Anti-Counterfeiting



Donalee Moulton for The Lawyers Weekly

March 12, 2010

Protecting brand - name, image and product - is big business for lawyers and those they represent. In fact, it's so big that one firm in the U.S. focuses exclusively on anti-counterfeiting, and a similar firm already exists in Canada.

The Gioconda Law Group was launched late last year in New York in response to two converging issues. First, there was the growing problem of anti-counterfeiting. Second, there was the reality of shrinking legal budgets.

"I found what clients wanted was a top quality lawyer who would protect their brand at a reasonable price," founding partner Joseph Gioconda told The Lawyers Weekly in an interview.

"I can put clients' needs first," he added. "I can fashion a solution that works without the huge overhead."

Lorne Lipkus and his colleagues at Kestenberg Siegal Lipkus LLP have been doing just that in Canada for more than a decade. In 1999, the Toronto-based firm decided to focus on anti-counterfeiting. It was a decision that surprised the legal community, said Lipkus. "People talked to me. They said, 'I think you're making a mistake putting all your eggs in one basket.' But nothing excited me more than this."

Like Gioconda, Lipkus has found a business model that supports the specialization. The challenge was to be reasonably priced for small companies. "We could be cost-effective if companies got together and hired us, then divided the bill," said Lipkus. "Companies were very pleased with that. All of a sudden [legal services] became affordable."

It's unlikely, however, that boutique firms specializing in brand protection will start to pop up across the country. "The market for exclusive anti-counterfeiting firms is limited here," said Gary Daniel, a partner with Blake Cassels & Graydon LLP in Toronto.

However, he noted, "there is room for both boutiques and larger players, particularly when it's the Canadian part of a larger international activity. There will always be a role for both."

Indeed, said Barry Sookman, a partner with McCarthy Tétrault LLP in Toronto, "there are many firms that have a vast intellectual property practice. You don't have to be a boutique firm."

Gioconda believes the landscape south of the border is similar. "I don't think you'll see other anti-counterfeiting firms spring up. They would have needed to start building this expertise starting 15 to 20 years ago. You [need] the relationships in place and the expertise."

Those lawyers currently working in the brand protection arena may find their plates getting even fuller. Business, it seems, is booming. "There is no doubt in my mind that counterfeiting is one of the largest growing industries in the world. The second largest growing industry is anti-counterfeiting," said Lipkus.

The landscape has changed significantly, said Daniel. "When I first started, counterfeit goods were restricted to a few number of goods, for example, tapes and concert items. Today anything can be counterfeited.

"Law enforcement and regulatory agencies do the best job they can," he added, "but it's so widespread."

While counterfeiters have opened up their market, companies have moved to protect their brand. That's a shift in approach, said Lonnie Brodkin-Schneider, a corporate commercial lawyer with Miller Thomson LLP in Toronto. "Years ago, not many companies were willing to take the time or make the effort, nor were they willing to invest in protecting their intellectual property and their brands. Even fewer took that protection seriously in bringing such protection to the next level by aggressively enforcing their rights.

"With the proliferation of the worldwide anti-counterfeiting problem, industry and government have been forced to take notice," he said. "As a result, the approach has gradually been moving from feelings of helplessness and lack of a sense of control in the face of the problem to active planning and coordination of efforts."

Changes in how counterfeiters work are driving some of this new action. "Counterfeiters don't concentrate on one product. A criminal isn't going to specialize," said Lipkus. "We've had situations where counterfeit Gucci and Louis Vuitton bags are stuffed with counterfeit pharmaceuticals."

The marketplace has also shifted. "More often than not the transaction is taking place in cyberspace and the person you're going after may not be here in Canada," said Daniel.

"Speed is really crucial," he added. "Everything can take place in minutes."

The bricks and mortar world is also fraught with difficulties, especially in this country. Canada faces its own set of problems that make counterfeiting a big issue, noted Sookman. "Canada has one of the weakest laws to deal with this."

A number of recent reports have called for an improved regime, especially with respect to border control and the use of Canada as a transit point for the movement of counterfeit goods. Our counterparts in the U.S. and the European Union concur and are pushing the federal government to take action. "It's a political embarrassment," said Sookman, who is co-chair of McCarthy Tétrault's Technology Law Group.

"[This] is a global issue," he added. "Canada has a heightened problem because our border controls are so lax."

A tight rein also needs to be held on brand by both companies and their law firms. "It is essential to ensure a strategic, unified and well-planned process for dealing with the issue, by putting in place a corporate anti-counterfeiting policy that involves education of employees, external advisors and business partners," said Brodkin-Schneider. "Vigilance and reaction are essential ingredients, and must be ongoing.

"The legal framework for reaction, including preparation and planning for injunctive proceedings, civil actions, and law enforcement communication and involvement, should be in place and planned before the problem becomes evident," he added. "Preparedness, planning, and legal advisors are key ingredients."

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