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Intellectual Property

How the PRO IP Act of 2008 Changes Trademark Anti-Counterfeiting Law

            The PRO IP Act of 2008, officially the Prioritizing Resources and Organization for Intellectual Property Act, increases penalties for civil and criminal counterfeiting and creates a new intellectual property enforcement coordinator at the federal level. While the law’s primary focus is counterfeiting of copyrighted material, it does makes some important changes to trademark law.
            First, the law raises the minimum and maximum statutory damages award a successful trademark owner can receive. The level of statutory damages in counterfeiting cases had not been raised since 1996 and Congress chose to double the possible statutory damages awards.
            A plaintiff that successfully pursues a civil counterfeiting action can choose between actual damages or profits and statutory damages. See Gilson on Trademarks § 5.19[4][b][v][B]. Under the new law, if the plaintiff elects statutory damages, it will receive an award of $1000 to $200,000 per counterfeit mark per type of goods sold, offered for sale or distributed. 15 U.S.C. § 1117(c)(1). The previous law allowed an award of $500 to $100,000 per counterfeit mark. In cases of willful counterfeiting, a court may now award up to $2 million per counterfeit mark per type of goods sold, offered for sale or distributed, up from $1 million under the prior law. 15 U.S.C. § 1117(c)(2).
            Second, the law imposes substantial monetary payments on some parties that intentionally assist counterfeiters. Where a party provided goods or services necessary to the intentional use of a counterfeit mark and intended that the recipient “would put the goods or services to use in committing the violation,” it must pay treble damages and attorneys’ fees. 15 U.S.C. § 1117(b). Previously, the only party subject to treble damages and attorneys’ fees was the one who intentionally used the counterfeit mark in connection with the sale, offering for sale, or distribution of goods and services.
            Under prior law, parties who intentionally induced others to counterfeit or who provided goods or services to intentionally facilitate counterfeiting were liable for contributory counterfeiting. See Gilson on Trademarks § 5.19[4][c]. However, this new provision adds a substantial exposure to damage awards for those parties in order to deter contributory as well as direct counterfeiting.
            Third, under the PRO IP Act, it is now a violation of Section 42 of the Lanham Act (15 U.S.C. § 1124) to export counterfeit goods from the United States. 28 U.S.C. § 2320(h). See Gilson on Trademarks § 5.20[1][a][i] for more on Section 42, which forbids the importation of goods bearing infringing marks or names.
            Fourth, records that are seized under an ex parte seizure order will now be subject to a protective order as to the use of any records or information that is seized, in addition to a protective order as to discovery of those records. The protective order will provide for procedures that ensure that “confidential, private, proprietary, or privileged information contained in such records is not improperly disclosed or used.” 15 U.S.C. § 1116(d)(7).
            In its criminal counterfeiting provisions, the law increases the maximum penalties for trafficking in counterfeit goods where the defendant knowingly or recklessly causes or attempts to cause serious bodily injury or death. 28 U.S.C. § 2320(a)(2). In addition, the civil and criminal forfeiture of counterfeit property to the United States is now treated under 28 U.S.C. § 2323. See Gilson on Trademarks § 5.19[5] for a discussion of criminal counterfeiting violations and punishments.
            Finally, the legislation creates the position of IP Czar, actually called the Intellectual Property Enforcement Representative, to be appointed by the President with the advice and consent of the Senate. In general, this executive branch official will coordinate the development of a Joint Strategic Plan at the federal level to reduce counterfeiting and infringement in various ways. He or she will also guide federal departments and agencies on intellectual property policy issues. This position will be supported by an advisory committee made up of representatives from various agencies, including the FBI, the State Department and the United States Patent and Trademark Office.
            For a full discussion of United States counterfeiting law, see Gilson on Trademarks § 5.19.
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