Page 30 - AVN May 2015

BUSINESS
STOLEN REPUTATION
Counterfeit products add injury to insult
that they are dealing with XYZ. Basement Dude’s DVDs are different. Basement Dude is
selling low-quality DVDs that the consumers and retailers will think came from XYZ. In
fact, what has been regularly occurring is that disgruntled consumers of Basement Dude’s
XYZ knock-offs return them to XYZ, complaining about defective XYZ products. Plus,
the consumers who were ripped off by Basement Dude likely will look next time for better
DVDs from a different manufacturer.
Basement Dude’s knockoffs are defined by a legal word of art, “counterfeits.” Readers
of this column who are victimized—both adult video producers and pleasure product
manufacturers—are understandably bent out of shape by counterfeiting.
However, Congress has come to the rescue. Does this mean Congress was helping
adult? Well, perhaps accidentally, but it did. Like copyright infringement, counterfeiting
impacts a huge universe of businesses, not just adult manufacturers. There are counterfeit
Swiss watches, high-end handbags, designer clothes, along with toys, auto parts and
everything else imaginable. Those counterfeit products cause damage to large corporations
that have considerable political clout. But the counterfeit products that cause real alarm
are things like aircraft parts, pharmaceuticals and medical supplies. How would you feel
about boarding a jet knowing that the recently replaced gyroscope that guides landings
was made in some Basement-Dude-type operation in China, rather than in the aircraft
manufacturer’s factory in Seattle? Not a pretty picture!
Because the Seattle gyroscope manufacturer stands both to be held accountable for a
plane crash caused by failing gyroscopes and to lose a sale every time a counterfeit one
is installed, it is no surprise that the Gyroscope, Incorporateds of the world have worked
hard to garner Congress’ ear. And they succeeded when Congress enacted Trade Dress
Duplication and the Trademark Counterfeiting Act of 1984.
The Counterfeiting Act includes both civil and criminal remedies, although the latter is
of little concern to readers of this column, since none of us can imagine an FBI crackdown
on counterfeit adult DVDs. But the civil remedies are just as good for porn as they are for
pizzas. (That’s right, folks, it is possible to have counterfeit frozen pizzas!)
LEGALESE | By Clyde DeWitt
IMPORTANT IS THE ‘REGISTERED’
PIRATES, DUPERS, RIP-OFF ARTISTS, counterfeiters, whatever you want
PART. REGISTRATION OF A
to call them, regularly do more than just steal content. They often sell
TRADEMARK IS NOT AS SIMPLE
a dramatically inferior product—that appears to be the real thing—
besmirching the good name of the manufacturer that has worked so hard
AS REGISTRATION OF A
to earn a quality reputation. The broad support for anti-counterfeiting laws
punctuates the severity of the problem. But by the end of this article, the
lesson learned will be that anti-counterfeiting laws provide one more good
COPYRIGHT, SO USE OF AN ATTORNEY IS ALMOST
reason to register trademarks.
A hypothetical example is a good teaching tool, so let’s try one. XYZ
IMPERATIVE.
Video takes pride in its quality product, being sure the number of defectives
is low, the reproduction quality is good, and the packaging is first class.
Now, assume for the moment that Basement Dude’s abcdef.com website
posts snippets of some of XYZ’s quality DVDs on its garden-variety site
that steals content and puts it up as its own. What damage has Basement
Dude done? Well, maybe none. Basement Dude may not have reduced
XYZ’s sales of DVDs by one unit. But Basement Dude has unfairly profited
by broadcasting content that XYZ spent thousands to create, and without
paying for it. The remedy here against Basement Dude, of course, is found
in the copyright law: statutory damages ($750 to $150,000 per title for
willful infringement, plus costs and attorneys fees). The judge would
decide, based upon perceived XYZ losses and Basement Dude profits, what
statutory damages are warranted.
Now, consider Basement Dude’s next misadventure, with a DVD
replicating machine, a scanner and a color printer. Now, Basement Dude
can purchase one copy of XYZ’s hottest selling DVD, a gross of DVD cases,
a gross of writable DVDs, and—zap!—Basement Dude has 144 look-alike
(albeit lower quality) copies of XYZ’s hottest selling title. Basement Dude
is into this for maybe little over $100 for a gross of DVDs, but he can sell
them for half of XYZ’s $20 price, netting an easy grand of profit each time.
Basement Dude has done exactly the same thing to XYZ with his DVDs
that he did with abcdef.com by getting free content, right? Well, yes, but
more. Nobody downloading from abcdef.com receives the impression
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The civil remedies, 15 U.S.C. §§ 1114(1), 1116(d) and 1117(b)(c), include recovery
of a choice between statutory damages (of “$2,000,000 per counterfeit mark per type of
goods or services sold, offered for sale, or distributed”) or treble damages, plus attorney’s
fees. Available remedies also allow seizure of the counterfeit goods and the manufacturing
equipment, injunctions and other remedies one might expect.
Now, here is the rub: A “counterfeit of a [trade- or service-] mark that is registered on the
principal register in the United States Patent and Trademark Office for such goods or services sold,
offered for sale, or distributed and that is in use, whether or not the person against whom
relief is sought knew such mark was so registered ... that is identical with, or substantially
indistinguishable from” the relevant trademark. Important is the “registered” part.
And, while beyond the scope of this article, registration of a trademark is not as simple
as registration of a copyright, so use of an attorney is almost imperative. It requires
application to the Trademark office, approval by an examiner (and examiners always
complain about some nit-picky detail), publication for opposition and, finally, issuance.
Registrations are subject to upkeep requirements also.
Counterfeiters, beware!
Clyde DeWitt is a Las Vegas and Los Angeles attorney, whose practice has been focused on adult entertainment since
1980. He can be reached at clydedewitt@earthlink.net. More information can be found at ClydeDeWitt.com. This
column is not a substitute for personal legal advice. Rather, it is to alert readers to legal issues warranting advice from
your personal attorney.