Cooperation for criminal enforcement fails. Civil liability is more effective at shutting down counterfeiting networks

These criminal penalties have been largely ineffective in eliminating the wide-scale infringement of consumer goods because U.S. laws do not impose significant penalties for infringement45 and the producers of infringing goods are generally located outside the United States.46 Where the operation includes a storefront or offers goods in-person, the individual sellers of counterfeit goods are often illegal immigrants working in informal trafficking rings with ties to producers or organized crime outside the United States.47 The arrest of individual sellers has a limited impact on the importation of counterfeit goods because the individual sellers are generally replaceable due to their illegal status.48 In addition, trafficking rings can easily utilize mainstream shipping methods to move large quantities of infringing product into the U.S. or other developed countries‘ markets.49

Furthermore, even when offenders are arrested they are generally not punished to the full extent that the intellectual property laws allow. The Obama Administration‘s White Paper on Intellectual Property Enforcement Legislative Recommendations (“White Paper”)50 recommended an increase in the sentencing range for intellectual property crimes (less than half of those convicted received prison sentences) and for recidivist intellectual property crime offenders.51 The White Paper noted that intellectual property crimes were light on punishment despite the high profit margins associated with trademark infringement, providing the incentive to sell counterfeit goods, and the relationship of counterfeiting activity to organized crime.52 It is not yet clear if the implementation of these recommendations will impact the counterfeit market.

The meaningful enforcement of criminal counterfeiting laws and civil trademark infringement suits continues to be a challenge for both law enforcement and trademark owners. Trademark owners, unlike law enforcement, are able to use a wider variety of civil tactics to shut down counterfeiting rings. By pursuing those who facilitate direct infringement under theories of secondary liability, brand owners can make the provision of counterfeit goods to consumers significantly more difficult and costly for counterfeiters and associated parties.