Trademark Counterfeiting: How Mark Owners Can Protect Themselves

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1 Trademark Counterfeiting: How Mark Owners Can Protect Themselves Presented by: Mike Rider Senior Vice President, General Counsel Callaway Golf Company with Lisa M. Martens and Gregory M. Krakau Fish & Richardson P.C.

2 Trademark Counterfeiting What is it and what can we do about it? 2

3 Trademark Counterfeiting What is Trademark Counterfeiting? The act of manufacturing or distributing a product or service bearing a mark that is identical or substantially indistinguishable from a registered trademark. 3

4 Why do we care? the crime of the 21 st Century James Moody, former Chief of the FBI s Organized Crime/Drug Operations Division As technology advances, so does the ability of criminals and infringers to illegally copy the trademarks of others in the hopes of easy profits. 4

5 A Growing Problem Counterfeiting costs legitimate business billions of dollars Lost sales Lost tax revenues 5

6 Callaway Golf Under Attack Knockoffs or Clones Counterfeits Taiwanese Money; Typically Chinese Manufacturing Unscrupulous Sellers & (Often) Unwary Consumers Sold on Internet Sites & in Asian retail outlets catering to tourists 6

7 Counterfeiting Means Jobs 7

8 A Typical Auction 8

9 Use Law Enforcement Press Release: ebay SELLER PLEADS GUILTY IN COUNTERFEIT CLUBS CRIMINAL PROSECUTION; CALLAWAY GOLF RAIDS CHINESE SOURCE CARLSBAD, Calif., Sep. 30, 2003 (BUSINESS WIRE) Callaway Golf Company (NYSE: ELY) announced today that its investigation of counterfeit golf club sales on ebay.com has resulted in the successful criminal prosecution of an individual in Erie, New York, and the raid of a factory in China. 9

10 IP Enforcement: Finding the Bad Guys Mine all sources of information Sales Reps Shareholders Retailers/Distributors Internet Monitoring Trade Shows Friends (i.e. Consumers, golf fans, converted former infringers) Investigators 10

11 Combating Counterfeiters Develop Intelligence Sources Cooperate as an Industry Petition Governments Monitor and Attack Internet Sales on Web Sites or Auction Sites Intercept Shipments (Customs) 11

12 Combating Counterfeiters Secure the Supply Chain in China Raid Factories, Wholesalers, & Retailers Use Civil Courts & Law Enforcement Educate the Public/Use the Media Wait 10 years, perhaps 20 12

13 Counterfeits & China It is estimated that 80%-90% of all golf counterfeits are made in China, with most from Guangdong, Fujian and Zhejiang Provinces. 13

14 Anti-Counterfeiting Working Group Founded: January 2004 Purpose: To share information, manpower, and financial resources to jointly petition appropriate government authorities to pursue entities involved in the unlawful manufacture and distribution of counterfeit golf products. 14

15 Anti-Counterfeiting Working Group Members: Callaway Golf, Nike Golf, Acushnet Golf, Ping, TaylorMade-Adidas, Cleveland Golf, plus. Permanent Antitrust Counsel Group-retained counsel in U.S., China, & Thailand Current Focus: China 15

16 Chinese Anti-Counterfeiting Raids ( ) 30 Factories 80 Retailers 8 Warehouses 16

17 A Retail Raid 17

18 Large Foundry in Putian 18

19 Xiamen: Machinery Seized 19

20 Destruction Ceremony 20

21 Conclusions/Outlook Must be in for the long haul Total victory not possible The Golf Industry must be a squeaky wheel to foreign governments As Chinese economy matures, the counterfeiting sector will diminish Balance of trade today is 100:1 21

22 The Protection Team Corporate Executive In-House Counsel Outside Counsel Federal Law Enforcement (CBP, ICE, FBI, US Attorneys) State Law Enforcement Officials (Local Police, Sheriffs, District Attorneys) Private Investigators 22

23 Protection Tools Federal Criminal Statutes State Criminal Statutes Civil Statutes CBP/ICE Enforcement 23

24 What can/should you do? Register, Record and Renew your IP Train Your Staff Tell Everyone Consider Publicity Know the Laws and Who to Call Hire/Train Private Investigators Have Identification Materials Ready Prepare your CFO for the Costs of Enforcement Form Strategic Alliances 24

25 Questions? Lisa Martens Greg Krakau Fish & Richardson P.C El Camino Real San Diego, California (858)