The Imminent Problem of Counterfeit Sports Merchandise

Counterfeit products are a growing issue and have resulted in an annual estimated loss of $20-30 billion in tax revenue for Canada over the past few years. In particular, the rise in counterfeit sports merchandise has been almost uncontrollable.

Recently, knock-off basketball jerseys bearing the trademarks of the Golden State Warriors and Cleveland Cavaliers were mass-produced around the time the two teams met in the NBA Finals. Unfortunately, consumers did not shy away from buying these items as they are generally known to feel that shaving a few dollars off of these items would be worth it. In other words, the thrill of the find is sometimes the primary objective.

The Canada Border Services Agency (CBSA) has instituted a program that is geared towards “the fight against counterfeit and pirated goods entering or leaving Canada”. While the program has been communicated to the public and is relatively simple, it operates through a complaint system. This means that a Canadian trademark holder registered with the Canadian Intellectual Property Office (CIPO) is eligible to file a Request for Assistance (RFA) application with the CBSA. Furthermore, processing a request takes four to six weeks and the applicant must fill out a form that is not exactly user friendly.

Additionally, pinpointing the primary source of the counterfeit merchandise is a problem, which does not seem to be directly addressed by the CBSA. As such, an added layer of government support in this matter would likely prove to be helpful.

It is interesting to note that the United States (U.S.) is facing a similar struggle. The U.S. Customs and Border Protection (“CBP”), has also been trying, tirelessly, to prohibit the sale and delivery of such products. Once again, this is much easier said than done. “Enforcing IPR laws is a priority trade issue for CBP and helps to protect America’s economic security and competitiveness,” said director Eric Batt, of the Apparel, Footwear and Textiles Center of Excellence and Expertise. “The significance of that mission is magnified even more during national sporting events such as the NBA Finals and just as our recent seizure activity shows, we remain committed to ensuring that arriving merchandise adheres to federal [intellectual property] law and shipments that infringe on registered trademarks will be targeted and seized.”

Section 53.3(1) of the Canadian Trade-marks Act forbids the distribution, sale, or exportation of merchandise that infringe registered trade-marks, with a special focus on counterfeit goods in section 53.3(1)(b). This means that while the proper laws are in place, enforcement is the primary hurdle with respect to this issue.

Given the new age of Internet shopping, controlling the shipment of fake goods is increasingly difficult. While counterfeit merchandise used to be sent to stores, they are now being sent, individually, to online shoppers. As such, government officials are forced to find and seize counterfeits one-at-a-time.

Another issue is the public’s interest in counterfeit goods. Finding products that look very similar to that of high-end designers at a much lower price may make shoppers feel as though they are being clever. However, the harm that this brand of shopping inflicts can be profound. Firstly, this causes severe problems for designers who spend much more time, effort, and capital to produce the ‘real deal’ because counterfeits can tarnish the reputation they have built through branding, and diminish their company’s good will.

Furthermore, according to the U.S. Department of Homeland Security assistant special agent Richard Halverson, counterfeiting efforts have regularly been tied to international crime rings that use this scheme to launder money from illegal drug sales and human trafficking. This direct link has is also supported by the United States National Intellectual Property Rights Coordination Centre.

So, the next time an ‘I-can’t-believe-it’s-not-real’ product catches your eye, please consider the consequences for all parties involved.

Saba Samanian is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.

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