Monthly Archives: October 2015

Digital Rights Management Systems

In my last blog post, I poked fun at having my ebook pirated. Actually, there’s nothing funny about the pirating of anyone’s intellectual property, including my own. I suppose the party responsible believes they’re helping to fight counterfeiting by posting a valuable resource online for everybody.

Ebook piracy requires the circumventing of the digital rights management (DRM) systems used for copy protection. A DRM system is what prevents users of Amazon’s popular Kindle from engaging in eBook piracy. A user who purchases an eBook from Amazon for his Kindle cannot make a copy of the eBook without tampering with the DRM and also cannot sell the content. Apple, makers of the popular iBookstore, uses its FairPlay DRM. Adobe, best known for its open source Portable Document File or PDF, which is a free or open source download, has developed a DRM called Digital Editions Protection Technology or ADEPT. ADEPT is used by Barnes & Noble, Sony and other companies.

 Tampering or bypassing a DRM system is illegal under the Digital Millennium Copyright Act (DMCA), signed into law by President Bill Clinton in 1998. Book piracy is a growing problem for publishers and authors. In 2012, Library.nu, also called Gigapedia and ebooksclub.org, was shut down by court order for book piracy following legal action from seventeen publishers. The site is believed to have hosted 400,000 ebooks with a revenue that exceeded $10 million.

 

E-Book Piracy

I performed a search on YouTube and typed in “trademark counterfeiting.”

I was hoping to find something of interest for a future blog. GUESS WHAT I FOUND?

Yes, folks, my own book available for download. Mama Mia!

I’m going to contact my publisher about filing a DMCA Takedown Notice and possibly filing a suit for piracy. The download was posted in YouTube on July 1, 2015.  Hmmm.  Maybe I haven’t been hit too badly.

Please, please, please . . . if you’re reading this blog post, please don’t rip me off by downloading my book. (It’s available on Amazon.com.)

Counterfeiting is a serious crime. Take it from me, I know all about it.

 

 

 

 

PRODUCT DIVERSION

You’ll be quite surprised if you search on Amazon.com for a book on product diversion, gray market, or parallel imports. I found one book, published in 2009.

Product diversion refers to products acquired through an unauthorized source and it is a huge underground  or ‘gray’ market. Product diversion is legal and usually involves products purchased in a country or region where the product sells for a lower cost and is then shipped to a country where it will sell for a higher price. It’s no secret that drug prices are lower in Canada and Mexico. Many Internet pharmacies use a domain name incorporating the word “Canada” to establish legitimacy.

Most consumers have purchased products off the shelf, without realizing it was diverted. Diverted products are a big problem in the cosmetics field. Paul Mitchell founded his line of beauty products and, after much effort that included driving around the country himself, had a company that was producing millions in revenue. Mitchell, who had twenty authorized distributors, began to find his product in discount stores and other locations. The problem became so bad that he launched a public awareness campaign.  https://www.paulmitchell.com/our-products/product-control/

Diversion is a lead source for counterfeit goods. A good case study would be counterfeit Similac. baby formula

In 1995, 54 complaints were filed involving children who developed skin rashes after their parents had fed them Similac. The FDA’s Office of Criminal Investigations (OCI) seized 500,000 pounds of a powdered  generic baby formula that was not authorized for sale in the United States but destined for Europe and packed to look like Similac. The counterfeiters had not followed the manufacturer’s safety standards in re-packing the fake product.

 

$1.2 Billion in Counterfeit Seizures in 2014

In April, U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) announced there were 23,140 intellectual property rights seizures with an estimated manufacturer’s suggested retail price or MSRP of $1.2 billion in 2014.

The People’s Republic of China remains the primary source economy for counterfeit and pirated goods seized with a total value of $772 million, representing 63 percent of all IPR. Wearing apparel and accessories continue to be the number one commodity classification based on number of seizures with 7,922 seizures or 28 percent.  Watches and jewelry are the largest commodity classification by value with an estimated MSRP of $375 million or 31 percent.

2014 IPR Stats

 

$5 Billion in Punitive Damages sought for CDLs

I first heard about the Coalition to Advance the Protection of Sports Logos (CAPS) in the mid-1990s while attending a convention of the International AntiCounterfeiting Coalition (IACC). Each year CAPS sends out hundreds of cease-and-desist letters, usually to vendors and silk screen businesses that are infringing on one or more federally registered major league or collegiate trademarks.

CAPS purchased a zippered Chicago White Sox jersey from the ZIP-A-Tee Shirt website as part of their investigation, and then sent several cease and desist letter to James Cross, the owner of Zip-A-Tee-Shirt, in 2012 and 2013 and eventually contacted website-hosting companies to complain about Cross and his company, which resulted in the suspension of domains he was using.

Acting as his own attorney, Cross filed a law suit and asked for a declaratory judgment of non-infringement and injunctive relief, as well as $700 million in statutory damages, $5 billion in punitive damages, and an additional $500,000 for each domain change. CAPS moved to dismiss, asserting that Cross failed to state a claim upon which relief could be granted and for lack of personal jurisdiction. The Court agreed and the case was dismissed in May, 2015.