Jessica  R.  Brown  

Law  &  The  Arts,  Final  Seminar  Paper  

Trademark  Counterfeit:    A  Survey  of  United  States  and  Italian  Law  

11/24/2014  

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This paper is a survey providing a brief synopsis of the trademark policy and

legislation of counterfeit goods in the United States and Italy. Both nations are two of the

major players in the luxury goods market. Lawmakers in both countries have seen a

need, particularly in the last decade, to change their policy to curb the growing rate of

international crimes related to counterfeiting luxury goods.

As will be shown, the economic impact of the underground counterfeit market on

both nation’s industries is staggering, despite a general economic slowdown in the

western world over the last decade. Lawmakers in both nations have argued for change.

Over the last 10 years, Italy has implemented strict legislation to its criminal code

regarding counterfeit sale and purchase.1 World organizations such as the International

Trademark Association (ITA), the United Nations, and WIPO have conducted research

and studies on the problem and proposed solutions implemented in Italy, to be used as a

model for combating this international crime.2 Although U.S. law enforcement agencies

have acknowledged a growing need to combat trademark counterfeiting, there is a

disconnect between these agencies and the legislature which has led to relatively slow

development in trademark law and anti-counterfeiting policy.3 Where Italian law has

more of a focus on individual purchaser liability, there is a lack of U.S. case law

prescribing liability for end purchasers of counterfeit goods.4

I. Background: United States Law

                                                                                                               1 Italian Decree-Law No. 80/50 of May 14, 2005 (2005). 2 UNICRI, Report on Counterfeiting and Organized Crime: The Italian Case, (Feb. 12, 2013), http://www.unicri.it/in_focus/on/2013212_Counterfeiting. 3 Lisa Lyne Cunningham, Trademark Counterfeiting and Individual Purchaser Liability, Nat’l L. Rev., Nov. 11, 2011, at 1. 4 Id.; see also Italian Decree-Law No. 80/50.  

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It took decades for Federal trademark protection laws to attain the level of

protection recognized under today’s standards.5 In 1870, Congress passed the first U.S.

trademark law, An Act to Revise, Consolidate and Amend the Statutes Relating to

Patents and Copyrights.6 Prior to this Act of 1870, trademark protection was exclusively

regulated under state authority.7 In 1876, the Act was amended to include criminal

sanctions in addition to the civil sanctions included in the 1870 Act.8 Under this revised

statute, infringers were liable for up to $1,000 in fines and possible maximum prison

terms of two years.9 In 1879, the U.S. Supreme Court held that the Trademark Act was

unconstitutional, determining that the Patent and Copyright Clause of the Constitution did

not grant Congress authority to regulate trademarks.10 Trademark holders were obligated

to rely solely on common law trademark protection.11

In 1946 Congress passed the Lanham Act, providing a comprehensive federal

system for regulating trademark protection and infringement.12 The Act only provides

for civil remedies for trademark infringement,13 and was not created with counterfeiting

in mind.14 The Act permits the courts to enjoin future sales, manufacturing, or

distributing of counterfeit goods, but the regulations put in place under the Act itself do

                                                                                                               5 Id. 6 George W. Abbott and Lee S. Sporn, Trademark Counterfeiting, § 1.02[B] (2002).  7 Id.  8  Act of Aug. 14, 1876, ch. 274, § 1, 19 Stat. 141, (1876).  9  Id.  10  U.S. Const. art. I, § 8; see also Trade-Mark Cases, 100 U.S. 82 (1879).  11  Abbott and Sporn, supra, at § 1.02[B].  12  15 U.S.C. §§ 1051-1127 (2009).  13  Id. at. §§ 1114-1126.  14  Amanda Silverman, Draconian or Just? Adopting the Italian Model of Imposing Administrative Fines on the Purchasers of Counterfeit Goods, 17 Cardozo J. Int’l & Comp. L. 175 (2009).  

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not generally deter counterfeiting.15 Registered mark owners may recover monetary

damages against infringers in the form of (1) profits incurred by the counterfeiter, (2)

monetary damages caused to the mark owner, and (3) litigation costs.16 Civil sanctions

are based in equity,17 however the Lanham Act includes special provisions for civil

remedies, wherein the Act permits the court to issue “judgment for three times such

profits or damages, whichever amount is greater, together with a reasonable attorney’s

fee if the elements for counterfeit infringement are met.”18 Under the Lanham Act, a

likelihood of confusion is presumed in counterfeiting cases.19 Nevertheless, a

counterfeiter may raise any defenses under the Act, including nominative fair use.20

It was not until 1984, advocated by a group of registered trademark holders under

the umbrella organization International Anti-Counterfeiting Coalition (IACC),21 that

Congress passed the Trademark Counterfeiting Act, wherein Congress established

criminal sanctions against anyone who knowingly dealt in counterfeit goods.22 In order

to achieve stronger sanctions for counterfeiters, the Act authorized ex parte seizures of

counterfeit goods and punished first time traffickers with fines up to $250,000 and a

maximum of five years in prison.23 Chronic infringers could be fined up to $1,000,000

and criminal sanctions for repeat offenders carried a 15-year jail sentence.24

                                                                                                               15  Abbott and Sporn, supra, at § 1.02[B].  16  15 U.S.C.A. § 1114.  17  4 Callmann on Unfair Comp., Tr. & Mono. § 30:88 (4th Ed.).  18  15 U.S.C.A. § 1117(b).  19  4  Callman, supra, at § 22:34.  20  Id. 21  Abbott and Sporn, supra, at § 1.02[B].  22  18 U.S.C. § 2320 (1984); Rep. No. 98-526, at 3-6 (1984).  23  15 U.S.C. § 1116(1984); 18 U.S.C. § 2320(a) (1984).  24  18 U.S.C. § 2320(a).  

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The IACC again successfully lobbied for stronger counterfeit protection with

passage of the Anti-Counterfeiting Consumer Protection Act of 1996, which granted the

U.S. Customs Service broader authority to regulate counterfeiting.25 The Act stipulates

in Section 1136 that counterfeiting is a “predicate act” under the Racketeering Influence

and Corrupt Organizations Act (RICO).26 Section 1136 also imposed fines of up to

$1,000,000 for each counterfeit mark in intentional infringement cases.27

Most recently, in 2006, Congress passed the Stop Counterfeiting in Manufactured

Goods Act, which further increased criminal penalties for trafficking.28 Prior to this Act,

during importation into the United States, counterfeited labels or tags that were separate

from the generic goods did not trigger liability under counterfeiting laws.29 Congress

dealt with this remaining loophole in 2008, when it passed the Prioritizing Resources and

Organization for Intellectual Property Act of 2008, wherein Congress broadened liability

to include those who, “with specific intent, provide ‘goods or services necessary’ to the

counterfeiting.”30 In this most recent amendment to the 1984 Act, criminal sanctions

were increased for counterfeiters who knew or should have known the counterfeited good

would cause serious bodily injury or death.31 The amendment also further imposed

penalties for United States exportation of counterfeit goods.32

II. Impact Of Trademark Counterfeiting On U.S. Market

                                                                                                               25 Anti-Counterfeiting Consumer Protection Act of 1996, Pub. L. No. 104-153, § 1136, 110 Stat. 1386 (1996).  26  Anti-Counterfeiting Consumer Protection Act § 1136.  27  Anti-Counterfeiting Consumer Protection Act § 1136.  28  Stop Counterfeiting of Manufactured Goods Act of 2006, Pub. L. No. 109-181, 120 Stat. 285 (2006), (codified as amended at 18 U.S.C. § 2320 (2011)).  29  U.S. v. Giles, 213 F.3d 1247 (10th Cir. 2000).  30  4 Callmann, supra, at § 22:34.  31  18 U.S.C.A. § 2320(e)(1)(A).  32  Id.

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According to estimates from the Organization for Economic Co-operation and

Development (OECD), it is estimated that counterfeit products may cost the global

economy up to $350 billion per year.33 The United States is dominant in the international

intellectual property market, and counterfeit products cost our businesses over $200

billion in potential sales.34 Government agencies catch just a fraction of the fake

products that enter the United States, and the U.S. Customs and Border Protection (from

here on, referred to as “Customs”) values that seized fakes rose by 38.1 percent in 2013,

from $1.2 billion in 2012 to $1.7 billion last year.35 About $1.2 billion of the $1.7 billion

worth of imitations picked up by U.S. law enforcement agencies originated in China.36

More than $400 million worth of seized goods came from Hong Kong, which Customs

classified separately.37 This recorded loss does not take into account other economic

factors impacted by trademark counterfeiting, such as the effect on the mark owner’s

reputation, or the cost to the mark owner to prosecute counterfeiters.38 Luxury items tend

to be the most counterfeited products because they are more valuable.39 And with better

counterfeiting methods, there is a greater challenge of detection as well as potential for

                                                                                                               33 Thomas C. Frohlich, Alexander E.M. Hess and Vince Calio, 24/7 Wall St., 9 Most Counterfeited Products in the U.S.A. (Mar. 29, 2014, 11:59 AM), http://www.usatoday.com/story/money/business/2014/03/29/24-7-wall-st-counterfeited-products/7023233/. 34 International Anti-Counterfeiting Coalition, The Truth About Counterfeiting, http://www.iacc.org/about-counterfeiting/the-truth-about-counterfeiting.php (last visited April 22, 2011). 35 Frohlich, Hess and Calio, supra.  36  Id.  37 Id.  38  U.S. International Trade Commission, Foreign Infringement of Intellectual Property Rights: Implications for Selected U.S. Industries, Table 9 (2005).  39  U.S. Customs and Border Protection, Intellectual Property Rights Fact Sheet, http://www.cbp.gov/linkhandler/cgov/newsroom/fact_sheets/trade/ipr_fact_sheet.ctt/ipr_fact_sheet.pdf (last visited April 22, 2011).  

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even higher profits.40 Therese Randazzo, director of Customs policy and programs on

intellectual property rights, asserted in an interview with USA Today that, "Now, the

quality [of fake products] has improved so dramatically that [criminals] have been able to

charge at prices closer to the price of the genuine article."41

Based on information provided by Customs, 24/7 Wall St. reviewed the nine most

counterfeited items seized by officials based on the MSRP (manufacturer’s suggested

retail price) of the genuine article, and USA Today published the list. The nine most

counterfeited products in America in 2013 were:42

1) Handbags and wallets: MSRP of seized goods totaled $700.2 million; the percentage of total seized goods: 40 percent; roughly 2,200 shipments were seized.43 2) Watches and jewelry: MSRP of seized goods totaled $502.8 million; the percentage of total seized goods: 29 percent; the value of seized watches and jewelry grew by 168.9 percent between 2012 and 2013, considerably more than that of any other commodity.44 3) Consumer electronics and parts: MSRP of seized goods totaled $145.9 million; the percentage of total seized goods: 8 percent; the dollar amount of counterfeit consumer electronics products seized rose by 40 percent in 2013. The number of seizures of counterfeit electronic products grew in conjunction with their total value--there were 5,656 seizures in 2013. According to a report by Customs, one particularly large seizure in 2013 was by a joint U.S. Customs and China Customs operation. The two-month long operation resulted in 1,735 electronics shipments being seized; removing more than 243,000 counterfeit consumer electronic products from the market.45 4) Wearing apparel and accessories: MSRP of seized goods totaled $116.2 million; the percentage of total seized goods: 7 percent. The US seized almost 100,000 shipments of counterfeit apparel and accessories last year, by far the most of any commodity and up 26.8 percent from the year before. In 2013, Customs, in conjunction with other federal and local agencies, conducted "Operation Red

                                                                                                               40  Id.  41  Frohlich, Hess and Calio, supra.  42  Id.  43  Id.  44  Id.  45  Id.  

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Zone," which seized $17.3 million worth of fake sporting apparel — jerseys and ball caps — and other collectibles coinciding with the 2013 Super Bowl.46 5) Pharmaceuticals and personal care: MSRP of seized goods totaled $79.6 million; the percentage of total seized goods: 5 percent. Customs agents seized nearly $80 million worth of counterfeit pharmaceuticals and personal care products in 2013. This was 4 percent lower from the nearly $83 million of such shipments seized in 2012, and down 44 percent from $142 million in 2011. Total seizures of such products fell in 2013 to 2,215 from 2,350 the year before. The decrease in seizures can possibly be attributed as the result of increased international efforts to crack down on the sale of fake prescription drugs.47 6) Footwear: MSRP of seized goods totaled $54.9 million; the percentage of total seized goods: 3 percent. Customs agents reported 1,683 seizures of contraband footwear in 2013, 214 less seizures than in 2012. The value of these seizures dropped by nearly 47 percent in 2013, from $103.4 million in 2012. This was one of the largest percentage declines among products reviewed. Nike shoes are widely believed to be among the most counterfeited footwear brands.48 7) Computers and accessories: MSRP of seized goods totaled $47.7 million; the percentage of total seized goods: 3 percent. Last year, the total value of such goods seized was more than $13 million, or 37.5 percent, higher than the year before. This is despite the fact that genuine PC shipments have declined worldwide during that time.49 8) Labels and tags: MSRP of seized goods totaled $41.8 million; percentage of total seized goods: 2 percent. The number of counterfeit labels — trademarked logos and tags that are not attached to products — seized in 2013 was effectively unchanged from 2012. The value of these seizures, however, increased more dramatically. Last year, the market value of counterfeit labels seized rose by 59 percent to $41.8 million. Because consumers recognize many products and brands according to their labels and tags, the fake labels help deceive buyers and make imitations look more authentic. Counterfeiters often smuggle the fake labels and the fake products into the United States separately.50 9) Optical media: MSRP of seized goods totaled $26.8 million; percentage of total seized goods: 2 percent. Products such as games, DVDs and CDs that the CBP seized fell to 1,409 last year from 2,892 in 2012. The value of the seized counterfeit optical media products fell by 30 percent from $38.4 million in 2012 to $26.8 million in 2013. According to Therese Randazzo, the drop in seizures may be partly attributable to the Internet. In 2013, in an effort to fight online piracy, Internet service providers banded together to introduce the Copyright Alert System, designed to fight copyright infringement by warning users against illegal file sharing and downloading.51

                                                                                                               46  Id.  47  Id.  48  Id.  49  Id.  50  Id.  51  Id.  

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III. Legal Remedies: Counterfeiting as a Crime Under United States Law

Counterfeiters in the United States are subject to criminal and civil sanctions

under contemporary anti-counterfeiting laws.52 Section 2320 defines a counterfeit mark

as a false mark connected to generic goods otherwise identical to goods with registered

trademarks which are used in commerce and likely to cause confusion among

consumers.53 Under § 2320, criminal penalties are available for anyone who

“intentionally traffics or attempts to traffic in goods or services and knowingly uses a

counterfeit mark on or in connection with such goods or services.”54 The counterfeited

goods must be used in connection with a market similar to that of the registered mark.55

The same penalties are available to anyone who traffics counterfeit marks, which include

such items as labels and packaging separate from the goods themselves.56 Criminal

sanctions include fines up to $2,000,000 and 10 years in prison.57 Repeat offenders face

fines up to $5,000,000 and 20 years in prison.58

The Lanham Act assigns liability if the counterfeit goods are used in commerce.59

Therefore, United States counterfeiting laws target only individuals related to trafficking

the goods through manufacture, sale, and distribution.60 Section 1117(b) requires four

elements to be met before civil liability can be assigned for counterfeit trademark

                                                                                                               52  18 U.S.C.A. § 2320; 15 U.S.C §§ 1116-1118.  53  18 U.S.C.A. § 2320.  54  Id.  55  Id. at § 2320(e)(1)(A).  56  Id.  57  Id.  58  Id.  59  15 U.S.C. § 1125(a)(1).  60  Id.  

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infringement, and before a judgment can be entered for monetary awards61: the

“defendant was (1) intentionally using in commerce a ‘counterfeit’ mark; (2) knowing

that the mark was a counterfeit; (3) in connection with the sale, offering for sale or

distribution of goods or services; (4) which use is likely to cause confusion, mistake or to

deceive.”62 In practice, judicial application of the third element of counterfeiting under

the Lanham Act has generally meant that counterfeiting liability ends with manufacturers

and distributors of counterfeited trademarks, and not with individual purchasers.63

It is important to distinguish between counterfeit and knockoff goods. §

1116(d)(1)(B) defines counterfeit marks as “the counterfeit of a mark that is registered”

with the U.S. Patent and Trademark Office for goods or services sold by the trademark

owner without regard to the counterfeiter’s knowledge of the actual registration of the

mark, or “a spurious designation that is identical with, or substantially indistinguishable

from” a registered common law mark protected under the Lanham Act.64 Counterfeit

goods have copies of a brand’s label or signature symbols or marks that so closely

resemble the original, they appear identical.65 Knockoffs, on the other hand, don’t have

such words or symbols and merely resemble the original.66 When buying knockoffs

                                                                                                               61  Id. at § 1117(b).  62  4 Callmann, supra, at § 25:15.  63  Silverman, supra, at note 28.  64  15 U.S.C.A. § 1116 (2008).  65  Jennifer Saranow Schultz, The Legality of Buying Knockoffs, The New York Times, (Oct. 28, 2010, 12:15 PM), http://bucks.blogs.nytimes.com/2010/10/28/the-legality-of-buying-knockoffs/?_r=2.  66  Id.  

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without the label in the U.S., buyers are not generally liable.67 As to counterfeits, if they

are purchased for personal use, it is legal to buy them but illegal to re-sell them.68

Customs in the United States will allow travelers to bring in one counterfeit good

per category.69 The U.S. has generally refrained from penalizing the buyers of these

goods because 1) arresting or fining tourists would impact the tourism industry; and 2)

the knowledge component is difficult for lawyers, juries, and judges to prove—to

differentiate between consumers who know what they are doing when they buy

counterfeits, and those who think they are buying the real thing.70 Each U.S. tourist may

bring back to the U.S. duty-free $400 worth of goods purchased abroad.71 The goods

must accompany the traveler.72 A flat rate of 10 percent is assessed on the next $1,000

worth of goods purchased.73

Manufacturers and distributors shoulder the burden of liability and criminal

sanctions, and no individual purchasers of counterfeited trademarked goods have been

brought before a court in the United States.74 Looking specifically at the language of the

International Anti-Counterfeiting Coalition, there is no mention that purchasing

counterfeit goods is illegal, but instead it is claimed that the purchase “supports illegal

activity.”75

IV. Argument for Change: Should the United States Adopt Italy’s Policy?

                                                                                                               67  Id.  68  Id.  69  Id. citing Professor Susan Sacifidi, Fordham University, Fashion Law Institute.  70  Id. citing Professor Chris Sprigman, University of Virginia School of Law.  71  Italian National Tourist Board of North America, Travel Tips- Regulations, http://www.italiantourism.com/regulat.html (last visited 2014).  72  Id.  73  Id.  74  Silverman, supra, note 28.  75  International Anti-Counterfeiting Coalition, supra.  

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Many legal scholars are determining that an even more effective way to combat

counterfeiting would be to “hold individual consumers civilly liable for both purchasing

counterfeit goods and aiding and abetting the production and manufacturing of such

goods.”76 These proponents argue that “[t]he dual purpose of trademark law is corrupted

when end purchasers of counterfeit goods escape liability.”77 Historically, the United

States courts and legislature have taken a narrow interpretation of the Lanham Act, which

critics argue restricts law enforcement efforts to control the ever-growing black market

and counterfeit crimes particularly of luxury goods, by ignoring legal liability for

consumer purchases of such goods.78 This system could be juxtaposed with those of

other countries, such as Italy, where the evolution of intellectual property has led to the

implementation of end purchase liability.79 Critics of the status quo here in the United

States argue that adoption of end purchase liability would send a similar message to the

public that “anti-counterfeiting rules are serious and will be enforced.”80

V. Background: Italian Code

The Italian legal system punishes the crimes of counterfeiting under Articles 473

and 474 of the Criminal Code,81 which concern, respectively, “the counterfeiting or

altering of a trademark and the trading of goods bearing a counterfeit or altered

                                                                                                               76  Cunningham, supra, at 1.  77  Id. at 5.  78  Id.  79  Id.  80  Id.  81  International Trademark Association, Gabriele Lazzeretti and Peter McAleese, ITALY: Disclaimers on Counterfeit Goods: Supreme Court Has the Final Word, INTA Bulletin, Vol. 67, No. 18, (Oct. 15, 2012), http://www.inta.org/INTABulletin/Pages/ITALYDisclaimersonCounterfeitGoodsSupremeCourtHastheFinalWord.aspx.  

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trademark.”82 In the Court’s opinion, as long as a trademark is counterfeited—by being

reproduced identically or in an altered way—the conduct amounts to a crime punishable

under Article 473 or 474 of the Criminal Code, depending on the type of conduct.83

Consequently, the presence of a disclaimer, such as “Falso d’Autore” or a similar phrase

is totally irrelevant from a criminal law standpoint.84 The rationale behind this zero-

tolerance standpoint is that the likelihood of confusion, which these provisions are aimed

at averting, is not between the products but between the trademarks.85 For this reason,

any element relating to the product—for example, a low sale price that makes the goods’

authenticity unlikely, the circumstances of the sale (by street vendors, oral disclaimers,

etc.) or the presence of written disclaimers on the goods—is not taken into consideration

when assessing the likelihood of confusion and, therefore, the criminal liability of the

counterfeiters.86

Law 99/2009 introduced new provisions, some of which are particularly

significant.87 Article 473bis provides for the “forfeiture of counterfeit goods and any

materials used for counterfeiting,”88 while Article 473ter provides that the “involvement

of a criminal organization dedicated to piracy will be considered an aggravating

                                                                                                               82  Id.  83  Id.  84  Id.  85  Id.  86  Id.  87  Prandin Donatella and Verducci Galletti Simone, Policing Very Much in Fashion in Italy, article published in World Trademark Review (n.24 April/May 2010), http://www.bugnion.it/marchi_det.php?id=278.  88  Id.  

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circumstance.”89 Such criminal acts may result in heavy fines, prison sentences of up to

four years, and the destruction of infringing goods by order of the criminal court.90

The Industrial Property Code sets out further criminal law provisions in Article

127,91 which states that “without prejudice to the application of the… Criminal Code,

whoever manufactures, sells, exhibits, displays, makes industrial use of or introduces into

the country items violating a valid industrial property right, pursuant to the rules of the

present code, shall be punished - at the opposing party's request - by a fine of up to

€1,032.91.”92

VI. Impact Of Trademark Counterfeit On Italian Commerce

Italy has become more than a destination for fake luxury goods, it has become a

center of creation and assembly for an increasing number of counterfeit products.93 The

counterfeiters have become “multinational operations.”94 The perfume industry is a large

component of this.95 For example, the Italian authorities have found that a common

scenario is when a well-known luxury perfume is “knocked off” in a series of

multinational efforts-- where the scent was produced in the Far East, the bottle was made

in a Central European country, and the label was designed and attached in Italy.96 This

                                                                                                               89  Id.  90  Id.  91  Id.  92  Id.  93  Robert Galbraith, Made in Italy: Counterfeits that were once mere imports, Style- International Herald Tribune, (Oct. 3, 2006), http://www.nytimes.com/2006/10/03/style/03iht-RFAKE.3015963.html.  94  Id.  95  Id.  96  Id.  

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illustrates that counterfeiting is becoming as much a domestic problem for the Italians as

an imported one.97

In Florence, the Confartigianato Imprese Firenze, or the Confederation of Small

Artisans, discovered that counterfeit apparel and leather goods are being made in

increasing numbers in Tuscany.98 From 2005 to 2006, the number of counterfeit goods

being confiscated in Florence had risen sharply.99 The police seized more than 50,000

fake luxury goods in Florence in the first four months of 2006, about 40 percent more

than the same period in 2005.100 The problem in Tuscany as a whole was even worse,

according to Italian police.101 There were 3.6 million fake luxury goods found in 2004,102

compared with 640,000 in 2003.103

INDICAM, the Italian anti-counterfeiting agency, estimated that the sales of

counterfeit goods in Italy in 2005 ranged from €3.5 billion to €7 billion.104 Of that, about

60 percent was thought to be clothing, accessories, and luxury goods.105 The amount of

money generated made counterfeiting one of the most attractive illicit businesses to work

for Italians, and arguably still is.106

Italians spent more than €6.5 billion ($8.2 billion) on counterfeit products in

2012, according to a report by Italy’s census bureau, CENSIS, released in October

                                                                                                               97  Id.  98  Id.  99  Id.  100  Id.  101  Id.  102  Id.  103  Id.  104  Id.  105  Id.  106  Id.  

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2014.107 That figure has decreased slightly in recent years, due to Italy’s economic

slowdown, but is still a significant number in proportion to overall spending.108

According to the report, the counterfeit market is massive in Italy.109 It is most prevalent

in the southern region of the country, where nearly 80 percent of Italians know that

counterfeit products are being sold in their area.110 The CENSIS report listed that eight

out of ten Italians said they usually buy their knockoff goods, such as clothing and

accessories, on the street, followed by street markets, the beach, department stores,

online, and door-to-door sales.111 Italy’s CENSIS report generated a list of the top

counterfeit products Italians purchase, which with a few exceptions looks quite similar to

the top nine most popular counterfeit products in America:112 1) clothes and accessories,

at €2.25 billion (nearly $3 billion), accounting for roughly one-third of the total amount

the nation spends on counterfeit goods; 2) music and videos in the form of CDs, DVDs,

and VHS, generating €1.8 billion ($2.25 billion); 3) food and drink, earning €1 billion

($1.25 billion); 4) household electronics, €586 million ($740 million); 5) watches and

jewels, €380 million ($480 million); 6) information technology, €240 million ($340

million); 7) car replacements, €102 million ($128 million); 8) toys, €29 million ($36

million); 9) pharmaceuticals, €21 million ($27 million).113 If all of these fake products

were sold through legal channels, rather than on the black market, the Italian economy

                                                                                                               107  Stefano Pozzebon, Here’s How Much Italy Spends On Counterfeit Goods, Business Insider (Oct. 3, 2014, 11:03 AM), http://www.businessinsider.com/italian-spending-on-counterfeit-goods-2014-10.  108  Id.  109  Id.  110  Id.  111  Id.  112  Id.  113  Id.  

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would instantly grow by €17.7 billion ($22.3 billion).114 It would also mean 105,000

extra jobs.115

VII. Legal Remedies: Consequences For Counterfeiters Under Italian Code

Italy takes a strong criminal enforcement route when it comes to trademark

counterfeit enforcement.116 The introduction of specialized IP court sections, which

handle only IP cases, has made the Italian enforcement system more effective.117 Italian

case law has established that criminal law provisions apply only to registered trademarks,

not to applications.118 Moreover, these provisions do not extend to counterfeit goods that

are deemed 'gross' fakes.119 The criminal law protects the public interest rather than the

private interests of a trademark owner.120 The police and the public prosecutor control a

criminal action, once initiated.121 The owner of the infringed trademark may be called

upon to cooperate with the investigation and may seek damages during the criminal

trial.122

The task of preventing infringing goods from entering the Italian territory lies

with Customs.123 Italian administrative law provides further rules.124 Article 146 of the

Industrial Property Code establishes the right of a major or prefect to order the

administrative seizure of counterfeit goods and - with the relevant court authorization - to

                                                                                                               114  Id.  115  Id.  116  Silverman, supra note 6, at 185.  117  Donatella and Simone, supra, citing WTR Issue 19, June/July 2009, at 72.  118  Donatella and Simone, supra.  119  Id.  120  Id.  121  Id.  122  Id.  123  Id.  124  Id.  

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dispose of such goods at the counterfeiter's expense.125 Furthermore, Law 80/2005 of

May 14, 2005 provides that purchasers of counterfeit goods may be fined between €500

and €10,000.126

Italian Customs operates according to the EU Customs Regulation 1383/2003

concerning customs action against goods suspected of infringing certain IP rights.127

Italy has applied the regulation in the same way as other EU states.128 The regulation

provides that a customs authority can act against suspect goods in two ways: First, the

authority may act ex officio if it has sufficient grounds to suspect that goods infringe a

party's IP rights. It may suspend the release of the counterfeit goods or detain them for

three days, in which time it may ask the rights holder to provide information to confirm

the initial suspicion of infringement.129 Second, action can be taken at a rights holder's

request.130 Once a decision has been issued accepting the application, and after

consulting the applicant if necessary, the authority may suspend the release of suspect

goods or detain them for 10 days.131 On detaining or suspending the release of goods, the

authority will inform the rights holder and, if the necessary preconditions are met, will

report to the police.132 If the authority is not notified that criminal, civil or administrative

measures are being taken against the detained goods, it must release the goods.133

                                                                                                               125  Id.  126  Id.  127  Id.  128  Id.  129  Id.  130  Id.  131  Id.  132  Id.  133  Id.  

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Civil law tools are useful and effective when the trademark owner already knows

the act of counterfeiting and the party responsible.134 Once counterfeit goods and details

of an infringement have been discovered, a trademark owner can obtain a preliminary

injunction quickly and effectively.135 Of the possible interim injunctions available to

trademark owners, restraining orders and injunctions for seizure of the infringing goods

are likely to be most appropriate and useful in anti-counterfeiting actions.136 However,

ordinary court proceedings must be commenced within one month of an interim

injunction being issued, as failure to do so nullifies the injunction.137

VIII. Argument For Change: Italy’s Policy Implementation Over Last Decade

Although in 2006 the European Commission adopted a proposal to strengthen the

application of the criminal law to IP offences, the Italian legal system is one of the few in

the European Union to provide for criminal enforcement of IP rights.138 This is the

consequence of the fact that the legal interest protected by these articles is the “public

faith,” in its reliance on citizens’ legitimate reliance on the trademarks or distinctive signs

that distinguish industrial products and ensure their circulation.139 The Italian Supreme

Court—the most authoritative in Italian jurisdiction—has affirmed with recent decisions,

and through clear-cut wording, that a registered trademark must be protected every time it

                                                                                                               134  Id.  135  Id.  136  Id.  137  Id.  138  Id.  139  Lazzeretti and McAleese, supra.  

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is unlawfully reproduced on a product, irrespective of the fact that there is also a risk of

confusion between the products.140

The social and political dimensions of the fight against counterfeiting in

Italy has ensured that it is often discussed in public debates and included on government

agendas.141 In early 2009 the Ministry of Economic Development, the government body

responsible for anti-counterfeiting, was extensively restructured.142 The Department for

the Fight Against Counterfeiting was created and the post of high commissioner for the

fight against counterfeiting was abolished.143 The Department is in charge of

coordinating and implementing the development of the Italian Patent and Trademark

Office.144 In 2009 the Department launched media campaigns to raise public awareness

of the damage caused by the trade in counterfeit goods, as well as the social and personal

risks involved.145 Most recently, the Department established an Anti-Counterfeiting

National Committee was established, pursuant to Article 145 of the Industrial Property

Code, wherein the committee is “empowered to monitor any signs of the infringement of

industrial property rights… and to coordinate and study measures to combat [such

infringement], as well as to assist enterprises for [their]... protection against unfair

competition practices.”146

The United Nations Interregional Crime and Justice Research Institute conducted

a report in conjunction with the Italian Ministry of Economic Development (Direzione

                                                                                                               140  Id.  141  Donatella and Simone, supra.  142  Id.  143  Id.  144  Id.  145  Id.  146  Id.  

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Generale Lotta alla Contrafazione).147 The Report “promotes an analysis of court cases

and investigations that confirm the actual involvement of organized crime in different

phases of the management of counterfeiting crimes in Italy.”148 The research “serves as a

basis for the design of a more comprehensive strategy of the Italian government against

counterfeiting and organized crime.”149 The Report confirmed the prominence of

Southeast Asia as a region of origin and export, mostly because of cost efficiency

reasons.150 Ordering counterfeit products through online catalogues is also increasingly

widespread within organized crime’s strategies.151 Nonetheless, these sourcing methods

exist alongside local production of counterfeit goods that is still present in Italy and is

mainly concentrated in the areas of Naples, Lombardy and Tuscany.152 The Report also

outlined the important involvement of the Camorra and the main clans active in

counterfeiting activities in both the south and north of Italy.153 For what concerns

Chinese criminal networks, their presence in Italy appears to be more and more

“organized,” with a significant involvement mainly in counterfeiting as well as

smuggling of illegal goods, illegal migration, extortion and money laundering.154 The

investigations and court cases analyzed show that Chinese organizations often operate in

agreement and in cooperation with the Camorra.155

                                                                                                               147  UNICRI, supra.  148  Id.  149  Id.  150  Id.  151  Id.  152  Id.  153  Id.  154  Id.  155  Id.  

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IX. Recent Efforts By Italian Law Enforcement

Italian law enforcement provides a comprehensive set of tools to combat

counterfeiting and piracy effectively.156 Certain private organizations promote collective

investigations and actions, the most influential being INDICAM.157 All of Italy's

policing bodies have internal departments devoted to the investigation of IP infringement

cases.158 The Guardia di Finanza, Italy's tax police, is empowered by Legislative Decree

68/2001 to “act against counterfeiting of trademarks (and audiovisual piracy) in order to

safeguard the economic development of the country.”159 It has created a “marks, patents

and IP division” in order to analyze, investigate and act against counterfeiting and related

crimes.160 Special departments of the police conduct investigations under the direction of

public prosecutors or may act on the basis of a report by a trademark owner.161

When police officers discover goods that they believe may infringe IP rights, they

make a criminal seizure and will usually ask the trademark owner to cooperate in the

resulting investigation.162 In such cases the police force acts on the basis of Articles 473,

474 and 517 of the Criminal Code, which were implemented by Law 99/2009 of July 23,

2009.163 They provide for the prosecution and punishment of parties that: “counterfeit,

alter or use distinctive signs belonging to a third party; bring into the country and place

                                                                                                               156  Donatella and Simone, supra.  157  Id.  158  Id.  159  Id.  160  Id.  161  Id.  162  Id.  163  Id.  

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on the market products which falsely bear marks or signs; or sell industrial products

which falsely bear marks or signs.”164

In Italy, Customs is extremely active.165 In 2002, of a total of nearly 85 million

items seized in the European Union, over 35 million were seized by Italian Customs.166

A smaller but still significant proportion - 11.6 million out of 76.7 million - was reported

in 2005.167 These results have been made possible partly by the implementation of

sophisticated information systems, in particular, FALSTAFF - the Fully Automated

Logical System Against Forgery Fraud.168 Customs authorities, applicants, associations

and consumers continually update this database.169 Its aim is to collect as much

information as possible in order to make the checks on goods more accurate.170 The

database can display images of products and other useful information in order to help

Customs authorities to determine whether a product is a fake.171

A Reuter’s news story quoted the deputy mayor of Venice as stating, "Our fight

against the illegal street trade is untiring."172 Still, with Italy's annual sales of counterfeit

goods estimated at four to six billion Euros, Italian authorities are under growing

international pressure to bring counterfeiting and piracy under control.173 Hefty fines are

                                                                                                               164  Id.  165  Id.  166  Id.  167  Id.  168  Id.  169  Id.  170  Id.  171  Id.  172  Durant Imboden, Fines For Fakes- Italy’s war on counterfeit products gives a new meaning to ‘caveat emptor,’ Venice for Visitors, http://europeforvisitors.com/venice/articles/counterfeit-products.htm (last accessed 2014).  173  Id.  

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imposed on tourists purchasing counterfeit goods while visiting Italy.174 As of May

2005, legislation was implemented which carries fines of up to 10,000 Euros for people

caught purchasing counterfeit products, and criminal charges for anyone caught selling

those counterfeit goods.175 Luggage is examined on entering and leaving Italy.176 Items

may be imported duty-free only on condition they are for personal use and are not to be

sold, given away or traded.177 There are no restrictions on gifts purchased in Italy, except

for antiques and works of art, which require the authorization of the Ministero dei Beni

Culturali e Ambientali.178

Conclusion: How do Nations Independently Fight a Growing International Crime?

After a general survey focusing on trademark counterfeit legislation and

enforcement in the United States and Italy, two of the world’s largest markets and most

influential players in terms of luxury goods, it seems that to combat the growing rate of

international crimes associated with trademark counterfeit it would be necessary for an

international treaty (similar to the Berne Convention which governs copyright). The

influence of an international trademark treaty may give the necessary push to countries

such as the United States and China to seriously redraft legislation and criminal

enforcement of trademark counterfeit. Multinational companies would feel better

protected to produce luxury goods, and buyers would feel more confident in purchasing

such goods. A “Berne-effect” would be created in the realm of trademark, inspiring

International goodwill in commerce and creation.

                                                                                                               174  Italian National Tourist Board of North America, supra.  175  Id.  176  Id.  177  Id.  178  Id.