Global Trade Brings Fight Against Counterfeit Products, Name Game
By CHRIS CZIBORR
It’s the flip side of global trade: piracy.
According to a recent Pricewaterhouse-Coopers survey, 19% of respondents,all global companies,said that they had been hurt by product piracy in the past two years. And 61% of those companies reported repeat cases of piracy.
Piracy varies for Orange County companies. The troubles of the county’s surfwear and apparel makers have been well documented. Their coveted fashions probably are the most ripped off of products that come from here.
Companies such as Foothill Ranch-based Oakley Inc. also are among the most aggressive in going after counterfeiters.
Other companies don’t report as much trouble with piracy because of the nature of their businesses,selling highly specialized products that are difficult to reproduce.
For healthcare companies, trademark infringement is more common. Case in point: Santa Ana eye products maker Advanced Medical Optics Inc.
Peter Gluck, vice president and chief intellectual property counsel for Advanced Medical, said the company has had to deal with people emulating its contact lens care solutions.
“We found that people were emulating both the formulations inside the bottles and in some instances also copied everything from the way the bottle looked to the trademarks printed on the bottle,” Gluck said.
Advanced Medical relies on sales representatives in other countries to watch for knockoffs.
“They do a policing effort as part of their daily activity,” Gluck said. “We also have services we work with on the trademark side, which monitor activities that look like piracy or counterfeiting. They look at things registered with local governments and send us reports on things that look or sound similar to our proprietary intellectual properties.”
In China, Advanced Medical sends people to shopping malls and outdoor markets to collect bottles of contact lens solutions that look like the company’s products. They send suspected knockoffs to Gluck, who gets a lab to test the product to see if it’s chemically similar to Advanced Medical’s offering.
“We always double-check everything and try to use the same sort of rigorous quality assurance and other technical standards that we use when testing our own products,” Gluck said.
From there, Gluck said he goes back to the people on the ground to find out how sales of the copycat product are and to see if the they could rise to a level where the company needs to take action.
“There is a much higher degree of activity for consumer products,” Gluck said “And there seem to be bunches of fly-by-night operations that pick something that is popular as a consumer item and emulate packaging and labeling,even the stuff inside of the bottles,rather quickly and get the stuff out.”
Advanced Medical works with government agencies to counter piracy but often has to go beyond that, Gluck said.
“We work with local agencies, but we also get our own people to infiltrate organizations that copy our product,” Gluck said. “We’re especially cognizant of Latin America, as well as the Far East. Those are the regions where we have noted the most activity, and those are places where it’s harder to enforce our rights.”
Officials at MSC Software Corp., a Santa Ana maker of industrial design software, said they don’t have to deal with piracy issues as much as makers of video games and other consumer offerings.
“We make low-volume, high-priced software for a company’s specific requirements, so we don’t face a lot of piracy issues,” MSC spokesman Todd Evans said. “A lot of software piracy affects lower-priced, high volume software products.”
Still, makers of specialized products don’t always get a bye from patent disputes, according to Edward O’Connor, a senior intellectual property litigator at Newport Beach law firm Stradling, Yocca, Carlson & Rauth.
“A lot of OC software companies create their own code, or take existing code and modify that,” he said. “What can happen is somebody leaves a company, takes the info they require to the new company and implements that code. Disputes can result from that. And often there are disputes over how much variation in code is enough to avoid trademark infringement.”
In other cases, the cost of making a complex product can be a deterrent,but not a block,to copying a product, according to Stephen Tomassi, general counsel for Orange-based Sybron Dental Specialties Inc., a maker of dental products.
Closely copying a Sybron product would take a lot of spending on equipment and engineering, “And it’s not easy for someone to do that,” he said.
“But we have still been hit by copying,” Tomassi said. “It happens all over in Asia and especially in China. We’ve encountered products where someone has put our name on it and it’s clearly not our product.”
Piracy hasn’t occurred frequently enough or on a big enough scale to cause company officials or overseas salespeople concern, Tomassi.
Irvine chipmaker Microsemi Corp. also is buffered by technology, according to Chief Executive Jim Peterson
“We have fairly unique processes,” Peterson said. “Copying could never happen because those processes would be difficult to duplicate, even in mainland China or Taiwan where we have a lot of business.”
Problems can creep up elsewhere. The biggest problem for Irvine computer security products maker Rainbow Technologies Inc. is its name.
“Rainbow is one of the most commonly used business names in the world,” spokesman Dan Chmielewski said. “We’ve come across Rainbow Refuse Co., Rainbow Shipping and an environmental sciences technology company in upstate New York that used the name Rainbow Technologies. There is a vacuum cleaner company that uses our name. I get constant e-mails from people complaining their vacuum cleaners don’t work.”
Often trademark violators do so unknowingly, generally because of poor research or bad legal advice.
Sometimes the offenses are innocuous, Chmielewski said.
“We once found a group of sixth graders around the Bay area that were running a homework tutorial service under the name Rainbow Technologies,” he said. “We sent them a bunch of company pens and shirts and told them to find a different name.”
Rainbow won’t have that problem much longer. Last week, the company agreed to be bought by Baltimore’s SafeNet Inc. and take on the SafeNet name.
