All too often, a company uncovers the fact that their intellectual property is being misused and they make rash decisions. Their first call to us is, “Hey, someone is selling my products and they are clearly counterfeit.  Can you contact law enforcement and get them arrested?”

Counterfeiting is an intent-based crime and in order for criminal prosecution to be an option, the counterfeiter must be aware and have knowledge that the products they are selling or distributing are in fact counterfeit.

The best course of action is to secure legal assistance and evidence before you play private investigator and potentially hurt your case. With expert counsel, you can collect the evidence that will standup in your court case against the infringer.

The 3 Steps to Proving Counterfeiting Intent

Step 1: Qualified Evidentiary Buy (undercover) – Your experienced, licensed, undercover investigator will purchase the counterfeited items and include all of the necessary documentation to withstand legal scrutiny (Buy Report / Chain of Custody). Additionally they will obtain photos/video and secure statements from the subject to support enforcement actions.  Once the counterfeited item is secure, it can be inspected to verify if it counterfeit or genuine.  It is important to have someone who is trained properly authenticate the product(s) as counterfeit.

Step 2: Cease & Desist Letter -A brand owner can put an individual or company on notice by sending them a Cease & Desist Notice.  Once the C&D Notice is sent a follow-up investigation should be conducted to determine if the infringer is or is not in compliance.

Step 3: Follow-up discreet inspection to to determine if subject is in compliance following C&D.  A second qualified evidentiary buy (undercover) from an alternate front company might be required.

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Many companies are in such a hurry to get to market with their company launch or latest new product that they overlook a very critical step. Protecting the intellectual property (IP) of the company and enforcing the use of it.  Experts agree that if you don’t protect your IP it can fall prey to those who capitalize on all your hard work and investment. In addition, the courts may not support legal action if you delay in a response to someone using your IP.

The first step in enforcing your brand is to actively conduct searches for potential infringement of your mark.  The common searches include federal and state trademark registrations, domain name registrations and common law uses (Corporate Filings/Fictitious Business Names/DBA’s) of your mark(s).  Many use a commercial search provider like CT Corsearch or Thomson Compumark to handle these types of monitoring services.

How Can We Tell if We Have an Infringement Problem?

Often times, companies are tipped off about infringers or unauthorized resellers by their sales representatives, authorized distributors and/or Google alert-type notifications.

Once potential infringers are uncovered, a business owner will often contact their IP Counsel and discuss the situation.  Your attorney will likely conduct some sort of an investigation prior to preparing and sending a Cease & Desist letter.  Counsel will need to take diligent steps to verify that the product being sold by the alleged infringer is in fact counterfeit or grey market.

The best way to verify the infringement is to engage an investigation firm with experience in IP cases. Specifically, you want to work an experienced firm with front companies used  to make purchases discreetly at the wholesale or retail level.  This will also aid counsel in understanding where the counterfeiter is located and provide additional information (phone, fax, email, products, date of first use, sales, scope, distribution warehouses, etc.).

Avoid Pre-Date Landmines

Attorneys will also need to verify that their client’s use in commerce pre-dates the alleged infringer. In other words, don’t poke the bear until you have well-documented, stand-up-in-court evidence that you were the first to market.

One of the worst things that can happen is that an infringer receives a Cease & Desist letter from a major brand or large company which triggers them to pursue or counter-sue. The major brand or large company may be on the losing side of the argument on the basis that alleged infringer’s use pre-dates the use of the notifying party.

Diligence Pays Off in the End

If infringements are dealt with quickly and effectively a brand owner can restore faith with their resellers, distributors, consumers and brand representatives.  Additionally, infringers that are approached and treated seriously are less likely to continue to infringe on those brands that are enforcing their IP rights.

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Once you determine that your products are being infringed upon (counterfeited),  it is time to take action.  Determine how far down the supply chain the products have made it (wholesale, retail, online, eBay, Amazon, Alibaba, etc.) and document all of those outlets.

Once the scope and scale of the issue is determined, it is time to plan your legal strategy with an investigator and legal counsel. The source of the infringing product, which could be a rogue company or just an individual in the supply chain, needs to be isolated and examined when we are talking about diverted/gray market goods.

The most common source of infringing goods is found on the Internet.  Online resellers can quickly and cost-effectively set-up an online presence, market their products and transact business anywhere, any time.  They can also take steps to privatize their domain registration (WHOIS), so as to not disclose the owners name and their office/warehouse location. They will even make up fake names and information in the ‘About ’ portions of their Websites to further mislead buyers and those trying to protect their IP.

6 ways to uncover the source?

  1. Piercing privatized domain registrations via established methods and resources.
  2. Undercover buy and trace.
  3. Search of historical domain name ownership records.
  4. Discreet calls and emails to the infringer
  5. Advanced database research (commercial databases that only investigators have access to)
  6. PIERS (import/export records) searches

 

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The use of surveillance as a strategy is something that attorneys, insurance companies, brand owners and businesses are utilizing to develop crucial evidence & information.

Here are some example of how you might utilize surveillance:

  • Insurance Fraud / Workers’ Compensation (Determine employee’s activity level)
  • Premises Liability (Buildings, Offices, Construction Sites)
  • Asset Searches / Judgment Recovery (Employment, Businesses, Banks)
  • Job Site Monitoring (Misstatement of Time/Labor, Materials theft, Accidents)
  • Trade Secrets Theft
  • Non-Compete Violations
  • Competitive Intelligence (Raw Material Shipments, Finished Product, Staffing, Operations)
  • Political Intelligence (Discreet meetings, Alliances, Background)
  • Improper use of company time (FMLA, Workers’ Compensation)
  • Environmental Issues
  • Auto Accidents (Cross-walks, Lighting, Traffic Light Timing)
  • Threat Detection / Mitigation
  • Improper use of residential or commercial property
  • Trademark Infringement / Counterfeiting

In order to obtain the information and evidence that you need engage with a licensed and experienced private investigator who conducts surveillance on regular basis.  A trusted investigator will maintain current equipment, utilize a discreet surveillance vehicle and be able to conduct the surveillance investigation without being made or burned.  We also suggest that any invoices, reports, case notes or communications regarding your surveillance investigations should be directed toward your attorney to keep the information privileged and confidential.

Workplace Investigations- Why?

Workplace violence, sexual harassment, Worker’s Compensation claims, theft (Intellectual Property, Internal, External), discrimination and data breaches can dramatically impact corporate culture and reputation; not to mention revenues.

A professional, trained, investigator that is experienced can provide your company and counsel with objective information you need to make crucial business decisions. Workplace investigations may include conducting interviews of any witnesses and involved parties.  Background checks on adverse parties and witnesses can prove to be useful to develop crimes of moral turpitude that can impact the credibility of their testimony.

Upon notice of Workers’ Compensation claims an employer should move quickly to secure statements from the injured worker, witnesses, and preserve any evidence (video/photographs).  If there is suspicions that an employee who was allegedly injured in the course and scope of employment and is collecting Workers’ Compensation benefits is believed to be working elsewhere or is conducting activities that are above and beyond their restrictions then conducting an activity check and or surveillance should be pursued.

When the decision is made to terminate an employee keep in mind that the situation could turn hostile.  According to OSHA statistics taken in 2012 over 2 million employees have reported being victims of workplace violence.  Steps should be taken to secure the employers facility via security personnel and the employee could be covertly followed to insure that he/ does not return to the employer’s location and cause a stressful and potentially threatening situation.

According to a study published by the Society for Human Resource Management workplace violence can cause the following issues in organizations;

  • A decrease in morale (29{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})
  • A perceived decrease in safety (28{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})
  • Less trust in coworkers (28{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})
  • Increased levels of stress and depression among workers (24{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})

Companies can mitigate workplace issues by conducting, diligent, pre-employment background checks on their employees, applicants, vendors & partners.

In a world where all the buzz is about counterfeit goods; the real question is how many of the suspected counterfeit goods are really “grey market/diverted goods.”  The Alliance for Grey Market and Counterfeit Abatement reports that $40 billion of tech products are sold on the grey market each year.

According to Wikipedia a parallel import is a non-counterfeit product imported from another country without the permission of the intellectual property owner. Parallel imports are often referred to as grey product, and are implicated in issues of international trade, and intellectual property.

Brand owners are always watching or monitoring their Intellectual Property (Trademarks, Domain Names, Patents, Copyrights) and when they come up with leads that they believe are possibly counterfeit they take action.  They will get advice from an attorney and then conduct some sort of investigation, whether it is internal or they enlist that help of a third party investigation firm specializing in the intellectual property investigations (trademark infringement, online protection, anti-counterfeiting & undercover buys).

When the products purchased end up with the brand expert for review after a formal buy report and investigation report have been drafted and the chain of custody has been properly signed there comes a moment of truth.

First, can the brand expert determine first if the product is in fact counterfeit?

Second, if the product turns out to be genuine how did it end up in the hands of an unauthorized retailer or distributor within their supply chain?

In the ever changing and ultra-competitive business environment supply chains can be become very complex as companies try to maximize distribution channels and optimize revenues and profits.  As companies grow it is become increasingly important that to thoroughly screen, track and audit contract manufacturers and partners that help them execute on their business plans.

Companies can use a trusted investigation firm to handle due diligence background checks on vendors and partners.  Employment background checks on their new employees.  Trademark and domain name monitoring to see who is registering marks that could be infringing and who is registering and using domain names that contain their marks or brands and are selling their products.  Undercover investigations on contract manufactures to insure that business agreements are being kept and that product is not being sold out the backdoor.  Companies should also be mindful of the ways they can mitigate risk in their operations.  Keeping their employees safe, mitigating accidents that can cause business stoppage and investigating claims and theft can mitigate insurance costs.

Why would an investigator be needed to assist in getting a trademark cleared and registered?  How could an investigator assist in monitoring and identifying commercial exploitation (infringement/counterfeiting)?

In the United States the United States Patent and Trademark Office (USPTO) has the duty of accepting trademark filings and having them reviewed (examined), rendering opinions, handling the opposition process and eventually registering and maintaining them.  Because the United States is a first to USE country and not a first to FILE country trademark investigations are often a key element in the Life Cycle of a Trademark.

CREATION – SCREENING – INVESTIGATION – FILING/REGISTRATION – PROTECTION – MAINTENANCE – COMMERCIAL EXPLOITATION

We often get involved following a full trademark or advanced Internet search to determine if common law rights exist for someone that used a mark in commerce, but has not obtained a Federal or State Registration. Common Law uses can often be found by searching Corporate Filings, Fictitious Business Names (FBN) or DBA’s, Phone Directories, Professional License Databases and many other business directories.

Our clients often call on us to answer the following questions;

  • When was the mark first used in commerce?
  • Can you identify the person or entity using this mark?
  • When did the mark appear on the subject’s website?
  • When did the subject cease use of the mark in commerce?
  • What types of goods and services are being sold bearing the mark?
  • Where are the goods and services being sold? (Statewide, Online, National, Global)
  • Determine channels of trade (Retail, Wholesale, Distributors)
  • Who are we tangling with? (Revenue, Size, Scope, Litigation History, Assets)
  • If the mark is no longer in use can you buy it and the accompanying domain name?
  • Can you make an undercover, evidentiary-trap buy, of the goods bearing the mark(s)?

We receive these inquiries on a daily basis and investigate cases throughout the world that give our clients answers to these important questions.  The investigation portion of the trademark life cycle is a key piece in giving the client the information that they need to make an important business decision.

The next question that we often get is, “This sounds great…but how do you do this?”  That is a tricky question because all cases have different aspects (pre-C&D Letter, pre-litigation, litigation, etc.).  The short answer is that we have been investigating these types of cases for well over 20 years and have trained investigators that know where to look for the information and how to frame questions in the proper context to verify pertinent information when interviewing sources.

We also have a network of “front companies” throughout the United States that allow us to obtain detailed information in a very discreet manner that does not jeopardize the integrity of the case (see picture above).  Additionally, our front companies allow us to secure undercover purchases of infringing or counterfeiting goods in the venue of choice based on where the goods are purchased and shipped.

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Santoni Investigations, an NTI Santoni, Inc. company, was involved in an anti-counterfeiting investigation / operation in conjunction with Microsoft and Federal Law Enforcement to solicit the sale of software from China into the United States. The successful operation yielded several targets, one of which was a significant player in the counterfeiting trade. The successful counterfeiting enforcement in this case involved a team of investigators, legal professionals and law enforcement.

The key player, who was later identified as Tony Nguyen d/b/a Sin Technologies, was one of the targets that Santoni investigators engaged with. Nguyen was involved in the importation and trafficking of counterfeit software that was coming from China.

According to sentencing records in the case of USA v. Nguyen (Case#: 2:12-cr-00783-DSF-1- United States District Court Central District of California) Tony Nguyen was sentenced to 5 years probation with a condition of 12 months home detention. It was also ordered that Nguyen pay $25,000.00 in restitution, $1,000.00 fine and a $100.00 special assessment. Nguyen was charged with, felony, trafficking in counterfeiting goods.

“We are pleased that our efforts lead to a significant victory for our client,” said Tim Santoni, president. He went on to say, “The Microsoft investigators, Federal agents and US Attorney’s office should be commended for their efforts in bringing this case to justice.”

The operation involving Santoni Investigations, Microsoft and Federal Law Enforcement led to numerous undercover purchases from various targets in the United States and China. Santoni investigators shared useful information and evidence, which was shared with Federal Law Enforcement. The search warrants executed and intelligence sharing provided Microsoft with useful information that they can use to protect their software and combat counterfeiting around the globe.

“The counterfeiting trade is something that hurts businesses and the United States economy in more ways than most people know,” said Tim Santoni.

Counterfeiting is a global trade that costs the United States government billions of dollars every year. According to statistics compiled by the IACC (International Anti-Counterfeiting Coalition), counterfeiting costs U.S. businesses $200 billion to $250 billion annually. Counterfeit merchandise is directly responsible for the loss of more than 750,000 American jobs. Since 1982, the global trade in illegitimate goods has increased from $5.5 billion to approximately $600 billion annually. Approximately 5{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929}-7{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929} of the world trade is in counterfeit goods. U.S. companies suffer $9 billion in trade losses due to international copyright piracy. Counterfeiting poses a threat to global health and safety.

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Oakley glass counterfeit picture

Consumers and brand owners stand to benefit from Isitfake.org a website launched by investigation firm, Santoni Investigations, to facilitate the identification and reporting of counterfeit goods. Isitffake.org makes it possible for consumers to submit suspected counterfeits for evaluation. Each “fake finder” report is evaluated to make a determination, working with brand owners whenever possible, as to the authenticity of the item reported. Confirmed counterfeits or “fakes” are posted to the site’s gallery, becoming a searchable resource for other consumers.

According to the Global Intellectual Property Center of the U.S. Department of Commerce, intellectual property theft costs U.S. businesses between $200 billion and $250 billion each year and the loss of 750,000 jobs, and poses risks to public health and safety through exposure to and use of counterfeit products.

IsItFake.org has been created to help combat the problem of counterfeiting in three ways,” explained Mike Santoni, Director of Investigations at Santoni, which initiated the IsItFake.org project. “First, consumers can reach out for help determining whether an item they have purchased is legitimate branded merchandise, or a knock-off. Secondly, each time isitfake.org is able to conclusively identify and report on a counterfeit, it adds to the searchable gallery on the site as a resource for the public. And finally, it provides brand owners with a new source of information about knock-offs that they can use in their anti-counterfeiting efforts.”

Reports of counterfeit items can be submitted through IsItFake.org anonymously. “We thought it was important that consumers be able to use the site without having to identify themselves, so there’s no reason not to submit a question or report through the site,” explained Tim Santoni, President at Santoni.  “Our objective is to collect and share intelligence about counterfeits and how they are distributed and sold, which will help consumers better inform themselves and help brand owners protect the integrity of their brands, products and reputations.”

The site is located at IsItFake.org

Santoni Investigations, a leader in intellectual property investigations and domain name acquisitions, reveals the best time to call on an investigation firm to acquire a domain name.

When the domain name needed is already registered, parked or being used by another business don’t give up hope.  There are creative ways to acquire domain names that businesses vitally need to execute their marketing plans and drive traffic to their web properties.

If cost mitigation, proving evidence of cyber-squatting and un-masking who the true owner of the domain name are an issue for you and your IP counsel then an investigation firm can be brought in to assist.

The Santoni acquisition team provides clients with information regarding the value of the domain name, identifies the owner (privatized registrations) and has a proven negotiation process.  When a proper valuation is conducted, the domain name owner/decision maker is identified and a sound negotiation strategy is used the client can obtain the domain names they need while mitigating cost and saving time.

In the process of conducting the domain name acquisition the Santoni team often develops evidence to support an Anticybersquatting Consumer Protection Action (ACPA) or Uniform Domain Name Dispute Resolution Policy (UDRP) action should those remedies be necessary to secure a domain name.

Additionally, an investigation firm with a global footprint that partners with registrars can provide localization requirements necessary to secured Country Code Top-Level Domains (ccTLD).