitton handbag was a fake Louis Vuitton handbag, and that buyers could not buy it without understanding that fact -- then there might not be any claim. There would be no likelihood of confusion. There would be no harm.

It's such an intriguing idea, I'm now kind of hoping that someone (again, someone with fantastic trademark/counterfeiting lawyers, and a large legal war chest) tests this out. If you do, send me some sample counterfeit merchandise as a thank you.

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Filed Under: 9th circuit, consumer protection, counterfeit, counterfeits, eye dew, fake goods, lanham act, likelihood of confusion, trademark
Companies: arcona, farmacy beauty


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  • icon
    hij (profile), 13 Oct 2020 @ 4:13pm

    stealing vs. taking the money

    Good artists borrow, great artists steal, great business people tell you up front that they are taking your money.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Oct 2020 @ 5:44pm

      Re: stealing vs. taking the money

      Great artists transform the original into something new and unique. Great scam artists become politicians or CEOs.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Oct 2020 @ 9:30pm

      Re: stealing vs. taking the money

      Good business people tell you up front that they are taking your money. Great business people tell you up front that the product is sold to you at a beyond ridiculous markup.

      The whole point of "designer" brands is that you're able flaunt spending a ridiculous amount of money to get the same if not worse product as their competitors. The whole point of these lawsuits can be summed up thus: "Whaaa! I can't flout my spending power in front of people because of similar products existing. Make those other products cease to exist so I can go back to holding up my nose around others." We literally deny existence to products because of a fucking name, even if the product explicitly denies relation, and it takes lawsuits like this to highlight just how absurd all of it is.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 13 Oct 2020 @ 10:15pm

        Re: Re: stealing vs. taking the money

        Good business people tell you up front that they are taking your money. Great business people tell you up front that the product is sold to you at a beyond ridiculous markup.

        A good con man can be on the train to the next town before the mark realizes they've been scammed.

        A great con man can walk right by the mark every day after the scam, because the mark will never realize they got the worse end of the deal.

        reply to this | link to this | view in chronology ]

        • icon
          Scary Devil Monastery (profile), 14 Oct 2020 @ 1:38am

          Re: Re: Re: stealing vs. taking the money

          ...and then there's con men like Barnum who made their artistry in conmanship the actual product they sold.

          I think a con man has reached the apex of his craft when people flock to see just how he intends to pick their pockets.

          reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 13 Oct 2020 @ 4:26pm

    I think where the idea of clearly advertised counterfeit causing no harm breaks down is when the customer is using it ie. out of its packaging. For example, when they take their counterfeit handbag around town. If it clearly says "counterfeit" or clearly has a different brand name printed on it, then maybe that's ok. But if it would confuse a friend into thinking it was the real thing, then you could argue that shoddy workmanship or subtle style differences could cause harm to the brand.

    reply to this | link to this | view in chronology ]

    • icon
      James Burkhardt (profile), 13 Oct 2020 @ 8:14pm

      Re:

      But, the branding is the only thing that is protected. A louis Vitton (I am not going to look up spelling) bag is only a louis vitton bag if it has that branding. Louis vitton doesn't own a style. The theory is that if the branding makes it clear the bag is NOT a louis Vitton bag, its not a counterfit louis vitton bag, even if the style of the branding is accurate to a genuine louis vitton bag.

      reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Heavy Brewing Co - Start drinking Heavy!, 13 Oct 2020 @ 4:34pm

    @"we let Coke have a trademark on the Coca-Cola branding"

    First: Can you get NOTHING right? It's the Coca-Cola company that has a trademark on both "Coca-Cola" AND "Coke"!

    Sheesh. And while prattling about confusion in the marketplace.

    [Deep breaths, so sticking to topic, but there's a tangent coming...]

    Okay. I don't see how "Eye Dew" isn't THE trademark, therefore using that EXACT distinctive name must be ruled out, else as you rightly claim, it's devastating to markets.

    No, I'm NOT harmed by trademark, and neither are you, just have a mania against "intellectual property".

    I bet this is overturned. It's not generic. "Eye Dew" on two products is inherently confusing. -- Take away the captioning and reverse the image order -- now which is the trademarked product? How can simple confusion escape learned judges?

    In your musing at the bottom: "Louis Vuitton" IS the trademark, right? USING the name on competing commercial product no matter how otherwise marked has to be ruled out.

    You're as always just hoping to destroy all trademark with one court decision, oblivious that it'd be wrong even by my views, and will be fought by those with trillions at stake, so complete pipe-dream.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 13 Oct 2020 @ 4:38pm

      Re: @"we let Coke have a trademark on the Coca-Cola branding"

      For somebody who thinks companies have no rights, tiy come on strong in supporting their rights when they are used in an anticompetitive fashion.

      reply to this | link to this | view in chronology ]

    • icon
      Stephen T. Stone (profile), 13 Oct 2020 @ 6:15pm

      How can a corporation control and enforce a copyright (or a trademark) when you believe corporations have no legal rights, and how do you feel about corporations using copyright (or trademark) to censor speech?

      reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    identicon
    Heavy Brewing Co - Start drinking Heavy!, 13 Oct 2020 @ 4:36pm

    Would you have NO problem if targeted the "Techdirt" brand?

    Assume someone REALLY wants it and has money to promote their own of same name, and for army of lawyers hounding you to give up the site name-- which has to resolve to a unique number in DNS so is effectively EXCLUSIVE trademark.

    Would you stick at handing over the site name, deeming it "yours", some sort of sentiment over mere words? HMM?

    C'mon, Maz, think this all the way through.


    The Tangent: "we let Coke"??? -- WHO is this "we", Mr Uber-Corporatist, which has the power to ALLOW OR NOT a corporation? By "we", do you NOT mean "The Public"? Explain, college boy, in light of your ongoing fixation that corporations are PERSONS with literal Constitutional Rights:

    [Time out to enjoy tune haven't heard for couple decades: Art Of Noise - Close (To The Edit)]

    "And, I think it's fairly important to state that these platforms have their own First Amendment rights, which allow them to deny service to anyone."

    https://www.techdirt.com/articles/20170825/01300738081/nazis-internet-policing-content -free-speech.shtml

    You cannot align your TWO positions. Just here you forgot again and BLITHELY reveal your TRUE opinion that "we" DO get to totally control corporations!

    reply to this | link to this | view in chronology ]

    • icon
      Stephen T. Stone (profile), 13 Oct 2020 @ 6:16pm

      I cannot align your TWO positions. Because I am an idiot who, among other things, thinks “common law” is something other than what it is.

      FTFY

      reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 13 Oct 2020 @ 11:13pm

      Re: Would you have NO problem if targeted the "Techdirt" brand?

      "Start drinking Heavy!"

      Clearly, you started way before everyone else.

      "You cannot align your TWO positions"

      No, you cannot align what you think the positions are. The guy making the arguments that have not been misrepresented by the wilfully ignorant can do so just fine.

      reply to this | link to this | view in chronology ]

  • icon
    Uriel-238 (profile), 13 Oct 2020 @ 5:32pm

    Walmart and Target brands

    The first thing that comes to mind are the generic drug and hygiene product equivalents I see in department and grocery stores. They'll even say compare to Flonase or compare to Listerine. Yeah, they might have a different name, but they're claiming that this product is similar enough to qualify.

    I also remember a cheaper cola brand where the can looked a lot like the red coca-cola can with a similar red and a similar font (slightly off) that was sold at half price. Can't find the name though.

    Also coming to mind, the use of Proxies in Magic The Gathering, because some real cards were outrageously expensive. Wizards of the Coast didn't like it and they were forbidden in tournaments, but most of us casual players could understand the problem of affording expensive cards.

    reply to this | link to this | view in chronology ]

    • identicon
      Paul B, 13 Oct 2020 @ 7:28pm

      Re: Walmart and Target brands

      This is often because they share the same active ingredient. Costco dandrif shampoo shares selenium sulphide with Head and Shoulders. Everything else is a random assortment of water, moisturizer and other fillers that have no major effect.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 14 Oct 2020 @ 6:10am

        Re: Re: Walmart and Target brands

        Well, actually they are often the exact same product, just repackaged (and in many cases just given a different label). Often the original company makes the product then sells to the store, which labels it "own brand" and sells on at a lower price. It's a way for the brands to sell to customers who refuse to pay a brand premium without diluting the brand.

        reply to this | link to this | view in chronology ]

        • identicon
          Paul B, 14 Oct 2020 @ 6:52am

          Re: Re: Re: Walmart and Target brands

          I was thinking store brands, which are often produced for a supermarket chain like Kirkland's for Costco. But even these often come from the same factory as the name brand and in some cases the store pays to white label the product.

          But wow, making your own generic just to push out the generics.

          reply to this | link to this | view in chronology ]

  • icon
    TKnarr (profile), 13 Oct 2020 @ 6:36pm

    I think there's a difference between "counterfeit" and "infringing on trademark". Counterfeit strongly implies that the copy looks very similar to and is intended to be mistaken for the original. Counterfeit US dollar bills, for instance, wouldn't be very good counterfeit if they were printed in bright orange ink instead of green and grey. The same with knock-offs, they only serve their purpose when they look similar enough to the real thing to pass themselves off as it at least at first glance. It seems to me that even if the buyer knows it's a knock-off, it's still trading on the reputation of the product it looks like and that's the central problem trademarks are intended to help solve.

    I'd argue that if it can't be confused with the original then it's not counterfeit or a knock-off by definition, and if it can be then the rest is just rules-lawyering.

    reply to this | link to this | view in chronology ]

    • icon
      JoeCool (profile), 14 Oct 2020 @ 1:02am

      Re:

      There are products where they can't help but all look alike. Take nails or screws - there's little to no differentiation between them... other than the branding. The products themselves are all but identical. So I'd have to say that even looking exactly the same does not necessarily make something counterfeit if it's marketed/packaged differently.

      This breaks down if the product has decorative bits that don't need to look the same due to function. So a shoe that looked identical to say a Nike, but was colored differently, would not be counterfeit in my book.

      reply to this | link to this | view in chronology ]

  • icon
    PaulT (profile), 13 Oct 2020 @ 11:11pm

    I'd argue that a counterfeit is something that aims to fool the buyer into thinking that it's the original product. If someone says "this is something that looks like X but it's clear not X", then I'm not sure that label applies.

    These products might still be infringing on trademarks, or have other problems that make them illegal, but I think it's important to apply the correct terminology.

    reply to this | link to this | view in chronology ]

  • identicon
    David, 14 Oct 2020 @ 12:46am

    Truthful advertising is not enough.

    If I truthfully advertise and sell counterfeit money at a quarter of the marked-up price, I am not defrauding anybody, but the whole point is that the principal business is being an accessory to fraud.

    Now in case of money, the counterfeiting itself is prohibited so this particular argument is not needed.

    When I was in China dozens of years ago, street markets offered obvious cheap watches for around $5 with "ROLEX" on their face. Nothing else looked remotely like a ROLEX and they were obviously not seriously being marketed as such but were more for amusement value (and quite unreliable. certainly worse than typical $5 watches).

    Yet I have little doubt that marketing them internationally would get stopped, even without significant danger of trade confusion (except possibly to young children).

    So with regard to counterfeit bags marketed as counterfeit, I'd think that if there actually is a similarity of the makeup designed to be significantly amenable to confusion, merely marketing the first sale in a non-confusing manner would seem too much like a "nudge, nudge, wink, wink, say no more" move not really preventing subversion of the trademark.

    reply to this | link to this | view in chronology ]

    • icon
      Jeroen Hellingman (profile), 14 Oct 2020 @ 2:53am

      Re: Truthful advertising is not enough.

      Exactly that. The initial party may be selling them as counterfeit, but you never know about the buyer. I normally think it is nonsense to stop somebody at the border or otherwise using a single counterfeit bag (Either aware or unaware of it state: even people with the real stuff get harassed sometimes).

      On the other hand, I think trade-marks have gone overboard. We should go back to the mark aspect: a two dimensional symbol that is in itself easily recognizable. All kinds of semi-functional shape aspects should not be covered under trade-mark law.

      reply to this | link to this | view in chronology ]

      • icon
        crade (profile), 14 Oct 2020 @ 6:07am

        Re: Re: Truthful advertising is not enough.

        We actually see this a lot with collector items. Some rare old video game cart, for example, etc is too pricey for collectors, some company swoops in and makes a replacement for collectors that can't afford it. They make it clear of course at point of sale that their product is a knockoff, but telling them apart is otherwise difficult.. So now the market has 500 rare carts and 10000 carts that are very difficult to distinguish from them in it. People are deceived, prices for the original plummet, harm occurs

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 14 Oct 2020 @ 6:25am

          Re: Re: Re: Truthful advertising is not enough.

          Are you saying many people should do without so that a few people can make a large profit? It seems to me that that does more damage than a few people losing out on a gamble on something maintaining or increasing its value.

          reply to this | link to this | view in chronology ]

          • icon
            PaulT (profile), 14 Oct 2020 @ 6:45am

            Re: Re: Re: Re: Truthful advertising is not enough.

            He's saying that the value of a discontinued collector's item is directly related to its rarity, so flooding the market with a bunch of fakes is bad even if the original seller made it clear to the original buyer that it was a fake. If someone thinks they're paying top dollar for an original item, but they're actually paying for a fake made 30 years after the original item ceased production, that's fraud and that is bad.

            That's a very different argument to whether a currently available, non-rare item is damaged by contemporary, clear fakes that don't realistically affect the actual market for the originals..

            reply to this | link to this | view in chronology ]

            • icon
              crade (profile), 14 Oct 2020 @ 7:46am

              Re: Re: Re: Re: Re: Truthful advertising is not enough.

              I'm also saying that the market for such items is significantly made up grifters. So even though the original seller isn't directly deceiving the collectors, the deception still drives their business, and basically if the only thing that makes your product obvious is how you are selling it, it isn't really good enough to remove the confusion

              reply to this | link to this | view in chronology ]

        • icon
          Samuel Abram (profile), 14 Oct 2020 @ 7:56am

          Re: Re: Re: Truthful advertising is not enough.

          Some rare old video game cart, for example, etc is too pricey for collectors, some company swoops in and makes a replacement for collectors that can't afford it.

          There's the illegal way and the legal way of doing that.

          The illegal way (as in it infringes both trademark and copyright) is to do a cartridge reproduction of, say, an NES cartridge of, say, Super Mario Bros. 3.

          The legal way (as in official and authorized) is to sell cartridges through channels such as Limited Run and iam8bit.

          This is one area where Trademark is useful because the counterfeit reproduction cartridges look like the real thing and can easily be confused for the real thing. On the other hand, the only reason why they're being reproduced in the first place is because the originals are so damn rare!! So it raises the question if the consumer is being protected by the legal prohibition of reproduction cartridges when they're actually serving a need in the market.

          reply to this | link to this | view in chronology ]

          • icon
            crade (profile), 14 Oct 2020 @ 8:03am

            Re: Re: Re: Re: Truthful advertising is not enough.

            Yes, items that are clearly different on their own are a different story

            but this article implies that if the items are clearly advertised as being knockoffs then there is no confusion. I say even if they are clearly advertised as such by the original seller, it does not necessarily absolve the original seller, you would need to look at the potential confusion the product itself creates independently of how it is currently being sold.

            reply to this | link to this | view in chronology ]

            • icon
              PaulT (profile), 14 Oct 2020 @ 8:37am

              Re: Re: Re: Re: Re: Truthful advertising is not enough.

              It really depends on the differences in the product. If you offer an identical product with the disclaimer "this is not the original", that's questionable. If you're selling a pair of MYKE trainers that happen to look a lot like NIKE trainers, there's likely little harm as the customers for the original would not be confused and nobody's going to choose the knockoffs if they can afford the original.

              reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 14 Oct 2020 @ 9:22am

      Re: Truthful advertising is not enough.

      When I was in China dozens of years ago, street markets offered obvious cheap watches for around $5 with "ROLEX" on their face. … they were obviously not seriously being marketed as such but were more for amusement value

      I think it's for amusement as much as the "aspirational" value Mike mentions. A co-worker of mine made enough money to own a real Rolex and never aspired to do so. But when he found out he'd be going to China on a business trip, he couldn't stop talking about the fake Rolex he was going to buy. Afterward, he loved to show it to people and mention that it was a 10-dollar fake. The watch he actually wore was a cheap Casio, because the "Rolex" kept terrible time.

      reply to this | link to this | view in chronology ]

  • identicon
    Bruce C., 14 Oct 2020 @ 5:21am

    Customs seizures - Another impact?

    Customs and border control has been very broad in the definition of "counterfeit" when seizing products at the port of entry. See for example the ear bud incident this past summer. Here's hoping this ruling can be used to restrict this behavior.

    reply to this | link to this | view in chronology ]

  • icon
    Federico (profile), 14 Oct 2020 @ 7:03am

    Replicas of sport merchandise

    There is actually ample jurisprudence already on the question, thanks to countless court proceedings spawning from sports merchandise. The Supreme Court of Italy has over 50 recent rulings discussing the "falso grossolano" ("clumsy counterfeit" products).
    https://www.altalex.com/documents/news/2014/02/24/marchio-falso-falso-grossolano-riconosc ibilita-ricettazione-contraffazione

    reply to this | link to this | view in chronology ]

  • icon
    tp (profile), 14 Oct 2020 @ 8:10am

    Marketing by association..

    If no consumers are fooled or harmed, then what's the issue?

    The vendor who does this, gets unfair advantage when he attaches his product to someone elses product. Ifyour you're a vanilla cola vendor, and decide to make packaging that looks exactly like original coca cola, with a small label that says its a knockoff, there will still be alot of coca cola customers who accidentally bought your vanilla cola, even though they wanted cola from coca cola company.

    Basically your small vanilla cola company gets extra marketing push without actually deserving it. These are generally called "marketing by association", basically you're not associating your product to any useful properties that your product supposedly implements, but instead you're associating your product to competing product offering, and tricking users to buy it whenever they actually wanted different company product.

    marketing by association is just ok if you market your vanilla cola as tasting better than competing products, but its not ok to say that you should buy our vanilla offering instead of coca cola because we made packaging look similar.

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 14 Oct 2020 @ 8:31am

      Re: Marketing by association..

      Huh, why I am not surprised that the guy with zero relationship to any market reality felt the need to weigh in here?

      "marketing by association is just ok if you market your vanilla cola as tasting better than competing products, but its not ok to say that you should buy our vanilla offering instead of coca cola because we made packaging look similar"

      Is that why you deliberately keep your advertising, UI and website so horrifically opposed to any current market standard that nobody uses them, and you'll just come in here whining about Pixar being popular instead?

      reply to this | link to this | view in chronology ]


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