Page 84 - DMGT547_INTERNATIONAL_MARKETING

Unit 4: International Legal Environment

Similar is the case with the patenting of Indian basmati rice, which has been patented by American Notes
Co. Ricetech and given its name as Texmati. India has a right to take up a case against the
patenting of Texmati in the United States' Patents Office as Indian basmati has exclusive marketing
rights being a geographic Himalayan tarai region product.

4.3.2 Counterfeiting

Once a business has obtained intellectual property protection, it then faces the far more difficult
problem of enforcing those property rights in the worldwide market-place. The most significant
problem is one of pirated or counterfeit products, especially for popular products. Both,
governments and individual businesses, have interests in stopping piracy and some grey market
practices.

Business Responses to Counterfeit Goods

As anyone who has walked down a city street and been offered counterfeit Gucci bags, pirated
cassette tapes, or bogus Levi’s 501 jeans knows, it is not easy to protect intellectual property
rights. The counterfeit merchandise looks, on the surface, to be the real article, but is really a
knock off, taking a free ride on the advertising and popular success of the genuine product.
Intellectual property piracy has three consequences for the legitimate trade mark, patent or
copyright holder. First, it deprives the owner of revenue from the creation of the product, since
the bootlegger pays no royalties. Second, when the quality of the counterfeit goods is poor,
buyers who thought they were getting the real product will think poorly of the company that
owns the intellectual property rights. Finally, the bootleg sales deprive the legitimate dealers of
sales, which affect the success of the distributors’ relationships with the right owner.

Of course, when a property rights owner finds someone selling counterfeit goods in any country
where the owner has intellectual property rights, an action for copyright, patent or trade mark
infringement is appropriate. Generally, most nations also allow customs officials to seize
infringing goods upon import. US law contains some representative provisions allowing customs
to stop infringing products at the border. Section 602 of the Copyright Act.

Example: Prohibits the import of products that infringe on US copyrights, and allows
customs to seize any such products (see 17 USC 602).
Similarly, Section 526 of the Tariff Act of 1930 (19 USC 1526) prohibits imports of goods bearing
a US registered trade mark without authorisation from the trade mark owner, and also allows
customs to seize those goods. Section 337 of the Tariff Act of 1930 (19 USC 1337) provides similar
protection from imports that infringe US patents.

Did u know? In 1988, Congress strengthened the methods available for blocking infringing
goods from import.

Using Section 337 of the Tariff Act of 1930 (19 USC 1337), any owner of a registered US intellectual
property right, who believes that an import infringes on that right, may apply to the International
Trade Commission (ITC) for relief. The ITC has the power to issue orders excluding goods from
the United States, ordering unfair trade practices to cease, and, in some instances, ordering
forfeiture of the offending goods. For managers, the weakness of all of these remedies is that
they only stop goods at the border, not at the source. Further, customs cannot inspect all incoming
shipments, looking for products that look genuine but are not. Customs relies heavily on
property rights holders informing them of incoming shipments or problems with counterfeit

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