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What to Do If You Are Accused of Trademark Counterfeiting

What to Do If You Are Accused of Trademark Counterfeiting

Online marketplaces like eBay, Amazon, and Alibaba give global sellers growing access to consumers in the United States. American companies in nearly every industry, from electronics to luxury goods and children's toys, have responded with increasingly aggressive litigation strategies designed to protect their intellectual property from counterfeiters and other copycats. In fact, some luxury goods manufacturers spend over 5% of their total revenue on anti-counterfeiting efforts.

If you are accused of trademark counterfeiting, you face a serious risk of being sued. Today, many companies have brand protection strategies that include suing even small-scale infringers for trademark counterfeiting. This includes suing individuals who may have unknowingly sold only a handful of counterfeit goods.

What to Do If You Face Trademark Counterfeiting Accusations

If you have received a notice of infringement or demand letter accusing you or your company of selling counterfeit products, you should immediately seek legal advice. Depending on the circumstances, selling even a single counterfeit product can subject a business to substantial liability.  

While you prepare to meet with a lawyer, be sure to take steps to gather and preserve the business records relevant to the alleged infringement by:

  • Keeping records of all the goods you purchased, sold, or imported.
  • Keeping the products mentioned in the cease and desist letter, if you have not already sold them or turned them over to trademark owner.
  • Gathering information about and communications with your supplier or source for any of the allegedly infringing items you sold.
  • Calculating the volume of allegedly infringing products you sold, along with any revenues or profit related to those products.

Damages in a Trademark Infringement Case

There is no absolute formula to calculate the precise amount of damages a company can seek from someone who sells counterfeit products. Damages for trademark counterfeiting typically begin with up to three times a Defendants' profits from the sale of the infringing products.

However, depending on the circumstances, the law authorizes courts to assess “statutory damages” from $1,000 up to 2 million dollars per counterfeit mark, per type of good sold.

Responding to a Notice of Infringement

Contacting legal counsel early is important because how you respond to a lawsuit or notice of infringement can have a significant effect on your ultimate liability.

For example, under federal trademark law, one of factors a judge can consider when awarding statutory damages is “the defendant's cooperativeness in providing information relevant to proof of profits and losses.” Other important factors include whether the infringer's conduct was willful or innocent and the profits made from selling the allegedly infringing products.

There are specific penalties for willful violation in trademark counterfeiting cases. This means if you sold counterfeit goods unknowingly, you may be able to avoid paying these extra penalties. 

As a result, if you are accused of trademark counterfeiting, your choice to cooperate with the trademark holder and your decisions about whether to retain counsel can impact your eventual liability.

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