Steve Suddell, inventor of the “Neck Hammock,” raised just over $200k on Kickstarter. He was on cloud nine – for about a minute. A week later, he began receiving angry emails from backers stating that his product was being sold for 50% less on other websites. After some investigation, he found websites featuring all of his images, videos, and content, advertising the Neck Hammock at half the price. He was concerned that Kickstarter would take his project down (as was the case with another product campaign, C-Rest), because the listings violated their policy of “not being able to sell the product anywhere else as long as the campaign is active.” The problem was, his product was not being sold elsewhere; rather, it had been copied and counterfeited. This has become very common with Kickstarter projects, and while Kickstarter is aware of the problem, it has not taken any steps to help the creators/inventors on its platform.

Yekutiel Sherman also knows all too well what it’s like to become a victim of China’s lightning-speed copycats. After he launched his Kickstarter campaign (but prior to manufacturing his first unit) of the “Stikbox,” a smartphone case that turns into a selfie stick, a cheap knockoff version of the product was being sold on AliExpress at half the price.

Unfortunately, these experiences are not uncommon. Crowdfunding platforms, Amazon and sites like Taobao have become feeders for knock-off artists to source other people’s new gadgets. These companies are deep-pocketed, and can get a product manufactured and sold well before the inventor’s campaign is fully funded. This just goes to show that your brilliant idea – even if it is patented or trademarked – could be on sale through Chinese distributors or other bootleggers even before you’ve gotten your project funded.

If you are an inventor who is considering using a crowdfunding site to fund your new idea, be diligent in protecting your proprietary information. There are strategies you can employ that describe the features, advantages, benefits and objectives of your invention without disclosing key details that would enable someone else to rip you off. Consider scheduling a consultation with an experienced intellectual property attorney who can provide you with some affordable strategies to protect your product, such as working with U.S. Customs and Border Control.

Due to China’s classification under the UPU, the U.S. is forced to subsidize shipping costs for Chinese imports – including counterfeit products – to the tune of approximately $300 million annually. As such, it oftentimes costs Chinese manufacturers and counterfeiters less to manufacture and ship products to the U.S. than it does for American companies to ship products within the U.S. This has become an increasingly troubling matter for American businesses over the past few years as consumer shopping has largely moved from brick and mortar stores to e-commerce platforms such as Amazon. Specifically, Chinese counterfeiters are able to severely undercut the price of authentic goods on Amazon (and eBay, etc.); making the counterfeit a significantly more appealing option to the unaware consumer.

This concern was echoed by President Trump’s trade advisor, Peter Navarro, who stated in a recent op-ed that this pricing “inequity puts American small businesses and manufacturers at a severe competitive disadvantage.” Navarro went on to detail how U.S. businesses and manufacturers pay between $19 and $23 to ship a 4.4lb package while China post only pays $5. It does not take an economist to see how such a disproportion is harming U.S. businesses.

As such, and in keeping with his America first policy, President Trump formally moved last week to withdraw from the UPU; an effort that is widely supported by U.S. shipping companies and manufacturers. Withdrawing from the UPU is a yearlong process, and if finalized in 2019, the U.S. will lose access to internationally recognized barcodes that allow parcels to be shipped throughout the UPU member countries. However, because it does take so long to formally withdraw, it gives the Trump administration ample time to renegotiate the rules and rates with the UPU and then rescind its notice of withdrawal. This is the most likely outcome, and one that will benefit U.S. product inventors, owners and distributors considerably.

Until this matter with the UPU is resolved, it is essential for product marketers to monitor third party sales of their products online to ensure counterfeits are not being offered at a lower price (and quality). Federally registering product trademarks and copyrights, as well as utilizing tools such as Amazon’s Brand Registry can help combat these counterfeiters and more effectively remove unauthorized product listings.

The copyright is so overlooked that even product attorneys forget what a powerful member of the IP protection league it is. For example, patent rights enforcement tends to be technical and complex, often requiring long, costly legal battles with Tony Stark caliber experts to prove infringement. However, copyrights, which protect property such as images, illustrations, infomercials, and product packaging, are pretty easy to eyeball, even for an untrained juror.

Copyright is also the most affordable IP protection to secure. Moreover, copyright infringement triggers statutory damage awards that can soar to up to $30,000 per occurrence; plus, recovery of attorney’s fees. As such, trial attorneys are more willing to take on a (properly registered) copyright infringement case on a contingency basis. Of course, statutory damages are merely a fallback, with many product owners seeking actual damages (i.e., lost profits), which is an entirely different hulk of a task.

Additionally, the copyright is the only member of the IP protection league that successfully combats counterfeit sales on platforms such as Amazon; trademark registration alone will not suffice to remove counterfeits on Amazon. To be sure, the counterfeit seller merely has to allege that it is selling a legitimate product, and then there is no infringement thanks to the First Sale Doctrine (you bought it, you own it, you can resell it and call it what it is). In some instances, the infringer changes the name of the product, which effectively shields it from a trademark infringement claim altogether. However, the right to resell a product does not give rise to the right to display copyrighted images for the purpose of that sale. This is another reason why the copyright is so powerful.

While patents and trademarks are formidable tools for many reasons other than defending against knock-offs and counterfeits, with the copyright being such a low-cost titan in the IP universe, it’s a wonder more businesses do not utilize its armor. For maximum protection, copyrights need to be registered in a flash, so be sure to summon an intellectual property attorney prior to your product rollout.

Luckily for fans, Michael’s death spurred the release of new material from and inspired by MJ; material that Jones claimed he was owed royalties based on contracts dating back to 1978 and 1985. As producer of Michael’s albums, Jones was granted rights and royalties to the music he produced, including the right of first refusal for reediting or remixing songs. Jones claimed that not only was he not consulted by companies such as MJJ Productions and Sony prior to the release of material containing edited music, but he was not paid royalties in full. Though Quincy has received $8 million in royalties since 2009, taking his cue from Michael, Jones was not going to stop till he got enough, and sued Michael’s Estate seeking $30 million in damages.

Material at the heart of the suit included, This Is It, a concert movie and documentary that was released just a few months after Michael’s death. Gross receipts from the film topped $500 million, with Jackson’s estate allegedly receiving $90 million. Additionally, the Cirque du Soleil production, Michael Jackson: The Immortal World Tour, was performed for over 2 million audience members and earned over $300 million. Michael Jackson One, the Cirque production at Mandalay Bay in Las Vegas, continues to wow audiences 5 times a week.

As trial was getting underway, Jones made an off the wall allegation of elder financial abuse; a cause of action dismissed by the judge as being too late to include in the case. Jones may have been getting a little greedy, but perhaps that’s just human nature. After the refusal, Jones’ attorneys got down to business and made the case out to be a very black and white breach of contract.

Jones should be pleased with his award of $9.4 million (as Michael’s Estate alleged he was owed less than $400,000). Jones’ case is a great example of why it is so important to have clear and concise contract terms, including those regarding royalties and audit rights in the event of a dispute. These types of disputes are more common than some may think; particularly for video/infomercial production companies. Be sure to consult with an attorney when negotiating or attempting to collect royalties.

When dealing with infringement on Amazon and eBay, the process usually goes something like this: you search for your product on the platform and find an unauthorized listing (or oftentimes, several) that displays your trademark and images from your product website. You (or your attorney) fill out the infringement report provided by the platform, and typically within 48 hours you receive the notice that a reported listing has been removed.

Unfortunately, in many instances, the listing goes right back up because the seller is not prohibited from relisting a product after being reported and removed for infringement.  Thus, takedowns become a frustrating game of whack-a-mole until it ultimately becomes apparent that the infringer is not giving up.

In these situations, copyrights become the product owner’s greatest intellectual property asset.  If the infringer is using images, videos or text from the product website or infomercial, you can request a subpoena from the clerk of any United States district court for the identification of the infringer, without filing a civil action.  Although this may seem like a tedious process, it can be much more efficient than continuously reporting the same infringers.

Digital Law Group has takedown experience on Amazon, eBay and Alibaba, and has issued subpoenas for seller information.

Please Email us if you have any questions or concerns regarding the content above.

What you need to know…

When you file a trademark, patent or copyright with the US Patent and Trademark Office, US Copyright Office or other IP-related government entities, your application becomes public information and anyone can access these databases. So-called marketing companies take your information and then solicit their victims via email or regular mail for services seemingly related to intellectual property or domain name registrations – services that you don’t actually need.

The solicitations may include:

(1) Offers for legal services to file your IP in another country.

(2) Trademark monitoring services

(3) Invoices for renewals (coinciding with your registration dates)

(4) Recordation fees for trademark registration with U.S. Customs and Border Protection

(5) Offers to include your trademark listing on private registries or directories

(6) Invoices for foreign registration

(7) Notifications that an unauthorized 3^rd party seeking to register your trademark or domain and will be approved unless you respond and pay the listed fees

These companies send out notices and invoices under official looking letterhead and often times, use government sounding names such as the “TM-Collection – International Register of Trademarks-Hungary,” The Asian Domain Registration Service” or “US Customs and Border Protection (CBP) Bureau.” Oftentimes they use scare tactics such as:

another company is attempting to register your intellectual property in their country and that if you do not respond, we will assume you have authorized this registration. Click here for more information on this scam.

Other times these scammers will simply send you an invoice in order for you to register your trademark from Hungary, for example, (in the amount of $1650.00 or otherwise be advised that you that you will lose your rights to register in the future).  Again, the solicitations are worded in such a way so as to appear that these fees are an ordinary charge and that you are obligated to pay to protect your intellectual property.

Alternatively, victims who already own a “.com” domain name are warned by so-called international domain registries that they need to buy all of the other variations from .net, .biz, .cn ,etc. in order to protect their trademarks within their countries. The truth is that you don’t need the help of these officious third parties as you can easily register alternative domains yourself with reputable registrars in your home country for a few dollars each a year.

If you receive any kind of renewal or listing notice, here are the six basic things you should do to avoid a scam:

• Check the source of the official correspondence – communication from the USPTO will either come from an address in Alexandria, Virginia or an email return address would end in “@uspto.gov.”
• Research the exact name of the organization that sent out the invoice and see whether they show up on any watch lists (or simple google their names)
• Read every word of the document. If it’s a “legal” trick, it will say somewhere (even in very small print) that it’s a solicitation, not an official invoice. You will probably note bad grammar and misspelled words in the solicitation as well.
• Know the normal maintenance filing deadlines and requirements associated with a U.S. Trademark — which typically occur between the 5^th and 6^th year after registration and again between the 9^th and 10^th year.
• Trust your instinct. Maybe the due date seems too soon? Maybe the due date has already passed? Maybe the details in the “notice” are limited and include no contact phone number?
• Work with your lawyer or other provider to help verify the authenticity and accuracy of any invoice or before paying it.

IP scams have become so rampant that that government entities have begun issuing warnings to advise intellectual property holders to be aware. Click here for the USPTO official warning. The World Intellectual Property Office also maintains a database containing samples of scam letters and invoices. Click here for samples of these “scam” invoices. You may also file an online consumer complaint with the Federal Trade Commission www.FTC.gov and/or email the USPTO @ TMFeedback@uspto.gov.

Readers, be on your guard for this new surge in patent, trademark and domain registration scams deigned to trick inventors and businesses into paying hundreds or even thousands of dollars for bogus services.  Feel free to email or comment on this post if you’d been the target of one of these scammers.