In a capitalist society, material goods are highly coveted. Some are more valuable than others, including designer goods like watches, bags, and other fashion accessories. Some may not have access to designer items, so counterfitters provide a market for knocked off items that are inauthentic copies, but nearly identical to their designer originals.
Buying a fake Rolex watch seems like a small offense. However, selling counterfeits is a federal offense, with a large network of criminals keeping the market afloat.
What is Counterfeit Merchandise?
Counterfeit merchandise is when something is manufactured as a replica, without the permission of the brand and with the intent to defraud and deceive. The quality of a counterfeit item is often inferior or slightly different than the original. These items are often sold under an identical trademark with the same branding and logos. In some instances, the counterfeiter may use slightly different characteristics and branding.
Many popular and coveted brands have been victim to counterfeits. Many of the counterfeits on the market are produced cheaply with inexpensive, low-quality materials in countries that exploit cheap labor, including China and Taiwan.
Counterfeit Merchandise as a Federal Offense
When counterfeit merchandise goods and/or services are sold, it is considered a federal offense. These laws apply to both the counterfeit seller and the party manufacturing the counterfeit item.
Trademark Counterfeiting Act of 1984
The Trademark Counterfeiting Act of 1984, 18 U.S. Code Section 2320, enforces monetary fines as well as jail time for the parties in violation.
“Trafficking in illicit goods” is the common phrase that describes all forms of illegal trade. This includes piracy (copyright infringement), counterfeiting (trademark infringement), smuggling of legitimate products, and tax evasion.
Counterfeit merchandise not only refers to fake items being sold as real ones, but also the sale of an authentic item on the black market to avoid paying taxes. By selling through underground and unregulated channels, such perpetrators avoid normal regulatory controls and are able to sell items without regard for the health and safety of the consumer, or the effect it may have on the global economy.
Penalties for Counterfeit Merchandise
According to federal law, any individual or party who distributes, wholesales, or sells counterfeit merchandise faces substantial penalties:
- Imprisonment for the first offense up to 10 years and up to 20 years for repeat offenders. If an offender knowingly or recklessly causes death due to the unlawful sale of goods or merchandise they can face life in prison.
- Fines up to $15.0 million for corporations and $5.0 million for individuals who are repeat offenders.
- Seizure and destruction of counterfeit merchandise the wholesaler or distributor has in their possession.
- Civil lawsuits brought by the owner of the trademark under federal trademark law to recover damages, profit losses, attorneys’ fees, and other injunctive relief.