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Conterfeiting Issue

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Different treatments against counterfeiting
Counterfeiting is looked at differently in US and in China. As a large contributor to the Chinese GDP the Chinese government looks the other way when it comes to enforcing intellectual property infringement. The Industry and Business Administration are in charge of regulating intellectual property infringement in China. When reports are filed the Industry and Business Administration will contact the police to enforce the law. The police will not do much about it because counterfeit software and products provide the people of China with affordable necessity. On the other hand, Intellectual property is heavily protected in the U.S. By filing Patent, Copyright or Trademark individuals are able to protect their property and have the right to sue people are producing their products. The Federal Fraud Department is in charge of investigating these cases. China’s police force is not able to do enforce the laws in the rural areas, where most of the counterfeiting happens. The police in those areas are understaffed and lack the technology to gather evidence.
Counterfeits are looked upon differently in these two countries and thus have different retail regulations. In the U.S. retails need to get permission from the manufactures to shelf their products and because of this they are not able to sell counterfeit products. In China, retailers need a license and certificate to run their store, but they are allowed to house and sell counterfeit products. The Patents, Copyright and Trademarks allow manufactures to sue stores that sell counterfeits, but since China does not protect these property rights retailers in China are able to sell counterfeits.
Three types of counterfeiting
First type of counterfeit: replica the logo or trademark:
In this type, people replica the product of those registered brands with exactly the same logo and trademark on it.
In America:
Trademark Counterfeiting Act of 1984: This law makes it illegal to produce, sell and trying to sell goods that use someone else's trademark without permission, such as the Nike sneaker for example. Punishment for those who violate such Act could be:
• Imprisonment: Up to 10 years for the first offense and up to 20 years for a repeat offender. An offender who knowingly or recklessly causes death as a result of an unlawful sale faces up to life in prison.
• Fines: Up to $15.0 million for corporations and $5.0 million for individuals who are repeat offenders.
• Seizure and destruction of the counterfeit products.
• Civil lawsuits by the trademark owner under the federal trademark law for the recovery of damages, lost profits, attorneys’ fees and injunctive relief.
In China:
Trademark Act:
• Imprisonment: Up to 3 years if the sales of fake product are below 250 thousands; 3-7 years if the sales are beyond 250 thousand.
• Fines: Up to 500 thousand Chinese RMB, depends on the sales of fake product.
• Seizure and destruction of the counterfeit products.

Second type of counterfeit: replica the product with similar logo or trademark:
It is another kind of fake product without using the exact brand logo or trademark on it, so technically, it is not a counterfeit. In China, you can sell this legally as long as you don't advertise or promote it as the genuine brand name. But in America, people can be sued even if they resemble the trademark or logo of a registered brand.
Stop Counterfeiting in Manufactured Goods Act: This law specifically targets the practice of attaching labels to fake products and passing off to consumers poorly made items as brand-name ones.It modifies the definition of "counterfeit mark" to include a spurious mark that is applied to or consists of a label or packaging of any type or nature that is designed, marketed, or otherwise intended to be used on or in connection with the goods and services for which the mark is registered in the U.S. Patent and Trademark Office, that is substantially indistinguishable from such registered mark, and that is likely to cause confusion, mistake, or to deceive.
• Up to 5 years in prison
• A fine of up to $250,000
• Seizure and destruction of the counterfeit products.
• Civil lawsuits by the trademark owner under the federal trademark law for the recovery of damages, lost profits, attorneys’ fees and injunctive relief.

Third type of counterfeit: so-called “knock-offs”:
Knock-offs are products that look a lot like a famous brand but are not identical copies and without using the same logo and trademark.
Basically, both in America and in China, it is legal to sell and buy such knock-offs. But in America, it will be illegal if the seller tries to give the impression that the products are in fact from the famous brand. For example, if in America, if you want to buy a watch, it looks like a Rolex, but the seller tells you his products are comparable in style and quality to the original Rolex watches, however he does not represent them to be original, nor do he represent that they are exact copies. Under such circumstance, it is not illegal and that seller does not violate trademark laws.
In the customers’ side:
It is legal in China to buy and use fake products, like LV handbag, Rolex watch. But in America, although I am not sure whether it is legal to buy such fake products just for personal use, it is illegal if people knowingly buy counterfeits and profit from them, such as reselling them. Besides, if you buy some fake products in another country and try to bring them into US, there is a good chance that those counterfeits will be seized by custom. But if you bring knock-offs, as long as they are clearly not trying to be confusing copies, just very close to the famous style, custom will not seize those knock-offs.
Consequences
Counterfeiting can bring very limited benefits in the short-run domestically, but cause much bigger damage to the economic domestically as well as globally in the long-run. We will discuss the effects brought by counterfeiting in terms of China and America. Furthermore, we will talk about the issue in global aspect.
For China, we can clearly see the benefits gained from not enforcing the regulation in faking products. It also due to the economy condition China is now representing. Firstly, counterfeiting contributes a lot to the national GDP and maintains substantial job positions for rural areas. Secondly, a certain amount of taxes are collected from those manufactories, which are somehow essential for developing the local economy. Thirdly, if any of these counterfeiting products were exported, they can earn China some foreign currencies, which are important for importing new technologies and further development in manufacturing.
However, all of those benefits stated above can only be maintained for short period. The benefits can never outweigh the damages that counterfeiting products can possibly bring to China in the long-run. First of all, if the regulations are failed to be enforce, the patents and copyrights would never have necessary protection. If it is the case, Chinese manufactories would gradually lose the concept and ability to create and innovate. The whole economy in China would end up collapsed or be manipulated by other economies if it lost the ability to create. The second important thing, and it’s now happening every second, is that China will lose its reputation in manufacturing. “Made in China” can be seen almost all over the world, but with perception of low in quality. Once the Chinese counterfeiting products become a global issue, I can’t imagine how those manufactories are able to regain the reputation.
Someone may think that the two damages mentioned above could only happen in the future. Let’s talk something about now. The third huge damage is happening right now, losing jobs. This time, we are not talking about jobs provided by counterfeiting manufactories; instead, we are talking about real jobs positions from regular companies. Due to the dominating fake software spread across China mainland, Microsoft company has threaten to move out of China to other Asian countries. The last but not the least, Chinese market is also on the victims list. As known, counterfeiting products are commonly in poor quality. Consumers in China suffered a lot from buying those fake products. What’s worse, consumers are getting used to the market environment as well as the attitude of the regulators.
Chinese economy was damaged not only in the aspects stated above; however, the global economy seemed to have been damaged greatly as well.
United States is the number one victim in this counterfeiting issue. A study showed that counterfeiting and piracy cost the U.S economy between $200 billion and $250 billion every year, as well as 750,000 American jobs loss. These can directly put health and safety issues at risk in the society.
Global effects:
To international companies worldwide, the damages to their brands and to their profits are almost immeasurable. If Chinese regulators had better enforced the laws, those international companies could have gain most of the share in Chinese market, not even mention losing market share in other markets due to the counterfeiting products.
To consumers worldwide, they have to suffer poor-quality counterfeits under certain conditions. As stated earlier, U.S custom may probably seize the fake product when engage any of those. However, not all nations are strict to imports. Some of the nation only forbids illegal products such as drugs, weapons so and so forth. In this case, the markets in those nations could be filled with counterfeits even regulations are existed. To those where with restrict regulations, they are actually under hugger risk of smuggling.
There are some positive considerations that counterfeiting products can bring to the global. In consumers’ aspect, counterfeiting products actually reduce our daily expense. For example, one can watch an up-to-date movie or download a latest song for free, but still suffer from the poor quality. In original producers’ aspect, counterfeiting products in some way raise the brand awareness worldwide. Some had conducted a study indicated that more fake products are produced, more original products are consumed. These are the only two positive effects that our team can come up with. Obviously, regulations should be enforced in order to eliminate the damages that have already been a Reference:
Biz Aims (2008, September14). The Impact and Examples of Fake Products.Retrieved from: http://www.bestthinking.com/trendingtopic/relateditem/1332
CBSNews (2007, December 5). The World’s Greatest Fakes. Retrieved From: http://www.cbsnews.com/2100-18560_162-595875.html
"Counterfeiting." West's Encyclopedia of American Law, edition 2. 2008. The Gale Group 1 May. 2012 Retrieved from: http://legal-dictionary.thefreedictionary.com/counterfeiting
Lashon Fryer (2009, April 14). What is the Penalty for Selling Fake Designer Bags?Retrieved from:http://www.ehow.com/about_5580860_penalty-selling-fake-designer-bags_.html
Lisa Page (2007, September9). It is Illegal to Sell Counterfeit or Fake Goods. Retrieved from: http://ezinearticles.com/?Its-Illegal-to-Sell-Counterfeit-or-Fake-Goods&id=1028018
Mitchell Proner (2010, January 21). Selling knock-off Rolexes is illegal? Retrieved from: http://arbitraryandfanciful.wordpress.com/2009/01/15/selling-knock-off-rolexes-is- illegal-but-everybody-else-is-doing-it/

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