The producers and distributors of counterfeit products are making extensive use of bogus web sites to market their knockoffs of established brands. Using web sites allows them to circumvent retailers who may recognize the counterfeits or be wary of the bad will they might generate by selling fake products. Web-based selling also reduces the counterfeiters exposure to jurisdictions that might crack down on their piracy.
The counterfeiters' web sites may appear almost identical to the official sites of the actual makers. The site domain names may even include the actual makers' trademarks. Other sites may claim to be authorized resellers. As a result, customers believe they are buying the authenticate article. When a customer buys and receives the inferior knockoff product, the actual maker not only loses a sale, but often the goodwill of the customer, who is usually disappointed with the purchase.
Shipments are typically from contract fulfillment operations. Orders for multiple websites can be forwarded to a single fulfillment house. If the actual makers shut down one fulfillment house, another can be quickly and almost seamlessly brought on line. As a result, the counterfeiter has little physical presence in the United States except for the financial accounts receiving the orders and the inventory at the fulfillment house.
The counterfeiter may also have a minimal physical presence overseas, presenting a whack-a-mole problem when trying to shut it down. The counterfeiter is typically organized as a shell company that contracts for everything. If it is shut down, the pirates simple organize under a different name and continue making knockoffs using the same suppliers without pause.
Counterfeiters can be effectively defended against by shutting down the bogus web sites that sell fake products. Shutting down the web sites cuts much of the counterfeiter's most profitable business, and often convinces the pirates to pursue less vigilant victims.
The easiest way to shut down a bogus site is through the ICANN Uniform Dispute Resolution (UDR) process. The fees and costs are relatively low, and the whole process can be completed in a few months. You need only show that 1) the domain name is identical or confusingly similar to your mark; 2) the holder has no legitimate interest in the domain name; and 3) the domain name was registered in bad faith. This is easily done for bogus sites.
However, using the ICANN UDR can still present you with a whack-a-mole problem. The counterfeiters may be able to set up new sites faster and more cheaply than you can shut them down. Because they rely on paid advertising rather than organic search, a new web site can be up and in business in minutes.
In these cases, it is usually more effective to sue in Federal court for trademark infringement or under the anti-cyber squatting act. This type of action has proved successful in shutting down multiple sites, as well as allowing the actual maker to shut down future sites without a new lawsuit.
Counterfeiters can be stopped. Businesses that have aggressively defended against counterfeiting find that a strong defense quickly pays for itself.
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