FREE ESSAY ON COPYRIGHT AND PATENT FRAUD

COPYRIGHT AND PATENT FRAUD

Copyright and Patent Fraud
by
David Lee Roth
12th hon. Government
Mr. Pibb
January 5, 1998
Roth 1
Today, more than ever before, products, goods, and services
are being provided by businesses of all variations. Fewer and fewer people today are
self-sufficient. Practically no one today makes his or her own clothes, and some people
do not even prepare their own meals. Today's business world and modern day technology
make it possible for people to obtain almost anything and everything they need or want,
provided they have the money to buy it. There are gardening, music, painting, moving,
clothing, and countless other businesses all around the world. Undoubtedly, there is a
business for practically anything one could think of, and many people have gained great
success and wealth by finding these needs and filling them.
With all this success and wealth, it is not surprising that
ideas are often stolen by other people in the hopes of gaining great wealth themselves.
The success of many of these businesses has caused the copying of many materials.
Although many diverse ideas and products are stolen, the biggest problems are clothing
and software. The majority of copying and fraud involve software, like CDs, tapes, and
computer programs, but there also is a huge market for clothing items like jeans, shirts,
and sunglasses.
Roth 2
CD piracy is currently the fastest-growing counterfeiting threat, with China and Bulgaria
suspected as the largest of the
counterfeiters, according to Mike Edwards of the International
Federation of the Phonographic Industry. Edwards claims that
worldwide piracy from street bootleggers, to organized crime, robs the recording industry
of about 2.5 billion dollars or 6.5 per cent of the industry's annual sales. (Edwards 6)
However, it is not always a product that is being copied. As in one case, Miller Brewing
Co. has developed a new beer with a label that appears to be aimed at taking customers
away from Anheuser-Busch Co. The problem is that the new brand gives a prominent display
of an eagle, like Anheuser's label. Anheuser-Busch is currently the number one brewer in
America, but Miller is planning to release a new flagship brand called Miller Beer. This
new brew is aimed at taking sales away from the king of sales, and the king of beers,
Budweiser. John N. McDonough of Miller claims that this new beer tastes different from
anything out there. Miller plans to put some 65 million dollars into promoting the new
beer. (Melcher 37)
In another case it is golf clubs and accessories that are being copied. In this case,
however, the companies are not
Roth 3
copying each other; rather, they are working together in an effort to stop production of
cheaper, copy-cat clubs that are taking away from their sales. There are three main
companies involved in this fight against the fakes. The companies are: Cobra Golf Canada
Inc. and Taylor Made Canada, both companies based in Montreal, along with Calloway Golf,
which is based in Carlsbad, California. (Estok 30)
In one instance, the Taylor Made Burner Driver, the company's top club, is being copied
with the name The Tour Made Ruler. This fake club is almost identical to the Burner
Driver. The fake club has similar colors, markings, and the same shape as the Burner
Driver. In addition to the Burner, there is also Tommy Man's Bumber, which is an apparent
knock-off of Taylor Made's Burner Bubble. The Tommy Man's Bumber even comes with similar
stylized lettering and red flames. (Estok 30)
Bob Cote, vice-president of Cobra, claims that he has been
battling pirate clubs since 1994. Mr. Cote has even gone to the
extreme of visiting retailers with a bailiff, and seizing imitation clubs off the racks.
Once the companies recognize imitations, they report them to a team of lawyers based in
Montreal that
sends out cease and desist letters to the stores with the imitation clubs. (Estok 30)
Roth 4
Materials are being copied in many different ways by many
different people ranging from the nice neighborhood man who copies a computer game for a
friend of his, to large production factories called sweatshops. Sweatshops are illegal
factories in which patent products are counterfeited for a profit. In these sweatshops
workers slave to counterfeit expensive, top-quality products which are then sold
illegally for high prices.
Company and product logos are another category subject to
copying. A logo is defined as an advertising symbol that represents a product or service
or conveys a message about a product or service. Some logos like Coca Cola are known
around the world, and symbols like McDonald's golden arches are recognized by people of
all generations.
One major component that leads people to recognize products is color, and just recently a
Supreme Court decision ruled that the color of commercial dry-cleaning press pads can be
trademarked. Justice Stephen Breyer ruled that, Qualitex can
trademark its press pads' 'sun glow' green-gold color because that color has attained a
'secondary meaning,' which in effect distinguishes a particular brand. (Reske 28)
Roth 5
Obviously, ownership of logos and/or symbols can become
complicated and difficult to maintain. For years, orange juice has
been associated with the abbreviation of O. J. Today, because of
the fact that sports celebrity O. J. Simpson has become so famous, (and later infamous,
as well), his initials have become the subject of dispute. Recently, Mr. Simpson agreed
to share marketing rights of his initials with the Florida Department of Citrus. In turn,
the agency that markets Florida's citrus products has withdrawn opposition to his attempt
to trademark his initials. According to Clark Jennings, a lawyer for the citrus agency,
Mr. Simpson was not paid any money; but Simpson can pursue his interests, and we can use
O. J. in connection with orange juice. Simpson wants to control the use of his initials
on about 50 products from apparel to toys. (Wells 1)
Logos and products can sometimes be protected from
counterfeiting by filing for a U.S. patent, a document that enables It's owner to exclude
others from making, selling, or using an invention. It is against the law to
intentionally copy or imitate a product or logo. Any false products or slogans cannot be
used anywhere at anytime without the written consent of the legal owner. 
Roth 6
Digital technology today presents a real challenge for graphic artists who are trying to
protect their creations. The creator must register the copyright in order to sue for
Fraud. Images not copyrighted are in the public domain. Also, copyrights expire 50 years
after the creator's death. (Baer 163)
Industry officials have estimated that China is the world leader in copyright piracy,
another term used for the unauthorized use of another person's or company's product or
invention. Officials estimate that Chinese counterfeiting costs U. S. companies about 827
million a year. China exports gray-market, impostor products to the United States with
familiar American names and labels that are trusted for quality, dependability, and
safety. Some gray-market products like shampoo and toothpaste contain different
ingredients than the U.S. versions which sometimes leads to problems with American health
and safety regulations. Some leading gray-market cosmetics contain Red
Dye no. 2 which violates U.S. health laws. Other products such as children's toys are not
tested for safety and could prove to be safety hazards. (Ludwig and Koenig270)
These gray-market products pose a great threat to the
concept of reliance on brand names as indicators of safety and
Roth 7
performance. For instance, someone who has been buying a certain product for years
suddenly falls upon a fake which dissatisfies them in some way, and the original company
loses business due to the false impression. Gray market products include thousands of
common items ranging from personal care products like soaps, toothpastes, perfumes,
pharmaceuticals, and cosmetics, to more expensive merchandise like cameras, watches, and
crystals. (Ludwig and Koenig 26)
Many stores that carry gray-market products place the fake
products right next to the real products on the shelf, a clever tactic
which often fools customers into buying the fake product without
even knowing it. Later when the profits are made, the American
company with the actual trademark loses out due to these false
imitations. Another problem which arises is that the gray-market
goods may have worthless warranties, or they may be damaged
because they were not intended to be shipped internationally.
(Ludwig and Koenig 26)
One of the largest counterfeiting industries for the Chinese is
the record industry. Chinese copyright pirates net about 2.5 billion
dollars a year from these fraudulent records. It is believed that, currently, one out of
four albums is counterfeit, and the problem probably will not stop there. (Edwards 6)
Roth 8
A Milwaukee court recently ruled that a hog is a Harley-
Davidson Motorcycle and nothing else. Harley-Davidson Motorcycle Company became involved
in this lawsuit with a motorcycle parts and repair shop called the Hog Farm in San Jose,
California, in 1991. The Hog Farm owners argued that a hog referred to any large
motorcycle. In this case, Harley-Davidson filed for a trademark of the nickname hog, and
was able to win the case. (Fritz 30)
An article in the Los Angeles Times reports that on July 5th,
1995, Federal agents raided a stuffy yellow warehouse in downtown Los Angeles, where
twelve men were cheating the Chanel Clothing Company of large profits. These few men make
money by copying Chanel's crossed C logo and selling the fake product with a 500-per cent
markup. (Simon A1)
Most counterfeiting products tend to be cheaply made, using
flimsy plastics, inexpensive polyester, or cheap screen printing
machines. However, some products are so real that even the
legitimate business owners can not tell the difference. One particular factory
counterfeited Gucci watches that looked so
real, even the actual Swiss experts had a difficult time determining the authenticity of
the watches. (Simon A1)
Roth 9
Although investigators have discovered such odd products
counterfeited as soy sauce and doggy chews, (Simon A1) for the
most part, product knock-offs are expensive items like designer
jeans or sunglasses that are easy to make. Counterfeiters take
normal denim blue jeans and slap on a cheap, home-made designer label of an expensive
clothing line like Calvin Klein jeans.
Another favorite item to counterfeit is sunglasses. Consumers pay top dollar for designer
sunglasses with special lenses to block the sun. As many know, counterfeiters mold cheap
plastic frames together, put a sticker on them, and ship them to pawn shops, street
vendors, or anywhere else people will buy them.
Most counterfeiters realize that what they are doing is illegal,
but they always say that they are not really hurting anybody. The truth is that aside
from the companies with their sales losses, people really are getting hurt. Some
counterfeit products can really endanger the public's safety. Over the last 20 years,
fake airplane bolts have caused damaged engines, fake birth control pills have caused
internal bleeding, and counterfeit brake pads have caused fatal car accidents.
Although there are many serious cases of product fraud, small counterfeiting operations
like the one in downtown Los
Roth 10
Angeles are the most familiar. Los Angeles and New York
are considered the nation's counterfeiting capitals. Factory workers involved with the
Chanel counterfeiting barely moved their heads when the Federal agents raided the
building. They realize the agents are after the person running the factories, and not the
workers. They have seen it all before, and they know the drill. (Simon, A1)
Another problem is that when these sweatshops get raided, no one really knows who is in
control of them. The boss of the operation stays low key and has someone manage the
factory. If one operation gets busted, the boss simply moves on to a new location and
product, hires all new workers, and starts all over again.
To combat all this counterfeiting, there are several ways in
which one can protect, or patent a product, slogan, or logo. First, the product or mark
should be sent to the U.S. Patent and Trademark Office in Washington, D.C. The product
will start with state protection, and then will later be registered for federal
protection.
Many people incorrectly believe that simply by incorporating, that they are protecting
their company names. However,
Roth 11
incorporating does not mean that they have registered their names within the state or the
federal government.(Munro 53R.)
To register for protection, an application must be filled out that requires information
about the company or the person registering the trademark. The current application fee
ranges from about $245 for a simple database search to about $1,200 for a typical patent
office search. (Patents) Persons are entitled to federal registration only if there are
plans to use the mark in more than one state. The record search can be done by the
business owner or by a specialized trademark lawyer. Next, the application is inspected
as to form and substance. It must initially comply with the formal requirements set forth
in the Patent Laws and Rules of Practice of the United States Patent Office. (Mandell
24.) If the trademark application is approved, then the Patent Trademark Office will
issue a certificate of registration within 15 to 18 months. The certificate issued by the
Patent Office is good for 20 years after the filing date, although it must be renewed
every five years thereafter. (Munro 53R)(Patents.)
Spending money for trademark protection in a young business may seem expensive to begin
with, but will be worth the trouble to avoid litigation in the future. According to
Debora H. Shavarese, a trademark attorney in the Dallas office of the
Roth 12
Hopkins & Sutter law firm, The key is to protect your business's mark before you invest
time and money in advertising and product development. Protection may seem
cost-prohibitive at the beginning, but it's worth it. The whole value of a catchy name is
no good if you can't use it. (Maynard 12)
Because the problem of copyright infringement and
counterfeiting have reached such enormous proportions worldwide, there are now
organizations that specifically concentrate on fighting these counterfeiters. Serving as
copy cops in a way, groups such as the Software Publishers Association (SPA) and the
Business Software Alliance (BSA) are winning substantial copyright infringement
settlements. These software industry groups are often successful because of tips from
laid-off or disgruntled employees who report massive illegal infringement on the part of
their former companies.
As an example, in December of 1994, a posse of federal
marshals, attorneys, and software piracy auditors appeared at the
offices of Southern Benefits Consulting in Dallas, Texas.
Representing their plaintiffs Microsoft Corporation and Novell, Inc.,
they conducted a surprise audit of the insurance company's
Roth 13
computers. The on-the-spot audit was allowed by a court order after Microsoft and Novell
filed a sealed complaint of massive copyright infringement. In just a few hours, the
audit of one
hundred PCs produced sufficient evidence to reap a $110,000 out-of-court settlement.
(Alster E1)
Once the SPA has gathered enough evidence to proceed in
any case, it can then move in one of three ways. If the case is small and there is only a
small amount of infringement, the SPA will issue a cease-and-desist letter. This letter
is usually the only step needed for the infringing company to understand they must stop.
The second measure is to confront the company and offer them the option of conducting an
audit of all the computers in the company as opposed to litigation. The third and most
serious cases usually end up in court immediately without previous warning.
As with every new addition to the modern world there comes both advantages and
disadvantages. Currently the Internet is causing many different battles over copyrights,
fraud, and creator royalties. A new law was just passed that will in the future let
performers receive royalties when their pieces of music are played over the
Internet.(web)
Roth 14
Consumer Fraud in America is a tremendous problem, and it is not going away any time
soon. People all across the globe are
suffering from fraud of some type, and many are fighting
back. It is going to be a long time, however, before the problem is all resolved if it
ever can be. Copy cats now have to watch out because the copy cops are out.
Works Cited
Baer, Marjorie. Making Sure Web Content is Legal: Industry Legal Issue. Macworld October
1996. 163.
Copyright Pirates Raid 2.5 billion From Record Industry Revenue.
USA Today. 27 November. 1995: 6.
Estok, David. The Clone Crackdown. Maclean's 1 July 1996. 30.
Fritz, Sandy. What do you Call a Big Pig? Popular Science. March 1994: 30.
Ludwig, Eugene, and Koenig, Eric. Importing a Fraud: Gray market Products. USA Today
(magazine). March 1990: 26-28.
Mandell, Irving. How to Protect and Patent your invention. New
York: Oceana, 1973.Fritz, Sandy.
Maynard, Roberta. Protect your Trademark Before you Start Using
it. Nation's Business September 1993. 12.
Melcher, Richard A. Is it Finally Miller Time? Business Week 12 February 1996. 37.
Miller, Jerome K. Applying the New Copyright Law: A guide for
educators and Librarians. Chicago: ALA, 1979.
Munro, Billie. When you want a 'R' Rating. Nation's Business June 1995. 53R.
Patents FAQ: URL: http://www.owgm@patentable.com
Reske, Henry J. Dye is Cast: Color can be Trademarked. ABA Journal June 1995. 28.
Simon, Stephanie. Brash World of Bogus Goods Thrives in L.A.
Los Angeles Times. July 1995: A1+.
Web of Confusion: URL:
http://infolawalert.com/stories/120195a.html
Wells, Melanie. O. J. Agrees to Sell Rights to his Initials. USA Today 22 February 1996:
1.
What do you Call a Big Pig? Popular Science. March 1994: 30.