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If Something Is Advertised As A Knockoff Product... Is It No Longer Counterfeiting?

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People throw around a variety of terms that sometimes need to have more specific meanings. When talking about physical goods, when people talk about "knockoffs" or "counterfeits" they're usually referring to a trademark issue. And, in some sense, this is what trademark is supposed to be about. For many years we've argued that trademark should not be lumped in with patents and copyrights, as the concept, purpose, intent, and even Constitutional underpinnings are entirely different. It's extremely frustrating to see people lump in patents, copyrights, and trademarks as "intellectual property" as if they were all similar. They are not. And trademarks are especially different.Indeed, we've always said that (unlike with the other two) trademarks are mostly a consumer protection law, so that you know who is actually making the things you're buying, and you know the origin of it. That is, we let Coke have a trademark on the Coca-Cola branding so that consumers don't get tricked into buying something that isn't Coke, while believing it is. This is why a key part of trademark law has always been the "likelihood of confusion." If there's no likelihood of confusion, than there isn't a trademark violation.But here's an interesting question: if someone is making a counterfeit product... is it still violating trademark laws against counterfeiting if buyers know it's counterfeit? A recent 9th Circuit Court ruling suggests... perhaps not. The case is not about this issue directly, but is about two separate companies who each (independently it appears) came up with products called "Eye Dew." One, Arcona, created an eye cream that in a tall cylindrical silver bottle. Arcona registered a trademark on the name. Around the same time (or even possibly a bit earlier), a different company, Farmacy Beauty, developed its own eye cream, also named EYE DEW. The packaging of the two products looks very, very different:


The ruling in the case finds that because the Lanham Act requires there to be a likelihood of confusion, and people are unlikely to be confused between these two products, then there's no counterfeiting claim. The court notes that while it has been recognized that a pure trademark infringement claim requires a likelihood of confusion, the 9th Circuit had never ruled directly on the question of whether or not a counterfeiting claim does, even though both stem from the Lanham Act. However, noting that everyone agrees that trademark claims require it, and the plain language of the statute says so, the court confirms:
We thus hold that a counterfeit claim requires a showingof likelihood of confusion under Section 1114.
And while the case is not about this, it raises a somewhat fascinating question first posed by law professor Mark Lemley. He notes that under this ruling, brands may not be able to go after obvious knockoffs if the knockoffs don't confuse anyone:
This is interesting on a few levels. First off, we've highlighted many studies showing that the vast majority of people buying knockoff products know they're knockoffs, and they buy them aspirationally -- knowing they can't afford the real thing, but wanting to build themselves up to buying the real thing, by first buying a knockoff. We've used those studies to question the common wisdom (often used by customs and border patrol and ICE) about the "dangers" of counterfeits. If no consumers are fooled or harmed, then what's the issue? And that's especially true if they weren't going to purchase a legitimate version in the first place.But this raises an even more interesting question to me: under this ruling, could a company not just make cheap knockoffs of a famous brand's products, but then avoid some level of liability by clearly advertising them as knockoffs? I wouldn't suggest doing that without a huge legal budget, but a strong argument can be made that if you made it abundantly clear that your fake Louis Vuitton handbag was a fake Louis Vuitton handbag, and that buyers could not buy it without understanding that fact -- then there might not be any claim. There would be no likelihood of confusion. There would be no harm.It's such an intriguing idea, I'm now kind of hoping that someone (again, someone with fantastic trademark/counterfeiting lawyers, and a large legal war chest) tests this out. If you do, send me some sample counterfeit merchandise as a thank you.

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posted at: 12:00am on 14-Oct-2020
path: /Policy | permalink | edit (requires password)

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Esports March On: Nike Jumps In With Glitzy Ad While Forbes Ponders If Esports Will Be Our New Pastime

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Esports continues to march down the path toward greater adoption. As we've detailed over many posts, esports had already become a cultural thing heading into 2020. But if anyone expected a regression back to IRL sports, the COVID-19 pandemic essentially cemented the cultural adoption of competitive video gaming. With even greater adoption by IRL professional sports leagues, and with many widely used social media platforms getting in the game and accelerating all of this, esports have continued to hit impressive milemarkers that showcase just how big this is all becoming.It's not slowing down. Signs of that acceleration can be seen first in a glitzy advertisement Nike has put out as it too jumps further into esports gaming.

The shoemaker has released its first-ever esports ad, coming out of Nike Greater China, showcasing how these esports athletes get their minds and bodies prepared for the challenge.The ad shows gaming superstar Uzi – who was recently the first esports athlete to be signed by Nike – completely a rigorous (and highly entertaining) training camp. According to Nike, the ad is a reminder for these gamers to remain active and healthy in order to stay on top of the challenges of gaming – which can see top players putting in 16-hour days six days a week.
Nike jumping into this is no small thing. And, while this is an ad for the Chinese marketplace, it would be quite surprising given esports' trajectory if we didn't see this sort of thing in the West before long.Along those lines, Forbes has also come out with an article asking if esports will soon be America's chief pastime.
Compared to America’s most popular pro sports, football, basketball and baseball, Esports is small, but it now ranks with popular sports entertainment like wrestling. In 2019, according to esportsobserver.com, over $211M was awarded from over 4,000 Esports tournaments, an increase of 29% from 2018’s $163M prize pool....Gaming is universal. The rules of the games are simple. It is simply the essence of competition. When produced for television, broadcasters can support the action with commentary, stating objectives for the game on-screen. Like golf, knowledge of the games might not be necessary at all as a games player base might be large enough to sustain eSports broadcasts, making non-player spectators a bonus, learning rules as they watch. Segments can support rules and strategies and highlights.
Will esports reach the vaunted levels for America's attention that baseball, basketball, and football have achieved? It's certainly on that trajectory. And the fact that publications like Forbes are even asking this question of a sport that has existed widely for less than two decades is telling. What esports really has to avoid is becoming the new World Series of Poker, where the fad fizzled out after a few years and is now relegated to niche status, albeit still popular.But as the post points out, gaming is becoming universal. It's already overtaken other forms of entertainment as the dominant force among young people. Why that wouldn't translate into even further spectatorship of esports tournaments, now propelled by major brands and funding, is a question I cannot answer.

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posted at: 12:00am on 14-Oct-2020
path: /Policy | permalink | edit (requires password)

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