Lock them up or make they pay?

What shall we do with them?
(photo by hmmlargeart)

The IPKat put in four 16-hour days at the recent International Trademark Association Meeting in San Francisco, but was still unable to cover more than a small amount of the programme.  He is therefore grateful to his friend and fellow blogger Aurelia J. Schultz for providing him with this note on one of the Table Topics which she attended:

"Counterfeit Goods, Civil Liability and Criminal Punishment 

Lock them up or make them pay? An international group of lunch munchers explored the various considerations in this choice at one of this year’sINTA Table Topics: The Intersection of Criminal Prosecution and Civil Trademark Enforcement, moderated by Michael J. Allan of Steptoe & Johnson LLP. In opting for one or other option, there are two main questions to ask: What do you want?  How likely are you to get it? 

What do You Want? 

In China, a successful criminal prosecution will get you the satisfaction of jail time for the defendant and a guarantee that confiscated counterfeit goods will be destroyed on 15 March, National Customs Day, when all confiscated counterfeit goods from across the country are destroyed.  It will not however, get destruction of the machinery used to produce the counterfeit goods and it will not get the trademark owner any money.  In the US, a successful criminal prosecution can include money for the trademark owner in the form of restitution, but the amount is far less than possible damages in a civil suit. 

Occasionally, it may happen that law enforcement begins a criminal investigation before the trademark owner brings a civil suit.  Things can get a little tricky when both cases wind up in the court system at the same time.  In the United States, the common procedure is for the defendant to ask for a stay of the civil proceedings until the criminal proceedings are complete.  Whether the court grants this stay can greatly affect the procedure of the civil case; thus the plaintiff needs to decide whether to argue in support of or against the stay.  A stay can make things easier for the plaintiff in the civil case because the government will do a large part of the discovery work through its investigation.  Plus, if the defendant is found guilty in the criminal case, that can be used to show liability in the civil case.  However, not having the stay can also benefit the plaintiff in the civil case by forcing the defendant to make some tough decisions.  Under the US Constitution’s Fifth Amendment, the defendant has a right not to testify in a criminal proceeding.  But, if he chooses to testify in the civil case, that right is considered waived.  In Latvia, there are no choices to make; the stay is automatic. 

How Likely are You to Get it? 

One notable consistency across the countries, if you want criminal enforcement, you’re probably going to have to do the dirty work yourself.  Governments are short on resources, money, time and personnel.  In the United States, trademark owners who want to close down counterfeit operations are more likely to get results working with the local law enforcement and prosecution offices, rather than with any of the various federal agencies.  In China, success is more likely with engagement of officers at higher government levels, most notably the Ministry of Public Security.  Local decision makers are often friends with the counterfeiters. 

Convincing law enforcement to get involved can be challenging, even if you’re able to foot the bill.  Generally, you need to show that involvement in your case benefits the greater public.  In the United States, all you have to do is find some way to persuade law enforcement that this counterfeit goods operation is linked to terrorism.  In Latvia, the sell is a little more difficult unless the counterfeit good is physically dangerous; loss of tax revenue is often the best point.  But there are also some places where the convincing is not as needed.  In Latin America, criminal prosecution is the standard for trademark infringement and counterfeit goods.  Civil cases just take way too long.

So when do you go for the money, when do you try for criminal enforcement and when do you have to choose?  Generally, you go for the money when you want money and you go for criminal enforcement when you are dealing with repeat counterfeiters and want the whole operation shut down, provided you can find a willing government partner and do some funding.  [Which  brings up a very interesting question about access to justice, but I’ll leave that for the comments section…]".