The Case for Intellectual Property Private Investigators in Trademark Counterfeiting Cases


Why specialized private investigators can make or break a counterfeiting prosecution

Counterfeiting is one of those crimes every successful business fears. Trademark counterfeiting is particularly worrisome. The crime can take many different forms, but simply understood, it is the practice of affixing a company’s logo or other identifying marks to phony, inferior-quality merchandise.

The ramifications of this practice are vast. Companies that have spent valuable time and resources building a strong brand can have their reputation decimated in a matter of months. Regrettably, the availability of online marketplaces like Amazon and eBay has only made it easier for counterfeiters to operate. Negative product reviews on those sites have also made the process of brand erosion faster and more devastating than ever.

Consequently, the identification and prosecution of trademark counterfeiters is paramount in today’s retail environment. One of the most effective ways to ensure prosecution is through the use of specialized private investigators who have the expertise, knowledge, and real-world experience needed to gather evidence and preserve it in a way that allows for its use at trial.

This article explores some of the challenges of criminal trademark counterfeiting cases, and makes the case for using focused private investigation firms to put an end to your company’s counterfeiting nightmares.

Where Trademark Counterfeiting Prosecutions Take Place

When most people think about the legal intricacies of counterfeiting, they tend to think of it as a federal crime that can only be prosecuted by U.S. Attorneys. Indeed, trademark counterfeiting is criminalized by important federal legislation, such as the 1984 Trademark Counterfeiting Act and the Stop Counterfeiting in Manufactured Goods Act. It is also true that agencies such as the FBI, Customs & Border Protection, and Department of Homeland Security have niche divisions responsible for investigating these crimes.

Nonetheless, the Federal Government is loath to pursue trademark counterfeiting in criminal courts, preferring instead that companies work out their business grievances in civil cases. Moreover, the feds tend to be focused on large-scale, multi-state, or international prosecutions. Meanwhile, scores of businesses are suffering from counterfeiting operations that fail to meet the federal thresholds.

Fortunately, most states now have criminal counterfeiting statutes on the books (this was not the case when we began doing intellectual property investigations in the early 1990s). In many cases, the prosecution thresholds for a state counterfeiting conviction are lower than those required in Federal Court. Furthermore, the laws regarding admissibility of evidence can be substantially different from state to state. As explained in the following section, having an investigator who understands those legal distinctions can make or break a counterfeiting prosecution.

Why Intellectual Property Private Investigators are Crucial to Local Prosecutions

This specialized nature of trademark counterfeiting prosecutions only serves to underscore the necessity for intellectual property private investigators. While local laws may favor victims of counterfeiting, many state and local law enforcement officials are not well versed in investigating these crimes. That’s where specialized private investigators come in. Their broad-based experience within the IP industry can be the deciding factor in the ultimate prosecution.

Those private investigators who specialize in intellectual property matters will know the complexities of the potential crime. While they are not lawyers, they are familiar with applicable laws and know precisely what evidence is needed to achieve a guilty verdict in every state in the union. In fact, if an investigator tells you he can only perform IP investigations within the borders of his state, it is time to hire a new investigator who has the know-how and expertise to practice across borders.

By necessity, intellectual property investigators must excel at a long-arm approach. In other words, they must be able to conduct investigations in states and countries that are remote from their home office. They will use burner phones, undercover bank accounts, and other tools to track down counterfeiters.The internet is critical tool in their arsenal. Indeed, today’s practice is entirely different from the phone books and “knock and talks” typical of private investigators 30 years ago.

As part of their preliminary due diligence regarding the subject of investigation, today’s investigators will literally put themselves into an offender’s mindset in order to get the evidence needed for a take-down. Ultimately, they will get the right person talking and will meticulously record the evidence for later prosecution.

The IP investigator’s knowledge and experience with evidence collection and preservation is paramount. Evidentiary purchases must be made lawfully and the chain of custody must be preserved in order for that evidence to be useful down the line. It’s one thing to track down a counterfeiter, but if the evidence gathered along the way is inadmissible in court, nobody wins.

One important example involves pretext investigations (i.e., the act of posing as someone else other than an investigator in order to interview witnesses or purchase counterfeit items). While most state courts allow for pretext investigations by private investigators, some do not. In those states, evidence gathered by use of this tried-and-true investigation tactic will be deemed inadmissible.

The same can be said for recording conversations. Some states require the knowledge and consent of only one party to the conversation for that recording to be deemed admissible at trial. Other states require that both parties consent to the recording. Still other states will allow for video recordings to be used at trial, but only if the recording does not include audio. Given these intricacies, it is crucial to use specialized investigators who are experienced in multi-state investigations.

Another subtle, yet critical difference among state statutes is the requirement of proving “knowledge and intent.” Though some states will prosecute counterfeiters even if they didn’t know their actions constituted a crime, most now require proof of knowledge and intent. IP investigators are aware of these distinctions and gather evidence accordingly. In fact, the most experienced IP investigators will seek evidence of knowledge and intent in every investigation, regardless of the jurisdiction, knowing that such evidence is useful in all prosecutions.

This deep knowledge base and intense focus on proper evidence gathering has the ancillary effect of garnering respect from local law enforcement agents and prosecutors. Evidence that is presented by someone who can “talk the talk” is likely to be taken much more seriously than a frantic phone call from a layperson complaining that someone is ripping off their business.

Specialized Industry Knowledge

An additional benefit to using intellectual property private investigators is their familiarity with various sales channels and the sales cycle. For example, they understand the relationships between manufacturers, distributors, and retailers, and will gather evidence aimed at stopping all illicit players in the supply chain. A less experienced investigator might be satisfied with collaring a counterfeit retailer in a flea market or mall kiosk. Seasoned IP investigators know better.

Significantly, they also know the processes and procedures for finding independent sellers who operate counterfeiting schemes on sites like Amazon, eBay, and Alibaba. They can track those sites for the tell- tale signs that counterfeit products are being peddled there (rock-bottom prices on typically expensive merchandise, for instance). They also know how to purchase counterfeit items in a manner that won’t raise the seller’s suspicions about being caught. This is a critical step in the process as online sellers can quickly “go dark” at the first sign of trouble.

While these investigative techniques are undeniably important, they are vastly different from the tactics employed by more traditional private investigators. It is precisely this level of expertise that warrants hiring an intellectual property investigator.

Hiring the Right Investigator

So, what do you do if your company suspects its products are being counterfeited? First of all, if you have a private investigator that you have successfully worked with in the past, call that person – even if they are a generalist. They may be able to recommend an intellectual property investigator that they know and trust. At the very least, they may be able to provide you with a law enforcement connection in the relevant jurisdiction. Those officers, in turn, may have contacts for PIs in the area, whether specific to IP or ones that are more generalists. Either way, it is a start.

Next, do an online search for Private Investigator councils or associations in your jurisdiction. In North Carolina, for example, we have the North Carolina Association of Private Investigators. Each state should have one of these organizations and they typically provide a wealth of resources.

There are also national associations that can offer suggestions for locating a specialist. One such organization, the National Council of Investigation and Security Services, maintains a membership directory online that can be viewed by the public. Involvement in state and national groups demonstrates an investment and vested interest in the industry as a whole, and possibly higher overall professional standards as is often expected of such members.

Other key resources include intellectual property organizations that are not specific to investigation companies. One such organization is the International Trademark Association (“INTA”). In addition to serving as a membership body for trademark owners and IP professionals such as lawyers, INTA allows intellectual property investigators to join its membership ranks.

These trade association memberships are important. While some investigators may not join such associations, they are an undeniable resource for industry awareness. Indeed, these organizations routinely update members on things like changes to the law, best practices, and recent takedowns.

Once you have a few names, start doing research about each investigator’s background and experience.A well-seasoned specialist will not only have great instincts and strategies for handling your case, but will work with an efficiency that saves your company time and money.

Don’t be afraid to interview multiple candidates. Ask about specific trademark counterfeiting cases they’ve worked on in the past, the rate of prosecution in cases they’ve been involved in, and their specific knowledge of the laws and evidentiary rules that will apply to your case. You’ll quickly get a feel for each professional’s level of competence and confidence.

Just remember that the better your IP investigator, the better the chances your company’s counterfeiters will receive a guilty verdict. Ultimately, that translates into greater revenues, a strong brand reputation, and happy customers.

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