Bill Introduced to Criminalize Purchase of Counterfeits in NYC

Legislation would make NY the first U.S. city to prosecute buyers of fake goods with jail terms of up to one year.

The New York City Council has introduced a bill to make the purchase of counterfeit goods a crime punishable by a fine of up to $1,000 and as much as a year in jail, which would make buying a fake Rolex watch a Class A misdemeanor.

The most stringent punishments would be applicable to people who buy in bulk, often to resell to friends back home, said NYC Councilwoman Margaret Chin, who introduced the legislation. In those particular situations it is difficult to argue that buyers merely got lost on the way to purchase authentic products. Chin’s district, which is comprised of lower Manhattan includes Chinatown, as well as flagship stores for Gucci, Prada, Louis Vuitton, Rolex and other luxury brands.

Golden Rule 

Teaching respect for others’ intellectual property should be the Golden Rule of the digital age. It does not matter if the property is intangible, like copyrights on recordings, or patents that cover inventions, ideas and creative output are not there for the taking. Real estate lines are clear cut; not so with the rights to intangible assets. Some consumers may require help understanding how brands work and the importance of upholding a trademark, but many would rather remain uninformed.

People can be taught the importance of respect for other people’s’ property not only because IP theft violates the law, but because it has serious implications for American jobs and businesses. When items such as pharmaceuticals and air plane parts can be counterfeited, there can be life-threatening consequences, too. 

The speed and accessibility of information makes it feel as if everything is within the tap of a smart phone or click of a mouse. But because images and content (and inventions) are easier to access does not mean that they are up for grabs. Lines of demarcation need to be more clearly delineated and consistently enforced.

A hefty fine or jail term for buying counterfeit goods may seem harsh, but that’s only because we’ve gotten used to accepting IP crimes as business as usual. Many believe that IP is a basic right, like air and water. It is not. Just as a “John” enables prostitution, in the eyes of the law and is in part responsible for it and criminally liable.  Similarly, those who buy counterfeit goods must be held accountable for their actions. Pleading ignorance is a sorry excuse. Parents, schools, and law enforcement agencies, need to do a better job of educating audiences about IP rights.

IP Theft is a Serious Problem

It is difficult to determine whether or not consumers who buy products from companies that violate other business’ patents are breaking the law. The fact remains that invention theft by technology companies is rampant. If more consumers were aware of the problem and its impact, they may care enough to do the right thing and encourage others to. (Awareness of child labor in developing nations has changed attitudes if not consumer preferences.) Consumers, not just the courts, are responsible for reinforcing good business  behavior.

Trademark, copyright and trade secrets are all protected to some extent under criminal law. If the counterfeit legislation is voted in, those who participate in brand or trademark counterfeits in NY will be subject to much harsher treatment than in the past. Patent violators escape criminal penalties, in part because infringement can be unintentional and wilfulness very difficult to prove. It will be interesting to see under what conditions criminal penalties for patent violators will become viable.

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Councilwoman Chin said at a public hearing that counterfeits deprive the city of at least $1 billion in tax revenue annually that could otherwise support community improvements. The Democratic lawmaker expects a vote sometime in the coming months.

France already has the toughest counterfeit law. “In France, everyone seems to know that buying or carrying fakes is a crime,” says Valerie Salembier, a former publisher of Harper’s Bazaar magazine who planned to testify at the NYC Council hearing. She runs the nonprofit Authentics Foundation dedicated to consumer education of the counterfeit industry. Air France warns tourists to stay away from fake goods, because anyone in the country risks fines of up to 300,000 euros’ (more than $478,000 USD), and up to three years in prison for the mere possession of a counterfeit item.

‘‘It’s why they don’t have a big problem with counterfeits in France,” Salembier says.

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“Protecting the trademark of manufacturers is in the city’s interest and the country’s interest, otherwise people wouldn’t come here and sell things and create things,” Mayor Michael Bloomberg told reporters during an appearance in the Bronx.

Image source: counterfeitchic.com; beingdutchinasia.com; http://ryklim.wordpress.com/