Trade Dress Watch: A case for counterfeit trade dress

by DLA Piper
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Can a product which imitates the look and feel of another product, but does not use the trademarked brand name, still be considered a “counterfeit” product under United States law? Owners of popular brands (like Louis Vuitton and Tiffany) are well acquainted with the counterfeiters’ practice of applying their brand name or logo to fake goods, and often respond with a claim pursuant to Section 32 of the Lanham Act alleging use of a “counterfeit mark.”

What is less clear is whether a counterfeit claim under Section 32 will be successful if the alleged “counterfeit mark” is trade dress, rather than a word mark or a well-known logo mark.

What does “counterfeit mark” mean under the statute?

The Lanham Act defines a “counterfeit mark” as “a counterfeit of a mark that is registered on the Principal Register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered.” If a company has registered its trade dress, such trade dress is a “mark that is registered on the Principal Register…” Accordingly, pursuant to the plain language of the Lanham Act, a potential defendant’s products which imitate a company’s registered trade dress also bear a “counterfeit mark,” thus providing the registered trade dress owner with the basis for a counterfeiting claim.

Why would a trade dress owner want to allege a counterfeiting claim?

While allegations of “counterfeiting” are often duplicative of routine trademark infringement claims in the US, alleging a more specific counterfeiting claim does have its advantages. Additional remedies are available against counterfeiters, including the ability to collect statutory damages of up to US$2 million (pursuant to Section 35(c) of the Lanham Act). Routine trademark infringement cases, in contrast, do not allow for the collection of statutory damages. In addition, ex parte seizure orders under Section 34(d) of the Lanham Act are only allowed when the defendant is involved in counterfeiting.

Are others doing it and how are the courts treating these claims?

In the US, trade dress litigation appears to be increasing. For trade dress owners that have been savvy enough to seek the appropriate federal registrations in advance, we expect this trend will be followed by an increase in specific trade dress counterfeiting claims.

However, case law with substantive discussion regarding counterfeit trade dress claims still is rather sparse. Some decisions seem to implicitly acknowledge that a cause of action for counterfeit trade dress exists, and others have granted statutory damages where trade dress registrations are at issue but are combined with other counts involving traditional registered trademarks. See, e.g., Victorinox AG v. U.S. Flash & Technologies LLC, 2010 WL 5691991 (S.D.N.Y. Oct. 21, 2010) (awarding US$600,000 in statutory damages relating to the sale of counterfeit versions of the Victorinox “SwissFlash” Swiss Army tool).

Are there any pitfalls to alleging counterfeit trade dress?

Given the potential benefits of a counterfeit claim, particularly in terms of access to statutory damages, trade dress owners should give serious consideration to strategic registration of trade dress. Registration leaves open the possibility of alleging trade dress counterfeiting claims in both pre-litigation demands and in any ensuing litigation matters.

This is not to say that counterfeiting allegations should become boilerplate in all trade dress infringement pleadings. For example, including a counterfeiting claim may heighten the risk of an assessment of attorney’s fees under Section 35(a) of the Lanham Act (if the trade dress owner does not ultimately prevail in the action), although this risk is the same for traditional trademark litigation. See Senate-House Joint Explanatory Statement on Trademark Counterfeiting Legislation, 130 Cong. Rec. H12076, at 12038 (Oct. 10 1984). In addition, trade dress owners should use caution in seeking ex parte seizure orders under Section 34(d) of the Lanham Act, due to the risks associated with wrongful seizure claims.

In sum, with the recent uptick in trade dress infringement claims, we can expect to see many more trade dress counterfeiting claims than in the past. In this evolving landscape, brand owners should consider registering their primary trade dress as part of a comprehensive brand strategy, to keep counterfeiting claims and statutory damages viable as remedies.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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