#424 – Protect your Brand from Counterfeiters with Stan Ference
Stan Ference, a seasoned patent IP lawyer with a fascinating transition from electrical engineering, joins us to share his expertise on protecting e-commerce sellers, especially those navigating the complexities of Amazon. Stan sheds light on the often-misunderstood responsibility of brand owners versus Amazon in policing counterfeit products. Since 2018, he’s witnessed significant shifts in the e-commerce landscape, revealing the evolving challenges and highlighting the urgency for sellers to take the reins in safeguarding their intellectual property. Engage with Stan’s personal anecdotes and insights, as he uncovers critical strategies for those aiming to protect their brands in a bustling global market.
Throughout the episode, we explore the nuanced intricacies of intellectual property rights, focusing on trademarks, patents, and copyrights. Stan offers a historical perspective on trademarks, demystifying the distinctions between design and utility patents, and their vital roles in protecting innovations. He provides practical advice on overcoming hurdles faced by inventors on platforms like Amazon and crowdfunding sites, where knockoffs are rampant. From early publication requests to expedited applications, Stan emphasizes the importance of timely filings to shield imagery and product listings from unauthorized use, ensuring entrepreneurs can safeguard their creative assets effectively.
Our discussion extends into the global realm of IP protection, dissecting how differing international trademark rules can impact businesses. Stan shares the unique challenges posed by China’s “first to file” approach, alongside Amazon’s evolving trademark processes and the significance of its transparency program in combating counterfeiters. Through captivating case studies and stories, Stan highlights the profound consequences of intellectual property disputes, from jeopardized business deals to the unauthorized sale of Simpsons-themed merchandise. This episode is a vital resource for Amazon sellers and digital creators striving to protect their intellectual property rights and secure their businesses’ futures against counterfeit threats.
In episode 424 of the AM/PM Podcast, Kevin and Stan discuss:
- 00:00 – IP Protection for Sellers on Amazon
- 04:57 – Amazon’s Accountability for Intellectual Property
- 10:24 – Enforcing Brand Rights on Amazon
- 13:37 – Intellectual Property Overview
- 15:09 – Intellectual Property Strategies for Amazon Sellers
- 18:05 – Water Balloon Invention Story
- 23:41 – Global Trademark Protection Overview
- 24:15 – Amazon Sellers IP Protection Strategies
- 27:27 – Amazon Transparency Program and Trademark Registration
- 31:34 – Trademark Renewal Requirements and Deadlines
- 40:01 – Global IP Protection and Branding Strategies
- 46:30 – Protecting Your Brand From Knockoffs
- 57:10 – Kevin King’s Words of Wisdom
Transcript
Kevin King:
Welcome to episode 424 of the AM/PM podcast. My guest this week is Stan Ference. Stan is a patent IP lawyer trademarks, copyrights, patents and he is big into helping protect sellers on Amazon. He helps protect sellers, he helps you sue if someone’s violating your rights, and in this episode we talk a bunch about what you can do to protect yourself, and there’s some interesting things that you probably don’t know that Stan is going to talk about. So I hope you enjoy this episode on IP protection. Enjoy this episode with Stan.
Kevin King:
I’ve got a special treat for everybody today. I’ve got the one and only Mr. Stan Ference on the show talking about something that’s near and dear to all of you sellers’ hearts. A lot of you are always complaining about people jumping on your listing and counterfeiters or people ripping you off, whether it’s your images or your product, and you’re like what can I do? What can I do? This is the guy that knows exactly what to do, whether that’s to protect yourself or whether that’s to fight against someone that’s taking advantage of you. So, if you would, please welcome Mr. Stan Ference to the podcast. How are you doing, Stan?
Stan:
I’m doing well, Kevin. Yourself?
Kevin King:
I’m alive and kicking. You know, every day above ground is a good day, so I’m here to celebrate.
Stan:
That’s a good thing.
Kevin King:
That’s a good thing, exactly so, just to get the legal stuff out of the way for those that are listening, Stan is a lawyer, he’s a litigator, so, but don’t take any advice that he says on this. This is not to be construed as legal advice anything that he may say on here, but it’s based on his experiences, but this is not actual legal advice of anything that we talk about on the show today. Just to make that clear. What’s your background in law? I mean, before you were doing, we’ll get into all the whole e-commerce side of things, but where did you get started in law?
Stan:
My undergraduate degree is in Electrical Engineering. I’m a patent attorney. When I got out of law school, I worked at a law firm in New York, an IP boutique that also did a lot of trademark work, and I’m old enough now that I’ve gone out with the US Marshals on counterfeiting raids. You know back in the day when it was all brick and mortar so, and we got into this Amazon stuff because one of the folks I had worked with before got a call from somebody who was having problems on Amazon and all the lawyers they had talked about or talked with said there’s really nothing they could do. They just had to take it on the chin and knew about my background and we were able to help them out. So that was sort of our foray into this Amazon brand protection stuff and we’ve been quite successful in helping sellers battle knockoffs and other unfair competition activities.
Kevin King:
And what year was this that you did that first job for this, the e-com guy?
Stan:
Back in 2018.
Kevin King:
Okay, so 2018. So the client came to you and you took this on. You’re like holy cow. There’s a lot of opportunity here. Maybe we should actually expand on this and see what we can do and helping this. Was it a surprise to you in 2018?, like you had no idea about this whole way Amazon worked, or is it pretty eye opening?
Stan:
It’s very eye opening. I mean at this point, really nobody in our office buys stuff off of Amazon if they really care about it because you don’t know if what you’re getting is authentic or if you’re getting something that’s made in another country that doesn’t have the same health and safety standards. Most people think when they’re buying from Amazon or off of Amazon, they’re getting it from Amazon. They don’t realize that over two-thirds of the sellers on Amazon are not from Amazon and you know Amazon’s made a big pitch to bring sellers on from outside the United States and that’s good for business, but you really don’t know what you’re getting and Amazon doesn’t police the marketplace. Amazon leaves it to the brand owners to police the marketplace. As we’ve worked with clients, that’s been a big shock to them because the clients think they’ve done everything right, they’ve gotten, you know, trademark registrations, they’ve gotten patents, whatever, and sellers are just going to respect their intellectual property and when they don’t, they go to sort of complain to Amazon and Amazon’s like well, that’s your problem, what are you going to do about it?
Kevin King:
Now some of that’s starting to change a little bit, but that’s been Amazon’s pretty much. That goes to everything, not just in law but in collecting sales tax for a long time. Amazon’s like that’s not my problem, that’s your problem. You’re the seller, you collect the tax and pay the state of California. But there’s people like Paul Raffleson that got that to get changed and the same thing I think is starting to happen now a little bit in some of the, the, the IP stuff, where Amazon is pretty much just exactly what you said throwing up their hands and said we’re not, we’re not responsible, we’re not liable, you deal with it. And now there’s enough stuff coming down where they’re actually starting in small steps. It’s not there yet been small steps starting to tighten up like all right, you do need to have some safety documents on file. You do need. If you’re selling supplements, you do need to have these documents before we’re going to allow you to sell supplements. And so they’re starting a little bit. But it’s still way, still the wild, wild west and all kinds of stuff can happen on there and a lot of sellers get frustrated because they spend a lot of time, money and energy developing a brand and imagery and packaging and everything just to have some sometimes their own factory uh, in other cases, someone down the street just knock them off and take advantage of all that hard work they’ve done and, a lot of times, crush them and it’s sad to see.
Stan:
We’ve seen clients that have lost 80 percent of their sales literally overnight when knockoffs start coming on to Amazon. We’ve also had clients where they find out that there’s a problem when the customer gets a product, calls them to complain about it and that’s the first they know that there’s a knockoff. The customer is confusing the knockoff with the brand owner. We also see situations where a client is sort of steady state and their growth isn’t where they want it to be, and they start looking at it and they discover that there are these knockoff folks out there and when we take care of it their sales go up 20% or so. I mean it’s truly amazing the impact that the knockoffs can have on the brand owner’s sales.
Kevin King:
There’s a common thing in a lot of the Facebook groups and a lot of the seller groups where people will say I’ve got a counterfeiter, they call it a hijacker actually. I’ve got a hijacker on my listing. How do I get them off? Or someone is selling my product in Canada and I didn’t give them permission to sell in Canada. I think there’s some confusion among a lot of sellers of what is truly IP infringement and what is the first. What’s it called? The first sale doctrine, the right of first sale or whatever? Where? So you can buy a product in the United States and resell it in Canada, you know, unless there’s there are some restrictions and cases where you can restrict that, but in general you can actually do that. Or someone can buy your product and then resell it on your listing. Or if you did a giveaway to launch your product and you said, hey, I’m going to give away 100 of these of my spatulas to everybody, go buy it and that helps you rank on Amazon because people are buying all these spatulas. But then people are getting free spatulas and then they just turn around and arbitrage it and sell it and then people are like, oh, they can’t do that, that’s counterfeit or they’re breaking my IP and they’re actually not. Can you explain the difference between true IP infringement and the first sale doctrine?
Stan:
In the United States, to some extent, the rights of the IP holder are extinguished once they make the first legitimate sale. And I phrased that the way I did because there are certain steps that you can take so that your rights don’t expire. And, for example, you know this has been a big thing over the years with luxury watches and warranties. Now, if you purchase a watch from an unauthorized seller, you don’t get the factory warranty and some other things. So the you know, if you’re, what you’re selling is the same product, that would be available directly from the manufacturer. You can do that. But if you’re not selling the same product, or somebody is selling it and it’s not the same product, so there’s a difference in warranty, for example. That’s not permitted. It has to be advertised, as you know, like a used product.
Kevin King:
So some people were doing that. That was a tactic a few years ago when people would say I got this hijacked on my listing and they say, well, just I’ll put a warranty, put an image on your listing that you give a 180 day warranty or a two-year warranty or whatever and they can’t, and put some phrasing down there. It says warranty only available if you buy directly here on Amazon from me or from the original vendor, original seller. And there’s some people that said, oh, that’s just, that’s just scare tactics. That’s not going to work. It’s never going to hold up in a court of law. Have you seen that technique actually work?
Stan:
Yes.
Kevin King:
On Amazon?
Stan:
On Amazon. Now the issue with it is the way it works is by the brand owner, sort of the original seller bringing a lawsuit and enforcing their rights. It will not work by making a complaint directly to Amazon.
Kevin King:
So do they have to have that as an image or just a statement on the listing okay? Do they need to have that in a little warranty field on Amazon to be able to enforce that? Or what’s the best? What are some things that they need to make sure they’ve done if they do decide to take it to court, so they have the proper notices on file?
Stan:
You want to have a program set up. You just don’t want to have a statement. Right, you know the statement can be part of the program, but it’s got to be a legitimate program, because when you do take it to court, you know the person or the seller that you’re suing is likely going to say you know, show me what your warranty program is, what do you offer that I don’t know. How do you keep track of all of this stuff? And so it, like I said it’s, it’s more than just a statement.
Kevin King:
Your firm still does a lot of a patent and IP initial stuff right when someone comes to you with a new idea. So it’s not just fighting people, but you’re actually people coming to you like I want to patent this or copyright this or trademark this. Can you for those listening, a lot of people get trademarks and patents mixed up. They don’t understand the difference between the two. Can you explain that just in layman’s terms for some of the people listening? That may get those in a copyright. What are the true differences between those three core IP types?
Stan:
Okay, a patent is the only one that sort of has a time limit. You have to act early or you’ve given up your patent rights, and the reason for that is in order for something to be patentable, it has to be new. Now the United States gives you a one-year grace period from when your first public disclosure, your first sale. Other countries do not give you any grace period. And now what a patent gives you is, it’s the patent itself typically comprises a written description, claims and drawings. The claims are spell out what you’re entitled to protect against others, and it’s for those folks that own houses. So, when you get a piece of property, you get a deed that spells out the meets and bounds of your property and you’re entitled to exclude others from trespassing on your property. That’s what a patent does. It doesn’t matter if somebody independently created it or if they copied you. You’re entitled to exclude them. Now you also have some marking requirements with your patent. You need to put the world on notice that you have a patent. That’s why you’ll see patent numbers listed on products. Or these days, if you buy, for example, some Procter and Gamble products you know Dawn dishwashing detergent, toothpaste, shaving cream, whatever it’ll say, patents:pg.com/patents and they set up a website that talks about the patents.
Stan:
And now a copyright protects against copying. It does not protect against I coming up with the same idea. The example I always use is you know, Margaret Mitchell wrote “Gone with the Wind” and she’s got a copyright on “Gone with the Wind”, but that doesn’t mean she can stop somebody else from writing a novel about the Civil War. Right? There are lots of novels about the Civil War. So, you can’t, with a copyright, protect an idea. You can protect the expression of an idea and the way it’s set up in the United States is you get a copyright the moment your expression is set in a tangible medium. So, when you draw something or create something, you automatically have a copyright. But you can’t go into court to enforce your copyright until you register your copyright. And there are some advantages to getting an early registration rather than waiting until after the infringement starts, and one of those is the potential for statutory damages and an award of attorney’s fees, because if you don’t have statutory damages, you have to prove how you have been damaged. You know what money have you lost, for example.
Stan:
A trademark identifies a common source. It goes back to the Middle Ages, when people couldn’t read and you knew if you bought a pair of gloves that had a red house stamped on them and they lasted and worked well, and when you went to buy a pair of boots and it had the same mark on it, they were coming from the same source and people would think that they would perform as well as the gloves that you got. So, at a high level, that’s the difference between a patent, a copyright and a trademark. I think you’ve also mentioned one other.
Kevin King:
Just to put it in perspective too on the patent, there’s two types. There’s a design patent and a utility patent. So the design patent actually protects the general concept how it looks and how it’s shaped and that kind of thing and then the utility patent is how it actually works, basically, in a nutshell, right?
Stan:
Well, the design patent protects the ornamental design.
Kevin King:
Yeah okay.
Stan:
All right, and sort of a granddaddy case of that is Gorham v. White and that dealt with designs of silverware and you know, is a consumer. And the question there is a consumer likely to believe that the designs are equivalent? And then, as you mentioned, you have a utility patent and that can address the product itself, how it works. It also can protect methods. So you can have a utility patent that has nothing but method steps in it. And there’s also a third type, which is a plant patent. So if you come up with a new hybrid plant, you can get a patent on that. Now design patents come into play on Amazon because design patents are pretty, you can get them pretty quickly, you can get them expedited and get them in under a year. On utility patents, it generally takes, you know, a year and a half, two years before the patent office first picks it up and then you start the prosecution dance.
Kevin King:
In the meantime, on those patents, until you have that issued, you can get knocked off. So if you launch it this happens a lot with Kickstarter and Indiegogo and platforms like that where someone comes out with a new concept, they put it out to raise money or they may even put it on Amazon and then all of sudden, within two months there’s knockoffs everywhere and they have zero protection, virtually. I mean, maybe you can tell, but under the patent law there’s basically zero protection because that hasn’t been issued yet. So during that timeframe of six months or a year, while you’re waiting for the design patent, someone can actually sell it. But once that design patent is issued to you, then you can go and enforce your rights. I know this happened back in 2015. I was buying these water balloons that you’d fill up. In the old way, if you’re going to have the kids over for a summer afternoon water balloon fight, you have to fill these water balloons up on the faucet one by one, tie them off and you put them in a bucket so they could have a water balloon fight. This device is called bundle balloons or something, and it had like one spout and then like all these little hooks off of it that you could do feel like 30 balloons at once and it was great. And the guys that came out, they put it up on Amazon, were selling about $50,000 a day of this stuff just like crazy numbers. And then infomercial, as seen on Telebrands, as seen on TV guides, Jersey came up and started running infomercials on it and there was nothing they could do because the design patent hadn’t been issued yet. They went after them. There was nothing they could do. So once the patent got issued, then they ended up working out a deal with them and I think Telebrands ended up buying them at that point. But for that timeframe they just were taking advantage of that loophole.
Kevin King:
So is there something you could actually do? If you put up a new product on Amazon and it takes off and you filed your design patent, I mean you can protect it pretty quickly with a trademark or copyright. Copyright’s about $45 to file that plus legal fees. Trademarks about $325 per category to file that plus legal fees. I think that’s what it is right now. And a patent, a design patents, two to five grand and a utility can be on seriously higher than that plus legal fees. So just to put that in perspective for you guys that are listening. But is there something you can do if you launch a product on Amazon and you’re in the process of getting your patents but you don’t have any kind of full protection other than maybe a copyright on your listing copy and maybe a trademark on your logo? But a lot of times, even trademarks can take six to nine months to come through.
Stan:
Well, these days trademarks are taking longer. Used to be, you could get a trademark within under a year. These days, it’s 11 months or so before you get your first office action, the trademark office is-.
Kevin King:
Oh wow, is it taking that long now? I haven’t filed one in a little while.
Stan:
Yeah, they’re just being overwhelmed with applications from non-US applicants.
Kevin King:
E-commerce?
Stan:
Yeah, right, but you’re right from the patent side. But you know, with utility patents, patents are published. You can request early publication. You can also request that the application be expedited. So, there are things that you can do to take a patent application out of the normal queue. But even while your application is pending, there are things that you can do. If somebody is making the product, they can’t be using your imagery from Indiegogo or Kickstarter to sell the product that they’re making.
Kevin King:
If you’ve copyrighted it, if you’ve actually filed the copyright right? Just like you said earlier, you technically get copyright the day you publish it, the day you create it, but actually to enforce that in court don’t you have to have actually filed?
Stan:
Well, you need a registration but we can help you get that.
Kevin King:
Yeah, you can help with registration, yeah.
Stan:
I mean, you can get an expedited registration. It’s an additional $800 and you can generally get it within a day or two after you file it.
Kevin King:
Oh wow, okay, I didn’t know you could do that.
Stan:
All right so. I mean, there are things that you can do if people are knocking off your product. You know, if I come up with a product, I file a patent application on it and you start selling it Kevin. You know, knocking off my product, but you’re using your own imagery, you’re not using mine, you’re not using my name, you know, there it gets a little more difficult to enforce the rights, but you still have to compete fairly with me and if you’re doing something where you’re not competing fairly with me, I can go into court. Amazon’s not going to care, but I can go into court. And if I can convince a judge that what you’re doing is improper, I can get a court order that Amazon will respect. I don’t want people to think, oh no, there’s nothing that I can do. We’ve helped people in those situations where their patent applications are pending and they’re being knocked off.
Kevin King:
What about with AI? Right now, I think there’s a lot of misconception, where a lot of people are using AI to create their logos or their imagery or their packaging design, not realizing that AI has no IP rights. So, if you’re going to do something with AI, it can be a great tool to get inspiration or to get ideas, but you need to modify it with a human in some way where they redo it or they add something to it or something where you can actually get IP protection on it. Am I correct in that?
Stan:
Well, the copyright office has held that it’s a human that gets the copyright, and same on the patent side. A human has to be an inventor, so AI can help you create something. But if you just dump some stuff into AI and it spits something out, yeah, you’re going to have some problems protecting that.
Kevin King:
Is there any little trick or any little thing that you would recommend someone do? Is it modify it 20%, 40%, you know, by human hand or some way?
Stan:
You know, I would say you can look to AI to inspire you on how you’re going to do something, but the final product should be yours, the work of a human.
Kevin King:
Can you talk to me a little bit about trademarks in foreign countries? I know there’s a I forget the name of the law, it’s the Geneva Convention maybe, or whatever it is where you can do like 60 trademarks or 60 countries, something like that. 60 some odd countries are covered?
Stan:
The Madrid Protocol.
Kevin King:
Yeah that’s it, the Madrid Protocol. I knew it was something over there, the Madrid Protocol. Can you tell me about that?
Stan:
Yeah, what most people don’t realize is generally IP protection is by country, so there’s no such thing as a worldwide patent or a worldwide trademark. So if you want patent protection around the world, it’s going to get quite expensive because you’ve got to get a patent issued in every single country. So most folks end up concentrating on particular markets. Now, for example, the United States and Europe. You can get a European wide patent and China because that’s where a lot of stuff is going to be manufactured. The same goes for trademarks. Now, you know it’s by country. And the United States is a little strange because trademark rights go to the first to use, where in most countries the trademark rights go to the first to file. So, there’s a cottage industry, for example in China, where they’re looking in the United States to see what products are coming online and are successful, and then folks will register or file applications for those trademarks in China in an attempt to block the US owner from expanding into China.
Kevin King:
It also can block exports and get takedowns on Amazon in some cases too, because Amazon recognizes trademarks from other countries, not for legal. I mean, if you have a trademark in Germany for your brand, that’s only going to apply in a German court of law under German rules, but from Amazon’s purposes they recognize the brand registration from Germany in the US market and they will actually take a listing down with a German trademark, without a US trademark. But if you try to get damages and go to court, correct me if I’m wrong on this, try to get damaged and go to court, it ain’t going to work because you don’t have a US trademark. You’re not technically protected. But from an Amazon ecosystem point of view, a trademark in Germany is just as valuable as a trademark in the US, and so that’s why, because of the lead time, Amazon changed this a couple years ago. But used to you could not get brand registry to get those extra protections on Amazon until the trademark was issued with the gold seal. Um, but the Amazon changed that and said well, no, now you can do proof of filing and you know we’ll go ahead and grant you this stuff now much sooner.
Kevin King:
But people were going to Germany because Germany was, uh, you could get it in a week or two and in Germany they basically check it later. So it’s not a in the United States. You file your trademark and then it goes through a process and then someone in the trademark office three, six, nine months later actually reviews it and if there’s a problem they call you, because I’ve had these calls and they call you and they say, hey, this is too close, we’re not going to be able to pass this or you might consider changing it. In Germany it was the opposite. It’s like we just give it to you and then we’ll check it later. So people were filing trademarks of things that already existed and just taking advantage of this loophole where Germany will revoke that three or six months later when they actually do their proper due diligence, and taking advantage of stuff on Amazon. It got to be pretty crazy. Amazon’s tightened a bunch of this stuff up. Those are some misconceptions. Can you talk about any of those misconceptions like that that are out there?
Stan:
You know Amazon requires a trademark registration to get into the transparency program. The transparency program can be helpful for folks dealing with hijackers on a particular listing, because if somebody purchased the product from you on sale and is trying to resell it on your listing and undercut you, Amazon won’t take that into their ecosystem. If your brand is in the transparency program, they’ll only take authentic merchandise. Now, Amazon charges a fee for that, but to get into the transparency program you need a trademark registration and, as you pointed out, Amazon will accept registrations from countries other than the United States. So you can, you know, with competent legal counsel, make some decisions on what’s going to get you the fastest trademark registration that’ll work for Amazon and get you into the transparency program. So that’s one way to deal with the listing hijacking.
Kevin King:
The transparency program for those that don’t listen that might not understand. That’s you get brand registered on Amazon with your trademark and then Amazon allows you to print little labels and they’re like little individual barcodes, like serialized barcodes, and you stick those on all your products that go both to Amazon and to wherever else you sell. So they go, they go all over the place and that way, if it doesn’t have that little barcode on it, Amazon knows this is not authentic. This is a knockoff or a copy or it’s an unauthorized seller.
Stan:
Amazon has an app for it, so you can download the app. A consumer can download the app on their phone and use it to see if the product they’ve gotten is authentic.
Kevin King:
I had someone on the AMPM podcast about two months ago that was in the process of selling their Amazon business for $3 million. They were selling an Apple Watch charging station. It charged the Apple Watch, the iPhone and the iPad all in one little kind of thing and the day that they were supposed to actually sign the documents, their listing on Amazon got taken down and so it put the deal on hold. That literally the day they’re signing and the wire transfer is going to happen that afternoon put the whole listing on hold. They dig into it and they find out one of their competitors who’s selling a very similar, undistinguished, just basically, the product was identical, but just a different logo and a different brand name on it because they weren’t doing any differentiation, buying it from the same factory. He got, together with the factory, filed a patent United States on it and was able to, after like a year, actually a design patent get issued and they took down all this competition in conjunction with the factory and it killed this deal.
Kevin King:
They were actually able to contact the guy and it’s a pretty fascinating story and after talking with him, saying, hey, we’re just a small little family trying to raise our family, the guy was pretty religious and he actually agreed to actually repeal it and allow them to continue to sell and it allowed the deal to go through where they sold the company. But it was a pretty scary moment where he was using this to block and I’ve heard stories, similar stories, of people who file in China you’re talking about China earlier without they’ll see something successful, but to block their competitor they’ll find Chinese trademark because there it’s first to follow, not first to use, like you said, and they will then use that to block exports of the product to the United States and so effectively cutting off the supply chain for someone. Have you seen any cases like that?
Stan:
I have. We had a situation where the client had come out with a product. They had a copyright on it, on the design of the product, and somebody in China filed a US design patent on the client’s product, did not disclose the existence of the client’s product to the patent office, the design patent issued and then it was used to take down our client’s product. And now? So what we were able to do there was file a re-examination request with the US Patent Office and get the design patent cancelled. And so there’s I mean, there are all sorts of tricks that are going on.
Kevin King:
I think a lot of people too don’t realize that trademarks don’t last forever, if you don’t use them, you lose them.
Stan:
That’s in the US. In other countries your registrations become subject to attack if you haven’t used them. But what a lot of people don’t realize is just once you get the trademark registration, you’re not done. There’s all sorts of ongoing paperwork, and that’s one of the reasons for using a lawyer is to have the lawyer keep track of these dates. So, for example, in the US, once you get your trademark registration issued, you have to file proof of continued use between the fifth and sixth year after registration and then at the by the tenth year, you have to file a renewal application and then every ten years you have to file another renewal application. Okay, so one of the things the lawyers do is dock at all of this stuff and remind the clients of when things need to be done. I was just talking to one seller who was surprised to hear that his US trademark registration was canceled earlier this year and the reason it was canceled was because he hadn’t filed the proof of continued use during the fifth and sixth year after registration. He just didn’t have, you know, wasn’t aware of that and didn’t have that docketed.
Kevin King:
What about people that when they’re first starting out in e-commerce, they’re like “You know what? I’m just going to use legal Sherpa, I’m going to use some guy on Fiverr to do this for me. You know, get a legal opinion or whatever, and have them file it. I don’t need to pay a lawyer three, four, 500, $600 an hour to do this for me. Or I’m just going to hold off on doing my trademark. You know, I don’t have. I don’t have the budget for all this legal stuff right now.” What would you? What would you say to those people?
Stan:
There are certain things that you want to get done. You know, for example, on the patent side, yeah, it’s an upfront cost, but if you don’t do it, you’re never going to get a patent. And because it’ll be, it’ll become time bar once you start to sell it. You’ve blown your patent rights outside of the United States. The US gives you a one-year grace period. Once you get outside that one year, you’ll never get a patent, and that’s the other utility patent or a design patent. And on the trademarks, while you can wait, you know you get a common law trademark but you don’t get the registration right away. You can do that, but it’s going to take some time to get the registration and their benefits to getting the registration. Now, for example, although now, once you’ve got your application, Amazon will let you into the brand registry, but you can’t get into the transparency program without the registration and if all of a sudden you have a problem and would really like to have a registration, you can’t get it in a timely manner. It’s going to take over a year to get a US registration, so you want to start early. Same thing on the copyrights. Copyrights are not that expensive, and the big benefit of getting your registration on file or your application on file is the ability to get statutory damages and attorney’s fees when you need to go and enforce it.
Kevin King:
So what are the stats? What statutory damages mean? So if I this happened to me when I was 20, 21, I was the Simpsons the animated TV show had just come out and Bart Simpson was a hot rage and I had a guy I was selling t-shirts, white t-shirt, cotton t-shirts on the on the campus of Texas A&M University and one of the things that we sold was my buddy, my roommate knew a buddy of his in New Hampshire. I was down in Texas that was making these Simpsons illegal Simpsons t-shirts, you know, with Bart Simpson on them with little sayings, and we started selling them. Uh, you know, not knowing anything, being young, 21, naive people just wanted to make some beer money and we started selling them. And then we started putting them and we did a road trip across the United States and hung little flyers in dorm rooms and me and my buddy would camp out in a motel six for two days and someone would call peel off the sticker, call an 800 number, days before the internet, and then we would go deliver the shirt. And after about two months of doing this, this, the company that owned the Simpsons out of Kansas City caught wind and sent us a cease and desist and they basically said you got to destroy your inventory and tell us how much you’ve sold and all this. And I think we just made some stuff up and just said oh, we’re just young kids and put our hands in there, oh, so sorry, we’ll destroy everything. But if they wanted to and they didn’t pursue us but if they wanted to pursue us, what could they have gotten? On the statutory side, or the damages or whatever. What can you actually get?
Stan:
Okay. Statutory damages mean by statute. Congress has decided what damages a court can award, and one of the reasons for that is when you’re dealing with counterfeiting or copyright infringement, if you really don’t have access to the defendant or they’re not being cooperative and not telling you how many they sold, it’s very hard to prove what your damages are. So for trademark counterfeiting, congress has said statutory damages of up to $2 million may be awarded. Okay, and on the copyright side, you can get statutory damages up to 150,000, and that may be trebled if it’s willful. Okay, so you can. It means you know the plaintiff no longer has to prove what their damages are. For example, if you’ve got somebody that you know has sold 2,000 units and you know when you sell 2,000 units you would have made $100,000 in profits, you would make a claim for lost profits of $100,000. That’s hard to do if the bad guy won’t tell you how many they’ve sold.
Kevin King:
I was just recently in Vegas at the Mob Museum. They have a Mob Museum there and in the Mob Museum there was a display I’m going to pull it up here on my phone real quick, about counterfeiting and IP and knockoffs. And they say I took pictures of the sign because I’m going to put this in my newsletter. But they say that counterfeit products are a more than $1 trillion illegal business for global organized crime. Two-thirds of faked and pirated products are produced in China. In the past, counterfeit products were sold mostly by discount merchants and flea markets, but today most transactions occur on the internet, on marketplaces. Nike, Ray-Ban, Rolex, Louis Vuitton they’re the most copied brands. Medicines also highly. A lot of medicines are also counterfeited and unregulated drugs that could really be messing with people. They go on on a whole bunch of stuff and they say that it’s $2 trillion in revenues per year. About 80% are made in China. This is another screen that they showed and organized crimes behind a lot of it. But then they actually broke down the countries, too, of where most of this happens and they say that China, the UAE specifically Abu Dhabi and parts of Italy out of the Port of Naples. Those are the three main, China, Abu Dhabi and the Port of Naples is where most counterfeit stuff passes through. So, is there anything? That, as a seller, is what we can do when we’re dealing with any of these regions or any of these districts or anything when we’re manufacturing overseas? Yeah, we can get the trademark in the US, but anything we can do, because maybe I don’t know, you know my product is being, you know, I know if someone guys makes it in my factory, knocks me off and puts it up on Amazon in the US, I know and I can go after them. But what if they’re not doing that? What if they’re sending it to one of these syndicates in Abu Dhabi or Naples and it’s just going all over Europe and I have no idea? How can I? Is there a way, is there a source that I can monitor anything like that? Or is it just I just got to have serendipity and run into it somewhere or someone report it to me? Is there anything? How do you, how do you, how do you monitor this stuff worldwide?
Stan:
Okay, you’ve asked several questions.
Kevin King:
Yeah, I did.
Stan:
All right. But you know, a lot of people sort of view themselves as US sellers. They come up with a product they’re selling into the US. They’re not thinking about foreign stuff. But if you’re going to be knocked off, it’s going to be in some foreign country and then the product’s going to come back into the US. You know, and you said, two-thirds of the stuff is made in China. I think that might be a little low, but one of the things we advise our clients is you want to think about getting IP protection in China. So if you have to go after people and you have a problem, you can do something about where it’s manufactured. Otherwise, all you can do is try and control the sale in the US. So when you’re starting to build a brand, you really need to be thinking globally. And if you’re looking to exit, a lot of exit plays are let’s purchase some brand that’s sort of US centric and then try and replicate the success by selling into other countries. You know expansion. To do that, your buyer is going to need some assurance that you’ve got the trademark rights in those countries some. So you know, when you’re starting to think about what you’re doing. You want to be thinking about the global IP, even though it’s going to be a drain on your budget. Now, you know, one of the fascinating things in this business is AI, and folks are starting to use AI to monitor different websites and see what’s for sale in various countries and on various marketplaces. Because if you’re not using AI, it’s basically a manual process, but one of the great ways of learning about things is using your customer base. You know, I know folks who have set up incentive programs, so if their customers tell them about a knockoff somewhere, you know they get something maybe a discount, maybe a free product, depending on the price point, et cetera. You know, but you want to listen to your customers and encourage your customers to report the knockoff products to you.
Kevin King:
In the US, everything gets published. Yeah, this global stuff sounds too complicated. I don’t want to mess with that. I just want to make sure I’m okay in the US. If I wanted to stay on top of things, I can actually subscribe to the government publication or something. All trademarks get published for opposition or what’s it called? Some sort of little booklet that comes out every so often. You can scroll through there. That looks pretty similar to mine. I’m going to follow an objection.
Stan:
You’re getting yourself here.
Kevin King:
Am I? Okay, I’m alright.
Stan:
When I started there actually were paper booklets both on the patent side and on the trademark side. On the trademark side it’s called the Trademark Official Gazette. Okay and that’s where all applications in the US are published. After the examiner says I’m okay with this, but I’m human, let’s see if anybody in the universe has a problem with it. So they publish it and you’ve got a period of time to file an objection or an opposition before the registration issues. If no opposition is filed, the registration will issue and then the registration will be published in the official Gazette as well. These days there’s no paper booklet. The booklet nomenclature continues to exist, but they’re published on the Pat office or the Patent and Trademark Office website, so it’s an electronic version. But there are what watching services out there that folks can subscribe to, where the watching service will notify you of when there’s a similar mark to yours, and you can watch in the US, you can watch around the world. You can also go on the Trademark Office website, tmsearch.uspto.gov and do your own searching for the US trademarks. That’ll pick up both issued registrations, pending applications and also abandoned applications.
Kevin King:
I’ve seen this happen, I think with Burger King. It was Burger King, you know, has the trademarks and all their IP protection in the US and I think it’s this is probably 20 years ago. They, for whatever reason, they didn’t file it properly or didn’t do it at all, like in Colombia. And you go into Colombia and here’s Burger King with any Burger King it’s some other like hamburger place, it looks like a Burger King with some of the similar colors and slightly changed logo, but it’s Burger King and now Burger King wants to go into Colombia with their official brand. Is there anything they can do other than negotiate with those people to, or is there any post-mortem rights, like after the publication that you just said in the gazette oh shit, we missed it. Uh, that was. Is there anything you can come to do after the fact?
Stan:
You can try and cancel the registration either in the us or in other countries, saying that the registration was fraudulently obtained. But that takes time and effort. There’s some uncertainty to it, so oftentimes folks will just end up negotiating with the pirates who got the registration in whatever country they’re interested in. But it slows down deals. It impacts the pricing because of the uncertainty and with the Internet and Amazon everything’s sort of global these days. It’s not just the US market.
Kevin King:
What’s something that you would recommend. Every seller that’s listening to this, every person that’s selling on Amazon or Walmart or TikTok shop or something right now that’s listening to this going. Yeah, this all sounds good, Kevin, but I just don’t know. I don’t have a bunch of money for this kind of stuff and I just don’t want to do this. I just want to make a little bit of money for my family and I’m just going to sell. I’ll worry about this stuff later. What would your advice be to them?
Stan:
You need to take a look at really what you want to accomplish. You should have trademark registrations in the United States and I would encourage folks to think about getting them in other markets where they may expand or where the products are made. You know the knockoffs are really going to be coming from China. The Chinese protection is fairly cheap. Once you have it, you can use it to take request takedowns off of Chinese based websites and Chinese marketplaces. So you want to look at that and you know if you’re launching a new brand or a new product, you know you want to think about patent protection. Because once somebody starts I mean what we found is typically folks will start by knocking off your product. You know the product itself calling it the same thing and so it comes up in the searches and once you start an enforcement program they’ll move away from calling it the same thing and using your brand name. But it’s still a copy of your product and the only way to deal with that is through patent rights.
Kevin King:
What about for, like, digital contents? Let’s say I have a. This has happened to me. I have a course on how to sell on Amazon and I’m selling this course to save for a thousand bucks. Well, inevitably, this happens every time with my Billion Dollar Seller Summits. Someone will buy the course, usually using a stolen credit card that I don’t know about, until two or three weeks later they download the whole course, they upload it to some server, usually in Russia, and then they go out and they sell it for 20 bucks a pop to a bunch of people and make money off it. And there’s services that monitor this and they will report back to you and someone will do takedowns in certain countries where they actually will issue the DMCA things or whatever it is that they issue. But there’s certain areas like Russia that just basically, you’re screwed. There’s just it’s like f off, uh, we’re not taking anything down, there’s no enforcement. Is there actually a way, I mean to do that without breaking the bank and spending hiring local Russian lawyers and just going to town? And that’s why a lot of stuff on they. These guys are preying on that. They know that most people aren’t going to go spend that money or go to that effort. So they’re just like, they’re just going to like up, just accept it, and that they build that into their, their business model.
Stan:
You know, given the state of relations between the US and Russia, you know it can be difficult to do things, but you know there are different tactics that can be done, can be invoked. So I wouldn’t just throw up your hands and say there’s nothing I can do. I would talk to a lawyer that’s familiar with this area and see what the options are, given the damage that it’s causing you. Because I mean, we’ve had cases where you’ve got seven sellers on Amazon. That are seven. You wouldn’t think that’s going to cause a lot of damage, right? A small number of sellers. They’re selling seven million dollars worth of product. Okay, it’s causing a lot of damage even though they’re just a few sellers. So you need to figure out you know what, what is your pain tolerance and does it really make sense to try and enforce your rights? But you just can’t say, because it’s one or two, that it doesn’t make sense. Those one or two or three or four may be doing an awful lot of damage.
Kevin King:
If I’m an Amazon seller and, like in this case, I got seven other sellers on my account and I’m like, okay, I want to take these guys off, I send them cease and desist. I’ve gone through the traditional, little cheaper methods and contacted Amazon and just I can’t get them all off, I’m going to take them to court. What am I looking at? Am I looking at $5,000 to $100,000 range? Am I looking at? Depends on where this how much litigation and prep work this is and how big the case goes. What am I? Just a ballpark figure of what I might be looking at.
Stan:
I mean, we’re very cognizant that you know a lot of Amazon sellers are smaller folks and you know they don’t have a big lawyer legal budget, let alone a litigation budget. So we work with the clients to make this very affordable for them if we’ve got to go into litigation.
Kevin King:
And what does that mean though that’s a, am I. When you say very affordable, does that mean you work for a percentage of what you recover, or is that where you work for a flat fee or what?
Stan:
We’ve done it all sorts of different ways. You know. We really need to understand what the problem is that we’re trying to address.
Kevin King:
But so but a general range is, I mean, what’s okay? You maybe can’t give a range because there’s a lot of variables in there, but what’s a really expensive case that you’ve had to fight that might have just was a really complicated, detailed case, and what did that end up costing?
Stan:
I mean the amount of time that goes into it. You know it can be in the several hundreds of thousands of dollars, but you know we want to help people on Amazon who sell on Amazon. You know and we recognize to do that we’ve got to make our fees affordable. We’re not going to work for free, but we do want to work and we do want to help people.
Kevin King:
What’s the difference between, if I’ve got a problem on Amazon, me contacting you versus contacting one of these other Amazon services? There’s several of them out there that are ex-Amazonian people that like, oh, we can help you get your listing back, we can help you do this fight. When should I consider maybe using one of those guys versus actually using proper legal counsel?
Stan:
We bring several advantages to the table. We’re patent attorneys. We do a lot of patent, trademark and copyright work. We can take care of cases at the trademark office. If we need to oppose something, we need to file a cancellation action. We can do work on the patent side as well, both in terms of re-examinations and filing patent applications, but, moreover, we have the ability to go into court. We do a lot of our litigation here in Pittsburgh, which is our home base. We’ve got a small bench. We’ve been in front of all of the judges and they understand the problems that sellers face, and what we find is typically clients start with somebody else before coming to us and what happens is it becomes a whack-a-mole. They don’t. You know your former Amazonians et cetera, who do take down requests. They take down the listings and then they pop back up because there’s no ouch there. When you go into court, there’s an ouch there. And because you know what’s the downside to a seller who has their listing removed on Amazon, they’ve got to set up another listing right? They’re losing potential sales. You go into court, you can get damages. So not only is the listing taken down, there’s an ouch on the money side and I probably shouldn’t say this. It’s a sad commentary on the state of affairs, but once you start an enforcement program in court, the knockoff people typically move to another product where they’re not going to be hassled.
Kevin King:
And you get a judgment in court, you can take that and actually freeze their funds at Amazon. File that with Amazon Legal in Seattle and actually Amazon will freeze those funds until the court orders them to be. They don’t just give them to you, but they’ll freeze them and then the court orders them to be released.
Stan:
Right. And when we go into court, we’ve taken the discretion away from Amazon, so there’s no uncertainty who’s going to pick this up at Amazon? You know the last five takedown requests worked, but is this one going to work or is somebody going to look at it a little differently? And then you also get the funds frozen, and Amazon likes this because they can then tell their customers this isn’t us making this decision. A judge told us we had to do this and we’re doing what the judge told us. If you don’t like it, go talk to the judge. Don’t be talking to us. We’re your ally here, we’re not your enemy. We didn’t take down your listing because we decided to. A judge told us we had to.
Kevin King:
Well, Stan, this is uh this has been great. This has been fun. If people want to reach out there maybe they got some issues going on they want to get a hold of your firm and talk to you and see if you might be able to help them out. What’s the best way for them to do that?
Stan:
Well, we have a practice area website devoted to this, onlinecounterfeiting.com, so you can check that out. We’ve got some videos of clients talking about how we’ve helped them. Our firm website is ferencelaw.com F-E-R-E-N-C-E-L-A-W.com, and you can also email me [email protected]. Now we please be pleased to talk to people, and what I tell folks is you know I don’t want you to be self selecting. You know, tell me what your problem is on Amazon or the other marketplaces and let me figure out the best way that I can help you.
Kevin King:
Thanks, Stan, and I’m glad I got to meet you at Innovate in New York and it’s been a pleasure.
Stan:
All right, thanks for having me.
Kevin King:
IP protection is something that a lot of sellers overlook. They just don’t want to spend the budget on that or it’s just something that’s bores them and they don’t think they need it. But as soon as you don’t think you need it is when you need it. It’s just like insurance. Sometimes you pay it for eight, nine, ten years and never have a claim and then all of a sudden boom, that massive flood comes or that fire comes and you’re glad you had it. So IP is similar. So if you’re not getting serious about your IP protection and not just in the United States, but in other countries, especially where you manufacture just like Stan was talking about I highly suggest you get onto that right away and get yourself fully protected. We’ll be back again next week with another awesome episode of the AM/PM podcast. In the meantime, I’ve got some words of wisdom for you before we part. Life is to be spent, not saved. Life is to be spent, not saved. See you again next week.
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