Fooling Around with Counterfeits: Don’t

Fooling Around with Counterfeits: Don’t

The Electrical Safety Foundation International has released its 2011 Holiday Safety Toolkit, and it deserves your attention.  In addition to valuable information about cooking safely, decorating safely, and heating your home safely, there are tips for purchasing safely including the importance of consumer attentiveness to the presence of counterfeit electrical products that are in the marketplace.  The credibility of this warning is highlighted by the fact that similar warnings are voiced around the world by reports of seizures of unsafe counterfeit electrical and electronic products seized at ports, at flea markets, and in stores.  Just yesterday, US Customs and Border Protection announced that it had recently seized 151 life-size, counterfeit Christmas decorations — lights in the shape of Santa Claus, a polar bear, and a reindeer with electrical adaptors that had not been evaluated for safety by Underwriters Laboratories.  While 151 units may not sound like a large number, Customs reported that the seized products had an aggregate value of $173,000.  If you were in the mood for lighting a fire this holiday season, these display characters could provide just the spark.  In England, the consumer watchdog group, Which?, released a report on counterfeit consumer products including their findings on unsafe, counterfeit battery chargers and hair straighteners. This week, U.K. authorities reported on a seizure of counterfeit goods that included Dr Dre headphones and hair straighteners that were potentially unsafe.  This week, the Royal Canadian Mounted Police in the province of Manitoba put on display a wide variety of counterfeit products seized in recent years — including counterfeit circuit breakers, batteries, light fixtures and cell phones, among others — while reporting that the value of counterfeit products seized in Manitoba in 2011 totaled more than $1 million.  In Ghana, cell phone manufacturer Nokia announced that it was beginning an aggressive campaign to identify counterfeit versions of their mobile handsets to consumers.  “The counterfeit phones pose health dangers because they do not go through rigorous testing like Nokia would do – their batteries also contain mercury and there have been incidents of some of those batteries exploding and causing fires whiles on charge or in use,” Nokia said. In India, police in Delhi recently arrested a gang that was trading in counterfeit wire and circuit breakers.  Just last week, a businessman from Texas pleaded guilty to selling counterfeit circuit breakers here in the United States, following an investigation by U.S. Immigration and Customs Enforcement (ICE).  The defendant purchased the circuit breakers with the counterfeit marks of several circuit breaker manufacturers, and then applied counterfeit UL labels on the product in the US.  In a raid back in 2009, ICE seized approximately 96,000 counterfeit circuit breakers with a value of about $4.7 million. 

Search the Internet and you can find more of these reports.  And that brings me to my next point:  Search the Internet to purchase a product and you may stumble upon the counterfeit goods and even unwittingly be fooled into thinking they are genuine.  Several of the reports just described have observed that commerce on the worldwide web is the medium through which some of the transactions in counterfeit products occurred.  As reported by the Halifax Courier in the U.K, "There are also copycat websites which appear to be the brand’s own website, but which are set up by rogues to sell counterfeit products or to take consumers’ money with no intention of sending out the goods, which are not only inferior quality, but which carry serious safety concerns – particularly in relation to electrical items such as GHD hair straighteners, mobile phone chargers which may never have been safety checked."  I wrote about this phenomenon in a previous posting on this blog a couple of years ago, reporting on a fake English-language website selling unsafe, counterfeit hair straighteners that appeared to have a presence in the United Kingdom, but in fact was located in China. 

Congress is attempting to address what is known as the "rogue website" issue, and legislation is pending in Congress.  The Senate Judiciary Committee has approved a bi-partisan bill to address the issue.  The House Judiciary Committee is considering similar legislation, which is now bogged down in a debate from the creative content providers and the Internet community.  Neither side disputes that rogue websites are a problem.  While the Justice Department has been aggressive in attacking rogue websites, the debate centers on the rights of private parties to prosecute rogue websites.  The legislation has a narrow focus.  A rogue website is a website that is devoted almost entirely to selling counterfeit and pirated goods.  So it will not address counterfeit products that are sold on eBay, Amaxon, or, and similar sites which also promote the sale of genuine goods.  It's difficult to assess which is more insidious in terms of whether consumers are fooled by a website that looks entirely legitimate or fooled by the fact that the fakes are intermingled with the genuine goods and cannot tell the difference. 

The Senate legislation also contains an important provision that will address a situation that has emerged in recent years when Customs and Border Protection issued a legal opinion that suggested that customs officials might violate the Trade Secrets Act if they shared certain information, including suspicious product samples, with trademark owners.  This legal opinion has regrettably led to a reduction in useful information shared that could more rapidly lead to the determination of whether goods are fake or genuine.  The purported "trade secrets" that were often redacted by Customs was product information put on the product by the manufacturers themselves so they could determine whether the goods were genuine, so it was difficult to comprehend who was being protected in this scenario.  Just today, a House Senate conference committee has released the Department of Defense Authorization bill, which has incorporated the Senate Judiciary's language dealing with the trade secrets issue.  Congress is expected to take up this bill this week. 

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