#424 - Protect your Brand from Counterfeiters with Stan Ference

#424 - Protect your Brand from Counterfeiters with Stan Ference Kevin King: Welcome to episode 424 of the AM-PM Podcast. My guest this week is Stan Ference. Stan is a patent IP lawyer, trademarks, copyrights, patents and he is big into helping protect sellers on Amazon. He helps protect sellers. He helps you sue if someone's violating your rights and in this episode we talk about There's a bunch about what you can do to protect yourself and there's some interesting things that you probably don't know that Stan is going to talk about. So I hope you enjoy this episode on IP protection. Enjoy this episode with Stan. Unknown Speaker: Welcome to the AM-PM Podcast. Welcome to the AM-PM Podcast. Where we explore opportunities in e-commerce. We dream big and we discover what's working right now. Plus, this is the podcast where money never sleeps. Working around the clock in the AM and the PM. Are you ready for today's episode? I said, are you ready? Let's do this. Let's do this. Here's your host, Kevin King. Kevin King: I've got a special treat for everybody today. I've got the one and only Mr. Stan Ferentz on the show talking about something that's near and dear to all of you sellers hearts. A lot of you are always complaining about people jumping on your listing and counterfeiters or people ripping you off your whether it's your images or your product or And you're like, what can I do? What can I do? This is the guy that knows exactly what to do, whether that's to protect yourself or whether that's to fight against someone that's taking advantage of you. So if you would, please welcome Mr. Stan Ference to the podcast. How are you doing, Stan? Stan Ference: I'm doing well, Kevin. Yourself? Kevin King: I'm alive and kicking, you know, every day above ground is a good day. So I'm here to celebrate. Stan Ference: That's a good thing. Kevin King: That's a good thing, exactly. So just to get the legal stuff out of the way, for those that are listening, Stan is a lawyer. He's a litigator, but don't take any advice that he says on this. This is not to be construed as legal advice, anything that he may say on here, but it's based on his experiences. But this is not actual legal advice of anything that we talk about on the show today, just to make that clear. What's your background in law? I mean, before you were doing it, we'll get into all the whole e-commerce side of things, but where did you get started in law? Stan Ference: My undergraduate degree is in electrical engineering. I'm a patent attorney. When I got out of law school, I worked at a law firm in New York, an IP boutique that also did a lot of trademark work. And I'm old enough now that I've gone out with the U.S. Marshals on counterfeiting raids back in the day when it was all brick and mortar. We got into this Amazon stuff because one of the folks I had worked with before got a call from somebody who was having problems on Amazon and all the lawyers they had talked about or talked with said there's really nothing they could do. They just had to take it on the chin and knew about my background and we were able to help them out. So that was sort of our foray into this Amazon brand protection stuff. And we've been quite successful in helping sellers battle knockoffs and other unfair competition activities. Kevin King: And what year was this that you did that first job for this, the e-comm guy? Back in 2018. Okay, so 2018. So the client came to you, you took this on, you're like, holy cow, there's a lot of opportunity here. Maybe we should actually expand on this and see what we can do in helping this. Was it a surprise to you in 2018, like you had no idea about this whole way Amazon worked or is it pretty eye-opening? Stan Ference: It's very eye-opening. I mean, at this point, really nobody in our office buys stuff off of Amazon if they really care about it because you don't know if what you're getting is authentic or if you're getting something that's made in another country that doesn't have the same health and safety standards. Now, most people think when they're buying from Amazon or off of Amazon, they're getting it from Amazon. They don't realize that over two-thirds of the sellers on Amazon are not from Amazon. And, you know, Amazon's made a big pitch to bring sellers on from outside the United States. And that's good for business, but you really don't know what you're getting. And Amazon doesn't police the marketplace. Amazon leaves it to the brand owners to police the marketplace. As we've worked with clients, that's been a big shock to them because the clients think they've done everything right. They've gotten trademark registrations, they've gotten patents, whatever, and sellers are just going to respect They're intellectual property. And when they don't, they go to sort of complain to Amazon and Amazon's like, well, that's your problem. What are you going to do about it? Kevin King: Now, some of that's starting to change a little bit, but that's been Amazon's pretty much, that goes to everything, not just in law, but in what's collecting sales tax for a long time. Amazon's like, that's not my problem. That's your problem. You're the seller. You collect the tax and pay the state of California. But there's people like Paul Raffelson that got that to get changed. And the same thing I think is starting to happen now a little bit in some of the IP stuff, where Amazon's pretty much just exactly what you said, throwing up their hands and said, we're not We're not responsible. We're not liable. You deal with it. And now there's enough stuff coming down where they're actually starting in small steps. It's not there yet, but in small steps starting to tighten up like, all right, you do need to have some safety documents on file. If you're selling supplements, you do need to have these documents before we're going to allow you to sell supplements. And so they're starting a little bit, but it's still the Wild Wild West and all kinds of stuff can happen on there. And a lot of sellers get frustrated because they spend a lot of time, money and energy developing a brand and imagery and packaging and everything. Just to have some, sometimes their own factory, in other cases someone down the street just knock them off and take advantage of All that hard work they've done and a lot of times crush them. It's sad to see. Stan Ference: We've seen clients that have lost 80% of their sales literally overnight when knockoffs start coming on to Amazon. We've also had clients where they find out that there's a problem when the customer gets a product, calls them to complain about it. And that's the first they know that there's a knockoff. The customer's confusing the knockoff with the brand owner. We also see situations where a client is sort of steady state and their growth isn't where they want it to be. And they start looking at it and they discover that there are these knockoff folks out there. And when we take care of it, their sales go up 20% or so. I mean, it's truly amazing the impact that the knockoffs can have on the brand owner's sales. Kevin King: There's a common thing in a lot of the Facebook groups and a lot of the seller groups where people will say, I've got a counterfeiter. I call it a hijacker actually. I've got a hijacker on my listing. How do I get them off? Or someone is selling my product in Canada and I didn't give them permission to sell in Canada. I think there's some confusion among a lot of sellers of what is truly IP infringement and what is the first, what's it called, the first sale doctrine, the right of first sale or whatever, where you can buy a product in the United States and resell it in Canada, unless there are some restrictions and cases where you can restrict that, but in general, You can actually do that or someone can buy your product and then resell it on your listing. Or if you did a giveaway to launch your product and you said, Hey, I'm going to give away a hundred of these of my spatulas to everybody. Go buy it. And that helps you rank on Amazon because people are buying all these spatulas, but then people are getting free spatulas and then they just turn around and arbitrage it and sell it. And then people are like, Oh, they can't do that. That's a, that's counterfeit or they're, they're, Rick and my IP and they're actually not can you can you explain the difference between true IP infringement and the first cell doctrine in the United States? Stan Ference: To some extent the rights of the IP holder are extinguished once they make the first legitimate sale. And I phrase that the way I did because there are certain steps that you can take so that your rights don't expire. And for example, you know, this has been a big thing over the years with luxury watches and warranties. Now, if you purchase a watch from an unauthorized seller, you don't get the factory warranty and some other things. So the you know, if you're what you're selling is the same product that If a product would be available directly from the manufacturer, you can do that. But if you're not selling the same product or somebody is selling it and it's not the same product, so there's a difference in warranty, for example, that's not permitted. It has to be advertised as, you know, like a used product. Kevin King: So some people were doing that. That was a tactic a few years ago when people would say, This hijacker on my listing and they say, well, just I'll put a warranty, put an image on your listing that you give a 180 day warranty or a two year warranty or whatever and they can't and put some phrasing down there that says, warranty only available if you buy directly here on Amazon from me or from the original vendor, original seller. And there's some people that said, oh, that's just, that's just scare tactics. That's not going to work. It's never going to hold up in a court of law. Have you seen that actually, that technique actually work? Stan Ference: Yes. Kevin King: On Amazon. Stan Ference: On Amazon. Now the issue with it is the way it works is by the brand owner, sort of the original seller, bringing a lawsuit and enforcing their rights. It will not work by making a complaint directly to Amazon. Kevin King: So do they have to have that as an image or just a statement on the listing okay? Do they need to have that in a little warranty field on Amazon to be able to enforce that or what are some things that they need to make sure they've done if they do decide to take it to court so they have the proper notices on file? Stan Ference: You want to have a program set up. You just don't want to have a statement. A statement can be part of the program, but it's got to be a legitimate program because when you do take it to court, the person or the seller that you're suing is likely going to say, show me what your warranty program is. What do you offer that I don't? How do you keep track of all of this stuff? Like I said, it's more than just a statement. Kevin King: Your firm still does a lot of patent and IP initial stuff, right? When someone comes to you with a new idea. So it's not just fighting people, but you're actually people coming to you like, I want to patent this or copyright this or trademark this. Can you, for those listening, a lot of people get trademarks and patents mixed up. They don't understand the difference between the two. Can you explain that just in layman's terms for some of the people listening that may get those in a copyright? What are the true differences between those three core IP. Stan Ference: Okay. A patent is the only one that sort of has a time limit. You have to act early or you've given up your patent rights. And the reason for that is in order for something to be patentable, it has to be new. Now, the United States gives you a one-year grace period from when your first public disclosure, your first sale. Other countries do not give you any grace period. Now, what a patent gives you is it's – the patent itself typically comprises a written description, claims and drawings. The claims spell out what you're entitled to protect against others. And it's for those folks that own houses. So when you get a piece of property, you get a deed that spells out the meets and bounds of your property, and you're entitled to exclude others from trespassing on your property. That's what a patent does. It doesn't matter if somebody independently created it or if they copied you. You're entitled to exclude them. Now, you also have some marking requirements with your patent. You need to put the world on notice that you have a patent. That's why you'll see patent numbers listed on products or these days if you buy, for example, some Procter & Gamble products, you know, Dawn dishwashing detergent, toothpaste, shaving cream, whatever, it'll say patents colon pg.com slash patents and they set up a website that talks about the patents. Now a copyright protects against copying. It does not protect against I'm coming up with the same idea. The example I always use is Margaret Mitchell wrote Gone with the Wind and she's got a copyright on Gone with the Wind, but that doesn't mean she can stop somebody else from writing a novel about the Civil War. There are lots of novels about the Civil War. So you can't, with a copyright, protect an idea. You can protect the expression of an idea. And the way it's set up in the United States is you get a copyright the moment your expression is set in a tangible medium. So when you draw something or create something, you automatically have a copyright, but you can't go into court to enforce your copyright until you register your copyright. And there are some advantages to getting an early registration rather than waiting until after the infringement starts. And one of those is the potential for statutory damages and an award of attorney's fees. Because if you don't have statutory damages, you have to prove how you have been damaged. You know, what money have you lost, for example. A trademark Identify is a common source. It goes back to the Middle Ages when people couldn't read and you knew if you bought a pair of gloves that had a red house stamped on them and they lasted and worked well and when you went to buy a pair of boots and it had the same mark on it, They were coming from the same source and people would think that they would perform as well as the gloves that you got. So at a high level, that's the difference between a patent, a copyright and a trademark. I think you've also mentioned one other. Kevin King: Just to put it in perspective too, on the patent, there's two types. There's a design patent and a utility patent. So the design patent actually protects the general concept, you know, how it looks and how it's shaped and that kind of thing. And then the utility patent is how it actually works, basically, in a nutshell, right? Stan Ference: Well, the design patent protects the ornamental design. Kevin King: Yeah, okay. Stan Ference: Right? And sort of the granddaddy case of that is Gorham v. White, and that dealt with designs of silverware. And, you know, is a consumer, and the question there, is a consumer, you know, likely to believe that the designs are equivalent? And then as you mentioned, you have a utility patent and that can address the product itself, you know, how it works. It also can protect methods. So you can have a utility patent that has nothing but method steps in it. And there's also a third type, which is a plant patent. So if you come up with a new hybrid plant, you can get a patent on that. Now, design patents come into play on Amazon because design patents are pretty, you can get them pretty quickly. You can get them expedited and get them in under a year. On utility patents, it generally takes, you know, a year and a half, two years before the patent office first picks it up and then you start the prosecution dance. Kevin King: In the meantime, on those patents, until you have that issued, you can get knocked off. So if you launch it, this happens a lot with Kickstarter and Indiegogo and platforms like that where someone comes out with a new concept, they put it out to raise money. Or they may even put it on Amazon and then all of a sudden within two months, there's knockoffs everywhere and they have zero protection virtually. I mean, maybe you can, you can tell, but under the patent law, there's basically zero protection because that hasn't been issued yet. So during that timeframe of six months or a year while you're waiting for the design patent, someone can actually sell it. But once that design patent is issued to you, then you can go and enforce your rights. I know this happened with back in 2015 I was buying these, uh, uh, balloon water, water balloons that you fill up in the old way. If you're going to have a, the kids over for a summer afternoon water balloon fight, you have to fill these water balloons up on the faucet one by one, tie them off and you'll put them in a bucket so they could have water balloon fight. This device is called bundle of balloons or something. And it had like one spout and then like all these little hooks off of it that you could do, fill like 30 balloons at once. It was great. The guys that came out, they put it up on Amazon. We're selling about $50,000 a day of this stuff, just like crazy numbers. Then infomercial, the SC19 Telebrands, actually, the SC19 TV guys out of Jersey came up and started running infomercials on it. There's nothing they could do because the design patent hadn't been issued yet. They went after them. There's nothing they could do, so once the patent got issued, Then I ended up working on a deal with them and I think Telegram ended up buying them at that point. But for that timeframe, they just were taking advantage of that loophole. So is there something you could actually do? If you put up a new product on Amazon and it takes off and you filed your design patent, I mean, you could protect it pretty quickly with a trademark or copyright. Copyright is about $45 to file that plus legal fees. Trademark is about $325 per category to file that plus legal fees. I think that's what it is right now. And a design patent's two to five grand and a utility can be on seriously higher than that plus legal fees. So just to put that in perspective for you guys that are listening. But is there something you can do if you launch a product on Amazon and you're in the process of getting your patents, but you don't have any kind of full protection other than maybe a copyright on your listing copy and maybe a trademark on your logo. But a lot of times even trademarks can take six to nine months to come through. Stan Ference: Well, these days trademarks are taking longer. Used to be you could get a trademark within under a year. These days, it's 11 months or so before you get your first office action, the trademark office. Kevin King: Oh, wow. It's taking that long now. I haven't filed one in a little while. Oh, wow. Stan Ference: Yeah, they're being overwhelmed with applications from non-US applicants. Right. But you're right from the patent side, but with utility patents, patents are published. You can request early publication. You can also request that the application be expedited. So there are things that you can do to take a patent application out of the normal queue. But even while your application is pending, there are things that you can do. If somebody is making the product, they can't be using your imagery from Indiegogo or Kickstarter to sell the product that they're making. Kevin King: If you've copyrighted it. If you've actually filed the copyright. Like you said earlier, you technically get copyright the day you publish it, the day you create it. But actually to enforce that in court, don't you have to have it actually filed? Stan Ference: Well, you need a registration, but we can help you get that. You can get an expedited registration. It's an additional $800 and you can generally get it within a day or two after you file it. Kevin King: Oh, wow. Okay. I didn't know that. All right. Stan Ference: So, I mean, there are things that you can do if people are knocking off your product. You know, if I come up with a product, I file a patent application on it and you start selling it, Kevin, you know, knocking off my product, but you're using your own imagery. You're not using mine. You're not using my name. There it gets a little more difficult to enforce the rights, but you still have to compete fairly with me. And if you're doing something where you're not competing fairly with me, I can go into court. Amazon's not going to care, but I can go into court and if I can convince a judge that what you're doing is improper, I can get a court order that Amazon will respect. I don't want people to think, oh no, there's nothing that I can do. We've helped people in those situations where their patent applications are pending and they're being knocked off. Kevin King: What about with AI right now? I mean, I think there's a lot of misconception where a lot of people are using AI to create their logos or their imagery or their packaging design, not realizing that AI has no IP rights. So if you're going to do something with AI, it can be a great tool to get inspiration or to get ideas, but you need to modify it with a human in some way where they redo it or they add something to it or something where you can actually get IP protection on it. Am I correct in that? Stan Ference: Well, the copyright office has held that it's a human that gets the copyright. And same on the patent side, a human has to be an inventor. So AI can help you create something, but if you just dump some stuff into AI and it spits something out, yeah, you're going to have some problems protecting that. Kevin King: Is there any little trick or any little thing that you would recommend someone do? Is it modify it 20%, 40% by human hand or some way? Stan Ference: I would say you can look to AI to inspire you on how you're going to do something, but the final product should be yours, the work of a human. Kevin King: Can you talk to me a little bit about trademarks in foreign countries? I know there's a, I forget the name of the law, it's the Geneva Convention maybe, or whatever it is, where you can do like 60 trademarks or 60 countries, something like that. 60 some odd countries are covered. Stan Ference: The Madrid Protocol. Kevin King: Yeah, that's it. The Madrid Protocol. I knew it was something over there. The Madrid Protocol. Can you tell me about that? Stan Ference: Yeah. What most people don't realize is generally IP protection is by country. There's no such thing as a worldwide patent or a worldwide trademark. If you want patent protection around the world, it's going to get quite expensive because you've got to get a patent issued in every single country. Most folks end up concentrating on particular markets. Now, for example, the United States and Europe, you can get a European-wide patent and China because that's where a lot of stuff is going to be manufactured. The same goes for trademarks. It's by country and the United States is a little strange because trademark rights go to the first to use, where in most countries the trademark rights go to the first to file. So there's a cottage industry for example in China where they're looking in the United States to see what products are coming online and are successful and then folks will register or file applications for those trademarks in China in an attempt to block the U.S. owner from expanding into China. Kevin King: also can block exports and get takedowns on Amazon in some cases. That's only going to apply in a German court of law under German rules, but from Amazon's purposes, they recognize the brand registration from Germany in the U.S. market and they will actually take a listing down with a German trademark, without a U.S. trademark. But if you try to get damages and go to court, correct me if I'm wrong on this, try to get damages and go to court, it ain't going to work because you don't have a U.S. trademark. You're not technically protected, but from an Amazon ecosystem point of view, a trademark in Germany is just as valuable as a trademark in the U.S., and so that's why, because of the lead time, Amazon changed this a couple years ago. It used to, you could not get brand registry to get those extra protections on Amazon until a trademark was issued with the gold seal. But Amazon changed that and said, well, no, now you can do proof of filing and we'll go ahead and grant you this stuff now much sooner. But people were going to Germany because Germany was, You could get it in a week or two. In Germany, they check it later. In the United States, you file your trademark and then it goes through a process and then someone in the trademark office, three, six, nine months later, actually reviews it. If there's a problem, they call you because I've had these calls. They call you and they say, hey, this is too close. We're not going to be able to pass this or you might consider changing it. In Germany it was the opposite. It's like we just give it to you and we'll check it later. So people were following trademarks of things that already existed and just taking advantage of this loophole where Germany will revoke that three or six months later when they actually do their proper due diligence and taking advantage of stuff on Amazon. It got to be pretty crazy. Amazon's tightened a bunch of this stuff up. Those are some misconceptions. Can you talk about any of those misconceptions like that that are out there? Stan Ference: You know, Amazon requires a trademark registration to get into the Transparency Program. Okay. And, you know, the Transparency Program can be helpful for folks dealing with hijackers on a particular listing. Because if somebody purchased the product from you on sale and is trying to resell it on your listing and undercut you, Amazon won't take that into their ecosystem if your brand is in the transparency program. They'll only take authentic Merchandise. Now, Amazon charges a fee for that. But to get into the transparency program, you need a trademark registration. And as you pointed out, Amazon will accept registrations from countries other than the United States. So you can, you know, with competent legal counsel, make some decisions on what's going to get you the fastest trademark registration that will work for Amazon and get you into the transparency program. So that's one way to deal with the listing hijacking. Kevin King: A transparency program for those that don't listen, that might not understand, you get brand registered on Amazon with your trademark and then Amazon allows you to print little labels and they're like little individual barcodes, like serialized barcodes and you stick those on all your products that go both to Amazon and to wherever else you sell. So they go all over the place and that way if it doesn't have that little barcode on it, Amazon knows this is not authentic, this is a knockoff or a copy or it's an unauthorized seller. Stan Ference: Amazon has an app for it, so you can download the app, a consumer can download the app on their phone and use it to see if the product they've gotten is authentic. Kevin King: I had someone on the AM-PM Podcast about two months ago that was in the process of selling their Amazon business for $3 million. They were selling an Apple Watch charging station. It charged the Apple Watch, the iPhone and the iPad all in one little kind of thing. And the day that they were supposed to actually sign the documents, their listing on Amazon got taken down. And so it put the deal on hold that literally the day they were signing and the wire transfer was going to happen that afternoon, put the whole listing on hold. They dig into it and they find out one of their competitors who's selling a very similar, undistinguished, just basically the product was identical, but just a different logo and a different brand name on it because they weren't doing any differentiation, buying it from the same factory. He got together with the factory, filed a patent in the United States on it, and was able to, after like a year, actually a design patent get issued, and then he took down all of his competition in conjunction with the factory, and it killed this deal. They were actually able to contact the guy, and it's a pretty fascinating story, and after talking with him, saying, hey, we're just a small little family trying to raise our family, the guy was pretty religious. And he actually agreed to actually repeal it and allow them to continue to sell. And it allowed the deal to go through where they sold the company. But it was a pretty scary moment when he was using this to block. And I've heard similar stories of people who file in China. You were talking about China earlier where they'll see something successful. But to block their competitors, they'll follow a Chinese trademark because there it's first to follow, not first to use, like you said. And they will then use that to block exports of the product to the United States. And so effectively cutting off the supply chain for someone. Have you seen any cases like that? Stan Ference: I have. We had a situation where the client had come out with a product. They had a copyright on it, on the design of the product. And somebody in China filed a design, a US design patent on The client's product did not disclose the existence of the client's product to the patent office. The design patent issued and then it was used to take down our client's product. So what we were able to do there was file a re-examination request with the U.S. Patent Office and get the design patent canceled. And so there's, I mean, there are all sorts of tricks that are going on. Kevin King: I think a lot of people too don't realize that trademarks don't last forever. If you don't use them, you lose them. Stan Ference: That's in the US. In other countries, your registrations become subject to attack if you haven't used them. But what a lot of people don't realize is just once you get the trademark registration, you're not done. There's all sorts of ongoing paperwork and that's one of the reasons for using a lawyer is to have the lawyer keep track of these dates. So for example, in the US, once you get your trademark registration issued, you have to file proof of continued use between the fifth and sixth year. After registration, and then by the 10th year, you have to file a renewal application. And then every 10 years, you have to file another renewal application. So one of the things the lawyers do is dock at all of this stuff and remind the clients of when things need to be done. I was just talking to one seller who was surprised to hear that his US trademark registration was canceled earlier this year. And the reason it was canceled was because he hadn't filed the proof of continued use during the fifth and sixth year after registration. He just wasn't aware of that and didn't have that docketed. Kevin King: What about people that when they're first starting out in e-commerce, they're like, you know what? I'm just going to use LegalSherpa. I'm going to use some guy on Fiverr to do this for me. I'll get a legal opinion or whatever and have them follow it. I don't need to pay a lawyer $300, $400, $500, $600 an hour to do this for me or I'm just going to hold off on doing my trademark. I don't have the budget for all this legal stuff right now. What would you say to those people? Stan Ference: There are certain things that you want to get done. For example, on the patent side, yeah, it's an upfront cost, but if you don't do it, you're never going to get a patent because it'll become time-barred. Once you start to sell it, you've blown your patent rights outside of the United States. The U.S. gives you a one-year grace period. Once you get outside that one year, you'll never get a patent. And that's either a utility patent or a design patent. On the trademarks, while you can wait, you get a common law trademark, but you don't get the registration right away. You can do that. It's going to take some time to get the registration and there are benefits to getting the registration. For example, although now once you've got your application, Amazon will let you into the brand registry, but you can't get into the transparency program without the registration. If all of a sudden you have a problem and would really like to have a registration, you can't get it in a timely manner. It's going to take over a year to get a US registration. So you want to start early. Same thing on the copyrights. Copyrights are not that expensive and the big benefit of getting your registration on file or your application on file is the ability to get statutory damages and attorney's fees when you need to go and enforce it. Kevin King: So what are statutory damages made? This happened to me when I was 20, 21. The Simpsons, the animated TV show had just come out and Bart Simpson was a hot rage. I had a guy, I was selling T-shirts, white T-shirts, cotton T-shirts on the campus of Texas A&M University. And one of the things that we sold was my buddy, my roommate knew a buddy of his in New Hampshire, I was down in Texas, that was making these Simpsons, illegal Simpsons T-shirts, you know, with Bart Simpson on them, with little sayings. And we started selling them, you know, not knowing anything, being young, 21, naive, people just wanted to make some beer money. And we started selling them and then we started putting them and we did a road trip across the United States and hung little flyers in dorm rooms and me and my buddy would camp out in a Motel 6 for two days and someone would call, peel off the sticker, call an 800 number. This was days before the internet. And then we would go deliver the shirt. And after about two months of doing this, the company that owned The Simpsons out of Kansas City caught wind and sent us a cease and desist. And they basically said, you got to destroy your inventory and tell us how much you've sold and all this. And I think we just made some stuff up and just said, oh, we're just young little kids and put our hands in there. Oh, so sorry. We'll destroy everything. But if they wanted to, and they didn't pursue us, but if they wanted to pursue us, What could they have gotten on the statutory side or the damages or whatever? What can you actually get? Stan Ference: Statutory damages mean by statute, Congress has decided what damages a court can award. And one of the reasons for that is when you're dealing with counterfeiting or copyright infringement, If you really don't have access to the defendant or they're not being cooperative and not telling you how many they sold, it's very hard to prove what your damages are. So for trademark counterfeiting, Congress has said statutory damages of up to $2 million may be awarded. And on the copyright side, you can get statutory damages You know, up to one hundred and fifty thousand. And that may be trebled if it's willful. You can. It means, you know, the plaintiff no longer has to prove what their damages are. For example, if you've got somebody that, you know, has sold two thousand units and, you know, when you sell two thousand units, you would have made, you know, one hundred thousand dollars in profits. You would make a claim for lost profits of $100,000. That's hard to do if the bad guy won't tell you how many they've sold. Kevin King: I was just recently in Vegas at the Mob Museum. They have a Mob Museum there. And in the Mob Museum, there was a display, I'm going to pull it up here on my phone real quick, about counterfeiting and IP and knockoffs. And they say, I took pictures of the sign because I'm going to put this in my newsletter, but it's saying that counterfeit products are a more than $1 trillion illegal business for global organized crime. Two-thirds of faked and pirated products are produced in China. In the past, counterfeits products were sold mostly by discount merchants and flea markets, but today most transactions occur on the Internet, on marketplaces. Nike, Ray-Ban, Rolex, Louis Vuitton, they're the most copied brands. A lot of medicines are also counterfeited and unregulated drugs that could really be messing with people. And they go on a whole bunch of stuff and they say that it's $2 trillion in revenues per year, about 80% are made in China. This is another screen that they showed. And organized crimes behind a lot of it. But then they actually broke down the countries too of where most of this happens. And they say in that China, the UAE, specifically Abu Dhabi and parts of Italy, the port of Naples. Those are the three main China, Abu Dhabi and the port of Naples is where most counterfeit stuff passes through. So is there anything that as a seller is what we can do when we're dealing with any of these regions or any of these districts or anything when we're manufacturing overseas? Yeah, we can get the trademark in the US. But anything we can do because maybe I don't know, you know, my product is being, you know, I know if someone guys makes it, my manufacturing knocks me off and puts it up on Amazon in the US, I know and I can go after them. But what if they're not doing that? What if they're sending it to one of these syndicates in Abu Dhabi or Naples and it's just going all over Europe and I have no idea? How can I, is there a way, is there a source that I can monitor anything like that? Or is it just, I just gotta have serendipity and run into it somewhere or someone report it to me? Is there anything, how do you monitor this stuff worldwide? Stan Ference: Okay, you've asked several questions there. Kevin King: Yeah, I did. Stan Ference: All right, but A lot of people sort of view themselves as U.S. sellers. They come up with a product. They're selling into the U.S. They're not thinking about foreign stuff. But if you're going to be knocked off, it's going to be in some foreign country and then the product's going to come back into the U.S. And you said two-thirds of the stuff is made in China. I think that might be a little low. But one of the things we advise our clients is you want to think about getting the IP protection in China. So if you have to go after people and you have a problem, you can do something about where it's manufactured. Otherwise, all you can do is try and control the sale in the US. When you're starting to build a brand, you really need to be thinking globally. And if you're looking to exit, you know, a lot of exit plays are let's take, let's purchase some brand that's sort of U.S. centric and then try and replicate the success by selling into other countries, you know, expansion, right? To do that, your buyer is going to need some assurance that you've got the trademark rights in those countries. So, you know, when you're starting to think about what you're doing, you want to be thinking about the global IP, even though it's going to be a drain on your budget. Now, you know, one of the fascinating things in this business is AI. And folks are starting to use AI to monitor different websites and see what's for sale in various countries and on various marketplaces. Because if you're not using AI, you know, it's basically a manual process. But one of the great ways of learning about things is using your customer base. I know folks who have set up incentive programs, so if their customers tell them about a knockoff somewhere, they get something, maybe a discount, maybe a free product depending on the price point, etc. But you want to listen to your customers and encourage your customers to report the knockoff products to you. Kevin King: In the U.S., everything gets published. Yeah, this global stuff sounds too complicated. I don't want to mess with that. I just want to make sure I'm okay in the U.S. If I wanted to stay on top of things, I can actually subscribe to like the government publication or something because everything, all trademarks, they get published for opposition or what's it called? Some sort of like little booklet that comes out every so often and you can like scroll through there and like, oh, that looks pretty similar to mine. I'm going to file an objection. Stan Ference: You're dating yourself here. Kevin King: Am I? OK. All right. Stan Ference: When I started, there actually were paper booklets, both on the patent side and on the trademark side. It's on the trademark side. It's called the Trademark Office, the Trademark Official Gazette. OK. And that's where all applications in the U.S. are published after the examiner says, I'm OK with this. But you know, I'm human. Let's see if anybody has a problem. Anybody in the universe has a problem with it. So they publish it and you've got a period of time to file an objection or an opposition before the registration issues. If no opposition is filed, the registration will issue and then the registration will be published in the official Gazette as well. These days there's no paper booklet. The booklet nomenclature continues to exist but they're published on the Patent Office or the Patent and Trademark Office website. So it's an electronic version. But there are watching services out there that folks can subscribe to where the watching service will notify you of when there's a similar mark to yours and you can watch in the U.S., you can watch around the world. You can also go on the Trademark Office website, tmsearch.uspto.gov, and do your own searching for the U.S. trademarks. That will pick up both issued registrations, pending applications, and also abandoned applications. Kevin King: I've seen this happen, I think with Burger King it was. Burger King, you know, has trademarks and all their IP protection in the U.S. and I think it's, this is probably 20 years ago, they, for whatever reason, they didn't file it properly or didn't do it at all like in Columbia. And you go into Columbia and here's Burger King with any Burger King. It's some other like hamburger place that looks like a Burger King with some of the similar colors and slightly changed logo, but it's Burger King. And now Burger King wants to go into Columbia with their official brand. Is there anything they can do other than negotiate with those people or is there any postmortem rights? Like after the publication that you just said in the Gazette, you're like, oh shit, we missed it. Is there anything you can come to do after the fact? Stan Ference: You can try and cancel the registration either in the U.S. or in other countries saying that the registration was fraudulently obtained. But that takes time and effort. There's some uncertainty to it. So oftentimes folks will just end up negotiating with the pirates who got the registration in whatever country they're interested in. But it slows down deals. It impacts the pricing because of the uncertainty. And with the internet and Amazon, everything is sort of global these days. It's not just the U.S. market. Kevin King: What's something that you would recommend every seller that's listening to this, every person that's selling on Amazon or Walmart or TikTok shop or something right now that's listening to this going, yeah, this all sounds good, Kevin, but I just don't know. I don't have a bunch of money for this kind of stuff and I just don't want to do this. I just want to make a little bit of money for my family and I'm just going to sell. I'll worry about this stuff later. What would your advice be to them? Stan Ference: You need to take a look at really what you want to accomplish. You should have trademark registrations in the United States and I would encourage folks to think about getting them in other markets where they may expand or where the products are made. The knockoffs are really going to be coming from China. The Chinese protection is fairly cheap. Once you have it, you can use it to request takedowns off of Chinese-based websites and Chinese marketplaces. So you want to look at that. And, you know, if you're launching a new brand or a new product, you know, you want to think about patent protection. Because once somebody starts, I mean, what we found is typically folks will start by knocking off your product, you know, the product itself, calling it the same thing. And so it comes up in the searches. And once you start an enforcement program, they'll move away from calling it the same thing and using your brand name, but it's still a copy of your product. And the only way to deal with that is through patent rights. Kevin King: What about for like digital contents? Let's say this happened to me. I have a course on how to sell on Amazon and I'm selling this course to say for a thousand bucks. Well, inevitably, this happens every time I'm a billion-dollar seller summit. Someone will buy the course. Usually using a stolen credit card that I don't know about until two or three weeks later. They download the whole course, they upload it to some server, usually in Russia, and then they go out and they sell it for 20 bucks a pop to a bunch of people and make money off it. And there's services that monitor this and they will report back to you. And someone will do takedowns in certain countries where they actually will issue the DMCA things or whatever it is that they issue. But there's certain areas like Russia that just basically, you're screwed. It's like F off. We're not taking anything down. There's no enforcement. Is there actually a way, I mean, to do that without breaking the bank and hiring local Russian lawyers and just going to town? And that's why a lot of stuff, these guys are preying on that. They know that most people aren't going to go spend that money or go to that effort, so they're just going to like, oh, just accept it and that they build that into their business model. Stan Ference: You know, given the state of relations between the US and Russia, you know, it can be difficult to do things. But, you know, there are different tactics that can be done, can be invoked. So, I wouldn't just throw up your hands and say, there's nothing I can do. I would talk to a lawyer that's familiar with this area and see what the options are, given the damage that it's causing you. Because we've had cases where you've got seven sellers on Amazon. You wouldn't think that's going to cause a lot of damage, right? A small number of sellers. They're selling $7 million worth of product. It's causing a lot of damage even though they're just a few sellers. So you need to figure out what is your pain tolerance and does it really make sense to try and enforce your rights. But you just can't say because it's one or two that it doesn't make sense. Those one or two or three or four may be doing an awful lot of damage. Kevin King: If I'm an Amazon seller and like in this case, I got seven other sellers on my account and I'm like, okay, I want to take these guys off. I sent them cease and desist. I've gone through the traditional little cheaper methods and contacted Amazon and just, I can't get them all off. I'm going to take them to court. What am I looking at? Am I looking at $5,000 to $100,000 range? Am I looking at, depends on where this, how much litigation and prep work this is and how big the case goes. What am I, just a ballpark figure of what I might be looking at? Stan Ference: I mean, we're very cognizant that a lot of Amazon sellers are smaller folks and they don't have a big legal budget, let alone a litigation budget. So we work with the clients to make this very affordable for them if we've got to go into litigation. Kevin King: And what does that mean though? When you say very affordable, does that mean you work for a percentage of what you recover? Or you work for a flat fee? Stan Ference: We've done it all sorts of different ways. We really need to understand what the problem is that we're trying to address. Kevin King: But a general range is, I mean, okay, you maybe can't give a range because there's a lot of variables in there, but what's a really expensive case that you've had to fight that might have just was a really complicated, detailed case and what did that end up costing? Stan Ference: I mean, the amount of time that goes into it, you know, it can be in the several hundreds of thousands of dollars. But, you know, we want to help people on Amazon, who sell on Amazon, you know, and we recognize to do that, we've got to make our fees affordable. We're not going to work for free, but, you know, we do want to work and we do want to help people. Kevin King: What's the difference between if I've got a problem on Amazon, me contacting you versus contacting one of these other Amazon services? There's several of them out there that are ex-Amazonian people that like, oh, we can help you get your listing back. We can help you do this fight. When should I consider maybe using one of those guys versus actually using proper legal counsel? Stan Ference: We bring several advantages to the table. We're patent attorneys. We do a lot of patent trademark and copyright work. We can take care of cases at the trademark office. If we need to oppose something, we need to file a cancellation action. We can work on the patent side as well, both in terms of re-examinations and filing patent applications. But moreover, we have the ability to go into court. We do a lot of our litigation here in Pittsburgh, which is our home base. We've got a small bench. We've been in front of all of the judges, and they understand the problems that sellers face. What we find is typically clients start with somebody else before coming to us and what happens is it becomes a whack-a-mole. Your former Amazonians, etc., who do take down requests, they take down the listings and then they pop back up. Because there's no ouch there. When you go into court, there's an ouch there. Because, you know, what's the downside to a seller who has their listing removed on Amazon? They've got to set up another listing, right? They're losing potential sales. You go into court, you can get damages. So not only is the listing taken down, there's an ouch on the money side. And I probably shouldn't say this. It's a sad commentary on the state of affairs. But once you start an enforcement program in court, the knockoff people typically move to another product where they're not going to be hassled. Kevin King: And you get a judgment in court, you can take that and actually freeze their funds at Amazon. Follow that with Amazon Legal in Seattle and actually Amazon will freeze those funds until the court orders them to be... They don't just give them to you, but they'll freeze them and then the court orders them to be released. Stan Ference: When we go into court, we've taken the discretion away from Amazon. There's no uncertainty who's going to pick this up at Amazon. The last five takedown requests worked, but is this one going to work or is somebody going to look at it a little differently? Then you also get the funds frozen and Amazon Everybody likes this because they can then tell their customers, this isn't us making this decision. A judge told us we had to do this and we're doing what the judge told us. If you don't like it, go talk to the judge. Don't be talking to us. You know, we're your ally here. We're not your enemy. We didn't take down your listing because we decided to. A judge told us we had to. Kevin King: Well, Stan, this has been great. This has been fun. If people want to reach out or maybe they got some issues going on, they want to get a hold of your firm and talk to you and see if you might be able to help them out, what's the best way for them to do that? Stan Ference: Well, we have a practice area website devoted to this, onlinecounterfeiting.com. So you can check that out. We've got some videos of clients talking about how we've helped them. Our firm website is www.ferencelaw.com, F-E-R-E-N-C-E-L-A-W dot com. And you can also email me, sdference at www.ferencelaw.com. Be pleased to talk to people and what I tell folks is I don't want you to be self-selecting. Tell me what your problem is on Amazon or the other marketplaces and let me figure out the best way that I can help you. Kevin King: Thanks Stan and I'm glad I got to meet you at Innovate in New York and it's been a pleasure. Stan Ference: Thanks for having me. Kevin King: IP protection is something that a lot of sellers overlook. They just don't want to spend the budget on that or it's just something that bores them and they don't think they need it. But as soon as you don't think you need it is when you need it. It's just like insurance. Sometimes you pay it for 8, 9, 10 years and never have a claim and then all of a sudden, boom, that massive flood comes or that fire comes and you're glad you had it. So IP is similar. So if you're not getting serious about your IP protection and not just in the United States but in other countries, especially where you manufacture, Just like Stan was talking about, I highly suggest you get onto that right away and get yourself fully protected. We'll be back again next week with another awesome episode of the AM-PM Podcast. In the meantime, I've got some words of wisdom for you before we part. Life is to be spent, not saved. Life is to be spent, not saved. See you again next week. Stan Ference: Okay.