Profiles in IP Law: Paul Brown, UL

UL’s certification marks are symbols of trust, integrity, and safety. They help ensure consumers’ peace of mind. We don’t make or sell physical products; we license our brand. Our reputation as represented in our marks is among our core assets. And, because we are a trusted brand, particularly for market access, we find that counterfeiters use our marks on their products to give them a halo of credibility. Our customers invest resources to earn the UL certification. It’s important to them that we help protect their investments by stopping parties from using UL marks to compete unfairly.

Consumer safety is very important to us as well. Products bearing a counterfeit UL mark provide a false sense of security to consumers because these items are often poor quality, shoddy, and sometimes very dangerous.

In 2016, we trained officers from US Customs and Border Protection at 12 different ports to identify counterfeit UL certification marks. We have similar programs in China, Mexico, and other parts of the world. Last year, US Customs seized over 500 shipments with counterfeit UL marks; however, we received many more inquiries.

In the 2016 holiday season, we saw hoverboards enter the market—however, many of these products were made with unsafe parts, and many of them had counterfeit UL marks. US Customs found and seized 52,000 hoverboards from more than 31 ports in the United States. I think we can say because of our brand protection efforts, we help prevent tens of millions of dollars of potentially dangerous counterfeit products from entering the stream of commerce and reaching consumers’ hands. This is part of our public safety mission. So, if you were to annualize the data, there’s more than one seizure per day of shipments of counterfeit products with unauthorized UL marks on them.

The College is a collaborative effort with Interpol. The mission of the College is to deliver world-class IP education to law enforcement agencies and other stakeholders around the world on how to effectively communicate and cooperate in the fight against counterfeiting and other IP crime. The College is delivered on a multilingual platform, with courses in English, Spanish, French, Arabic, Mandarin, and Portuguese, among other languages. So far, 12,500 people have been trained by the College, representing 454 global organizations from over 140 countries.

In 2017, we’re developing a new curriculum aimed at global customs officers. This will provide information and case studies on their role in securing supply chains and encouraging transnational cooperation between various law enforcement agencies. The College also has a platform for private rights holders to deliver customized courses to law enforcement to teach them how to identify the private rights holders’ counterfeit products and marks.

So, there are platforms for both the public and private sectors—it’s free for the public sector, and there’s a paid version for the private sector.

We have a number of investigators who have the responsibility to research cases for potential counterfeiting of the UL mark that come to our attention. We have full-time staff dedicated to responding to inquiries from US Customs—verifying whether or not a UL mark is legitimate. We have lawyers who work on brand protection efforts and a broader brand protection team that works with legal, our anticounterfeiting team, marketing, and our market surveillance group. They all work together to set our brand protection policy and help protect UL’s brand in furtherance of our public safety mission. So, we certainly devote a lot of resources to anticounterfeiting. It’s very important to us as part of our public safety mission.

I’d start with the basics of trademark protection. We’re probably largely talking about brand and trademark counterfeiting. So, make sure your trademarks are registered with the appropriate trademark offices—the offices in the countries where your markets are. You’re also going to want your marks recorded with US Customs. That’s a separate process after you have a trademark registration. If you don’t have a big enough legal team, or a legal staff member in each country, ask outside counsel you trust in your various markets that know the country’s system and laws. You also have to be firm and somewhat aggressive in your anticounterfeiting efforts. Develop a clearly defined policy as to when you will tell law enforcement to seize products and what’s counterfeit and what’s not. If you are inconsistent, law enforcement is not going to want to waste their time with you. It’s also important to train US Customs on how to identify your marks so they have all the needed information. We recommend if you can, have a dedicated internal team to investigate and respond to US Customs and really bring these matters to a resolution if possible.

Certainly, UL offers opportunities to meet other brand owners and law enforcement officials. We offer the IP Crime Conference that we host every year with Interpol and local law enforcement. The IP Crime College, which I have already mentioned, is also a good resource to learn about anticounterfeiting.

Another thing to keep in mind, your anticounterfeiting program should be a global effort. You need to look not only at where the products are being imported, but also where they’re being made and exported. There are other parts of the world, besides the United States, where counterfeits are being manufactured. Efforts can be taken there to stop counterfeits at the source before they even make it out of the country of origin.

China’s customs program is one that looks at both imports and exports from China. We work with China customs similarly to how we work with US Customs—we train them and help them identify counterfeit UL marks. They seize and detain products in much the same way as US Customs. There are also other administrative remedies in China that the United States doesn’t have. They have AIC (Administration for Industry and Commerce) actions where you can have counterfeits seized and destroyed with raids, in addition to police actions. We’ve had a lot of success in China with criminal actions. And we try to do similar things in other countries.

Know your customers, know your suppliers, and know your supply chain. If products are coming from strange sources or are in markets where you’re not selling them, that’s often a pretty good sign they are counterfeit. There are also security features that you can build into your products. For example, UL uses holographic labels on certain product categories to help us more easily determine whether a UL mark on a product is counterfeit.

There are all sorts of technologies that can be used to determine whether or not a mark is counterfeit. However, anything can be copied with enough time and resources. You have to try to stay one step ahead of the counterfeiters. While you can add any amount of technology or security features to a product, at some point it becomes cost prohibitive. Consumers may not choose to pay the extra money for security features. It’s really a balance.

Owners use all sorts of various tiny, microscopic particles that you can put into labels, which sometimes require sophisticated machinery or equipment to detect. For a higher value item, you might want a very accurate detection method.

Yes, and testing tools are part of our operation too. That’s part of the suite of tools we give to US Customs, helping to identify counterfeit UL marks. But, if there’s an expensive piece of electronic equipment needed to detect whether or not a label is accurate, are you really going to give that to thousands of US Customs officers and train them on how to use it? If it’s something that’s Internet-based, these guys are often in warehouses and on shipping docks. They’re not necessarily going to have an Internet connection to look up a QR code or something else. So, you want to ensure that your anticounterfeiting features are good and accurate but not so sophisticated that they’re unusable in the field.

Depending on the particular port or country, you may have to go in person, but it’s not always necessary. It may be that they send you pictures or other evidence, or it may be that a registered agent, whether a law firm or some other party, can look at a shipment of potential counterfeits It’s often just pictures or other information. Hopefully, it’s enough to make a determination.

It’s one thing for the products to get detained and stopped by US Customs, but if products have made it through, you’ve also got a remedy against the importer or the party that’s going to distribute the goods. You’ve got the ability to go after them through private civil action that may include negotiating a settlement with cease and desist letters or bringing a lawsuit. You also might want to investigate whether there’s a bigger distribution problem going on. I would say if you’re seeing large shipment volumes or multiple instances of the same product being counterfeited over and over, and it looks like it’s coming from the same source, then there might be some kind of organized distribution network.

We do have a civil program where we go after counterfeiters and have collected money, which goes back to funding our public safety mission. But, it really depends on the facts. A lot of times it’s fly-by-night operations so it may not be worth spending on litigation. But, in other cases, you may have a bigger distributor or retailer selling products that are counterfeit and causing financial harm to the brand owner.

An investigator or someone else who is familiar with your marks and your brands can identify counterfeits at a flea market. You can serve sellers with a cease and desist letter . . . I would recommend doing that right away. If you catch them doing it again, they have knowledge, which gives you good facts for a case of willfulness, giving you enhanced remedies for trademark infringement.

Also, if you have good reason to know there will be counterfeiting of your brand at a flea market, you can bring law enforcement with you to seize product. You will see similar things, for example, with counterfeiters outside concerts. They’ll have bootleg merchandise and, a lot of times, you’ll see US Marshals serving temporary restraining orders against those counterfeiters, stopping products before they’re even sold.

That can be very challenging. There are various tools available to scour the Internet to find counterfeit product. It’s more of a visual thing; one data point. There are certain product categories our customers don’t sell on certain retailer platforms. So, when we see those, we have a pretty good suspicion that they are fake. We also do some random purchases online from certain marketplaces to see if the products we buy are legitimate. Drop-shipping and using express consignment has definitely made it more challenging. You have any number of these online platforms that connect you to a number of manufacturers and retailers around the world, making policing much more difficult.

That’s definitely a more cost-effective way to do it. We have an investigator on our staff who’s solely focused on online enforcement, but not every brand may have those resources. Building relationships with the platforms is important as well because most don’t want to be in the business of selling counterfeits.

This is a rapidly evolving area. In the past couple of years, we’ve seen a lot more interest in or from the platforms in trying to stop counterfeiting. I think getting to know the people who operate the platforms is helpful to understand their positions and build up relationships. Then, when you do have a problem, you’re going to get more cooperation in resolving it.

Counterfeiting is never going to stop—understanding that is important. We handle it by using a multipronged approach, a combination of enforcement, partnership, and education.

We’ve talked a bit about US Customs enforcement and law enforcement, but we take our own private civil actions when we need to. We partner with US Customs, law enforcement, and other brand owners. We build our network of parties who are interested in stopping IP crime. We educate through the IP Crime College. We’re involved with the International Trademark Association (INTA) and serve on its anticounterfeiting committee, in addition to being a member of the International AntiCounterfeiting Coalition (IACC). These are all places where you can network and learn about how to stop counterfeiting, stay current on the law, and get information on which strategies are working and which aren’t. For us at least, this combination is working.

UL for a long time has collaborated with Disney on a number of videos aimed at kids, using the characters from The Lion King: Timon and Pumbaa. A couple of years ago, we put out a DVD with Disney called Safety Smart: Honest & Real, which was aimed at school-aged kids to teach them about the value of being honest. I know it sounds silly, but we are asked: “Are you trying to teach little kids about counterfeiting?” It’s helpful to start education at a very young age about why it’s wrong to steal and why it’s important to be honest. You really need to aim at all different age levels and parts of society to really get the anticounterfeiting message out there. It’s cultural, too. It’s not as bad in the United States as it is in other countries where there is just a cultural thought process of: “Yeah, it’s okay to buy counterfeit. It’s fine. They’re cheap. It’s just what we do.” So, it’s going to take a long time to change perceptions about that.

That video I mentioned, Honest & Real, has been translated in 10 or so different languages. One of the important things is getting people to understand that IP crime is not a victimless crime. Counterfeiting usually is associated with other types of crime, like human trafficking and drug trafficking. Counterfeiting is a fairly safe way for those criminals to make money, which is why they often do it, but it’s usually part of a bigger set of crimes. So it’s necessary to understand that when they’re buying that fake bag, it’s not money just going in some person’s pocket, it’s going to fund all these horrible things.

It’s very important to remember that trade agreements often contain provisions on IP protection. It would be a shame to lose some of those because counterfeiting is ultimately a threat to public safety. Regardless of what happens, I would hope that international law enforcement, US Customs, and brand owners continue to work together toward this common goal of stopping counterfeiting and IP crime.