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Selling Fake Designer Merchandise Could Cost You Millions

Posted on January 22, 2014 by Mintzer Law

Corporations that spend millions of dollars designing and manufacturing merchandise for sale protect their investment with trademarks or copyrights. Makers of designer products suffer huge financial losses due to counterfeit goods being sold as the real item. The owner of the trademark loses revenue as people buy fake merchandise instead of the real items, and they also lose when consumers are duped into believing that poorly made counterfeit items are the real product.

Selling Fake Designer Merchandise is Illegal

Federal and state laws make it illegal to manufacture, distribute, sell or possess with intent to sell merchandise known to be have a counterfeit trademark or other protected symbol identifying it as a designer brand. Texas, for example, classifies trademark counterfeiting as a misdemeanor or felony depending upon the value of the item.

The Texas criminal laws define a protected mark as a trademark, service mark or identification mark that is either:

  • Registered with the secretary of state in Texas
  • Registered with the United States Patent and Trademark Office
  • Registered according to the laws of another state

Anyone who intentionally makes, sells, distributes or possesses with the intent to sell merchandise bearing a counterfeit designer mark can be charged with a violation of the criminal laws in Texas. Depending upon aggregate value of the merchandise, a person could be charged with a felony punishable by imprisonment and fines up to $10,000.

Federal Laws Against Selling Fake Designer Merchandise

Under federal statutes, trademark infringement in connection with designer merchandise is proven if the owner of the trademark can establish that consumers will likely be confused by the fake or counterfeit product. Courts hearing cases alleging trademark infringement have generally agreed in their decisions that counterfeit merchandise causes confusion among the consumer population.

Penalties For Selling Fake Designer Merchandise

Aside from the criminal sentences courts may impose for violations of state laws against counterfeit merchandise, the Lanham Act permits the owner of a trademark to sue for monetary damages and for an injunction barring sales or distribution of counterfeit designer merchandise. Depending upon the circumstances, courts can award triple damages, legal fees and lost profits against a person or corporation violating a trademark.

Damages awarded for counterfeiting designer goods can be enormously high because the laws authorize the imposition of a $10,000 civil penalty for each violation. Each fake item constitutes a separate violation, so a person possessing 100 fake Gucci handbags might be subject to civil penalties in excess of $1 million.

Defending Against Claims of Selling Fake Items

A person who offers fake designer goods for sale might avoid civil or criminal penalties if it was done unintentionally. Not knowing that the merchandise is fake might absolve the seller of liability. Some laws, such as those in Texas, impose liability on a seller claiming ignorance of the true nature of the merchandise if the facts show the person should have known.

If you have been accused of selling illegal products, then you will need to speak with a qualified legal representative to learn strategies to defend your case. Contact Rand Mintzer today at 713-862-8880.