Counterfeiting and piracy are a form of theft that has been steadily growing in recent years, reaching an estimated value of up to US$917 billion a year for the illegal trade in goods alone, according to the International Chamber of Commerce. The global value of digital piracy in movies, music and software reached a further US$213 billion in 2015.
Counterfeiting has a damaging effect on business, the economy and the general population. Think of the health risks when taking a counterfeit medicine, for example, or using a product that hasn't been subject to rigorous healthy and safety standards. It's alway best to avoid counterfeits where possible!
According to Lapixa, more than half (51.66%) of all counterfeits came from China, but were also produced in Southeast Asia (9.04%) and Eastern Europe (4.47%). The production costs in these countries are low due to the use of cheap source materials and poor working conditions, furthermore costs for development and marketing basically do not exist.
79 percent of all companies are affected by product piracy, even several times a year. The product counterfeiting occurs across all sectors and ranges from handbags to electronic devices to drugs, machines and entire industrial plants.
Preventing counterfeiting is not easy, as the laws against it are full of loopholes and are often loosely enforced. Stricter laws are difficult to pass, because of fears that they will stifle creativity and allow bigger companies to bankrupt smaller designers with copyright infringement claims. How close in design does something have to be to infringe on your copyright? What are you allowed to copyright? Adidas claims the 3 stripes for example, but how do you stop a company using a similar design with 4 stripes? There are many grey areas.
Exact replicas are different however, with intellectual property laws ostensibly providing strong protection against this.
There are different ways to protect your intellectual property. Melwani & Chan LLP, a New York City Shareholder Rights & Intellectual Property law firm, give a brief overview on their website:
"Copyright protection is generally not available to a clothing designer for the garment itself," they write. However, copyright protection is available for a print/or design pattern and the two-dimensional sketch."
"Why is copyright protection available for the sketch and not available for a garment? Copyright protection is usually denied to clothing on the grounds that they are considered useful articles. Copyright will only apply when the article’s expressive design component is separable from its useful function. Since clothing is considered a useful article, a court will generally take the view that a garment’s expressive component cannot be separated either physically or conceptually."
"A fashion designer seeking copyright protection from a knock-off designer must convince a judge that either the item of clothing is not functional or that its artistic design is separable from its utilitarian purpose. A court is unlikely to view the garment itself as not being utilitarian. However, courts will give copyright protection to the design pattern itself and/or the two-dimensional sketch, since they are considered pictorial works."
"A distinction should be drawn between a garment and fashion accessories such as a piece of jewelry, since jewelry is generally considered to be non-utilitarian, and therefore eligible for copyright protection as pictorial and/or sculptural work."
"A patent is granted for a new and useful process, machine, manufacture, or composition of matter and it must advance the prior art in a way that that is non-obvious. A design in fashion is generally not considered a process, machine, manufacture or a composition of matters. Occasionally a design patent will be granted to a designer to protect the appearance of a fabric, garment, handbag, eyeglasses, etc. For example, Burberry has a design patent for its trench coat."
"Even if courts allow a fashion design to be patented, the amount of time it takes to acquire a patent makes this process impractical for most designers. A United States Patent and Trademark Office application can takes years to review and only about half of them are granted a patent and by then the garment would most likely be out-of-season."
"In some cases, pursuing a utility patent may make sense for a designer. For example, if they had invented a new fabric such as Goretex® or created a new technology, such as method for dyeing garments."
"A trademark is any word, name, symbol, device, or combination thereof that is used by a merchant used to identify their goods and distinguish them from those manufactured and sold by other merchants. For example, Louis Vuitton’s “LV” logo or Chanel’s “Double C” logo are trademarks. Trademark protection in the United States is very strong and potentially infinite in length, as long as the mark is being used in commerce to designate the source of the goods."
"The key to determining if another designer is infringing on a trademark is the likelihood that ordinary consumers in the marketplace would confuse the original trademark and the allegedly infringing trademark. For example, Adidas won a 305 million dollar judgment against Payless Shoes in 2008 for selling two and four stripe shoes that looked very similar to Adidas’s three stripe shoes."
So it turns out that using 4 stripes can get you into trouble after all! Especially if your company can afford good lawyers like those at Melwani & Chan LLP. Scroll down below to see the rest of the list, and let us know what you think in the comments!
