Q&A

Questions and Answers:

Why should people read “The Counterfeit Detective” (Koehler Books, 2015)?

The novel is based in part on an award-winning short story as well as on real-life investigator David Woods, who handles intellectual property, especially counterfeit apparel and other products. A chapter-length book excerpt of Mr. Woods was published in P.I. Magazine as well as in my non-fiction book on trademark counterfeiting. One of his best cases involves a counterfeit Ferrari as seen on the TV show Miami Vice. I recently interviewed Mr. Woods and another investigator, Tim Santoni, for an article on domain name piracy (“Cyber squatting”) for P.I. Magazine.

What is intellectual property?

Intellectual property deals with creations of the mind or intangible assets: patents, copyrights and trademarks.

Theo Jones, the protagonist P.I., specializes in intellectual property and is engaged in a self-styled “war against the counterfeits.” Many of his investigations involve counterfeit consumer goods; especially apparel (designer knockoffs). The legal term is trademark counterfeiting or product counterfeiting and accounts for 7 to 10 percent of world commerce. Experts fear the crime is spiraling out of control and threatens the world economy, hence Jones’s “war.” Imagine if you had to worry that the toothpaste, cosmetics, medicine, auto and airplane parts, and so many other products were counterfeit? People have died from counterfeit products. Many counterfeits are never discovered. Organized crime and terrorists are sometimes involved in selling fake products because the jail time is low and the crime is lucrative.

Mr. Paradise is an expert on this business crime. He had five book excerpts published, including the cover story on cable piracy (“Signal Theft”) for the Jan. 1995 issue of Electronics Now Magazine and was interviewed on the radio for his expertise following the publication of Trademark Counterfeiting, Product Piracy, and the Billion Dollar Threat to the U.S. Economy (Praeger 1999, 2000). This book sold out the first print run in five months.

Please explain Andy Warhol’s influence.

The author was inspired in part by Andy Warhol’s influential painting “32 Campbell’s Soup Cans.” There were 32 paintings and referred to the machine replication of art. Warhol’s artistic statement was that commercial art, the art found in advertizing, is fine art. Of course Warhol was not referring to the can—but the Campbell’s Soup Trademark and the packaging referred to as the trade dress in the industry. Although this painting became the signature work of Pop Art, many critics called his concept “fake.” For example, the purpose of the Campbell’s Soup Trademark is to sell soup. Fine art has nothing to do with selling consumer products.

It’s interesting that commercial art deals with trademarks, because this intellectual property is an intangible asset that is largely a perception of value by the consumer. For example, many trademarks are completely made up words that obtain their value through association with goods or services (made-up words would include: Microsoft, Viagra, Google, iPhone, iPad, eBay, Facebook, Kodak, Starbucks; while other brands are a person’s name: Louis Vuitton, Calvin Klein, McDonald’s, Wendy’s, Campbell’s.)

P.I. Theo Jones is an unemployed New York actor who uses his acting skills to work undercover as an investigator. I envisioned him as chasing counterfeits of commercial art (trademark counterfeiting). Jones wants to return to an artistic career and realizes in the end that he is using his acting skills to far better use than as a failed actor.

The history of counterfeiting:

Counterfeiting is not a new crime and dates back to the Middle Ages and the Guilds. By law each Guild was supposed to have a distinguishing mark or brand. Counterfeiting of those brand names was widespread. Bread counterfeiting was a big problem and the fine during the Revolutionary War was $25.

Many of these early trade names are with us today: Sterling silver and Pewter are alloys that date back to the Middle Ages. Pumpernickel bread originated in Germany during the Middle Ages.

The United States was a notorious pirate

Until the 20th Century, the United States was a notorious pirate and freely pirated Britain’s intellectual property. The U.S. had much the reputation that China has today as a pirate. There were no laws to address the problem. “Give me the real McCoy” is a phrase dating back to the mid-1800s and refers to an oil can that was developed and patented by Elijah McCoy, a freed slave and prolific inventor. The first U.S. trademark law was the Trademark Act of 1870.

Why did the counterfeiting problem accelerate during the 1970’s?

Several factors: the Internet, the global economy, advances in technology all played a role—but perhaps the most important was the advent of “designer” apparel,” which was a marketing invention. Jeans, which were a working man’s clothes, became trendy thanks to Murjani International and Gloria Vanderbilt, and also because of Calvin Klein and Brooke Shields. Also, the emergence of a new market for sports apparel. This is the jerseys, sweatshirts, hats, key chains, and other consumer items bearing a big league team logo or sports icon name like Michael Jordan or Derek Jeter. Empires were founded on these consumer items of apparel—the downside was that they were easy to counterfeit.

The hottest topic today is piracy on the Internet, especially file-sharing.

Napster was invented by a teenager named Shawn Fanning who envisioned peer-to-peer (P2P) file sharing. P2P file sharing works like a giant swap meet, where people can download files from other users while offering files for others. Napster was only around for two years (1999-2001) before it was shut down but had 80 million users, many of whom were sharing music files.

Other websites included Grokster and most recently Pirate Bay, which is based in Sweden. Repeated efforts to shut down Pirate Bay have failed. Pirate Bay is based in Sweden which has an active hacking community and where Wikileaks was founded by Julian Assange. Assange is now an international fugitive.

Please discuss what happened to the 2012 Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA).

After Napster was shutdown, in 2001 the Recording Industry Association of America (RIAA) and to a lesser extent the Motion Picture Association of America (MPAA) filed numerous law suits. The RIAA filed over 20,000 law suits, some of which targeted teenagers. The law suits were a public relations disaster and played a role in the protests against SOPA and PIPA

The passage of these two acts was thwarted after protests by websites Wikipedia, Google and other information sites held a one day moratorium to protest the censorship powers included in both Acts. The two Acts were intended to strengthen copyright protection and would have empowered the entertainment industry, particularly the music industry, to crack down on file sharing. Both Acts were withdrawn.

Please discuss what happened to the 2012 Anti-Counterfeiting Trade Agreement (ACTA).

This was a multi-nation treaty to address counterfeiting that came close to being ratified in Europe but EU member countries refused to ratify it due to massive protests in Romania, Germany, and other countries in 2012. People were protesting in the streets against ACTA, which was negotiated in secret but the text was leaked by WikiLeaks. The leaked text sparked protesters throughout Europe; they were outraged by the secret negotiations and by provisions that would have amounted to censorship of the Internet. ACTA were perceived as for the benefit of the U.S. entertainment industries and would have allowed the industry to take down the website Pirate Bay in 2012.

Pirate Bay is a notorious website which uses Bit Torrent technology for file-sharing. It is based in Sweden. A police raid to seize the computer servers also found servers used by Wikileaks. As already mentioned, Julian Assange, the founder of Wikileaks, is currently an international fugitive.

What is the Pirate Political Party?

Formerly associated with Pirate Bay, the Pirate Political Party is an international movement, along the lines of Green Peace, which was founded in Germany. It is now the leading political party in Iceland and is established in 60 countries, including the United States. The Pirate Party advocates left wing topics including the environment, housing, equal employment, as well as advocating to reform copyright and patent law.

What is the Open Internet?

The Pirate Political party and other groups believe the Internet should be free of censorship and even view it as a fundamental human right. In fact many European countries have established such a right by law. It would be as if our Bill of Rights were amended to include a right to access the Internet. China, on the other hand, has a “great firewall” to prevent access to many websites.

Why is China perceived as synonymous with Piracy?

Largely because the United States imposed trade sanctions against the People’s Republic of China in 1995 and 1996. Advances in CD replication made the high speed copying of CDs possible and led to unprecedented advances in pirated music CDs. With intelligence provided by the International Federation of the Phonograph Industry (IFPI), a secretariat for the music industry based in England, the United States recording industry was able to identify 30 factories mass producing music in mainland China. These complaints were subsequently investigated by the United States Trade Representative who has the authority to impose trade sanctions. The Chinese posted guards in the factories in 1995 but to no avail. The factories were eventually closed down.

To this day, China is a leading producer of counterfeit products. This can be partly attributed to China’s rapid emergence as an industrial giant. Counterfeiting is a problem associated with free enterprise. Nonetheless, about 70 percent of the fakes sold in commerce come from China, which is a leading producer of counterfeit electrical wiring (over 90%) and counterfeit electronic components (70%). Most fake designer clothes come from China, where so much of the apparel is manufactured.

Another big pirate country is Ukraine which has a big internal counterfeiting problem and many fakes are imported from other countries. The United States Trade Representative (USTR) identified Ukraine as a major pirate in 2014 but declined to impose trade sanctions, likely because the country was invaded by the Russia in 2015.

Please Explain Why Intellectual Property is important?

Intellectual property is fast replacing natural resources as the foundation of a nation’s wealth. Ideas and creativity are replacing coal and oil in economic importance. For instance, the computer industry is largely an American invention and continues to produce high-paying jobs. Third-world or developing countries can participate in the global economy as licensees.