Counterfeiting is a crime that costs billions and, potentially, even your life. So why are the perpetrators just getting slaps on the wrist?

Is Lady Justice getting soft on counterfeiters? Examples abound from around the world.

In Puerto Rico,  Nelson Acevedo-Cruz and his wife Noraida Beltran were indicted on multiple counts of conspiracy to infringe copyright, trafficking in counterfeit labels, and trafficking in counterfeit goods or services – and were found guilty on all counts. They were sentenced to 48 months and 36 months in prison, respectively. Their sentences – well below the guideline ranges of 63-78 months for Acevedo and 41-51 months for Beltran – were recently affirmed by the Court of Appeals.

In Pittsburgh, during the sentencing of Mamdou Diallo, found guilty in April 2006 of trafficking in goods bearing counterfeit trademarks, federal prosecutors asked for a sentence of 33 to 41 months in prison for Diallo.  In assessing the seriousness of his crime, they relied on the cost of the genuine versions of the goods that Diallo sold (counterfeit Louis Vuitton, Prada, Coach, Kate Spade, Burberry and Chanel handbags, clothing and jewelry) -- approximately $215,000 --. Diallo's lawyers, however, argued that the sentence should be based on what Diallo would have sold the counterfeits for -- around $10,000.  U.S. District Court Judge Nora Barry Fischer agreed with them, sentencing Diallo to 6 months’ home detention, 3 years’ probation and a restitution of $2,600.

In England early this year, Teesside Crown Court imposed a nine-month suspended prison sentence on Robert Edward Jackson, aged 41, of Acklam Road, Middlesbrough in the UK, after he pleaded guilty to the production and distribution of copied DVDs - fifteen offences under Trade Marks, Copyright and Trade Descriptions legislation. The judge said he deserved a prison sentence but suspended it as long as Jackson works to “overcome his problems.”

Many have argued that the current laws to protect intellectual property should be strengthened. But is it that laws have to be changed…or that they have to be better enforced? Why are convicted counterfeiters being handed down minimum sentences when there are maximum penalties already available under the law?

In her blog, www.counterfeitlawblog.com, Leora Hermann of the law firm Kluger, Peretz, Kaplan, and Berlin applauds the recent trend calling for stiffer sentences of seven years or more that have been imposed on convicted fraudsters. But she notes that most of the efforts have been on the federal level – local governments are too strapped for funds to finance lengthy investigations.

Judge Price from the UK said, as he meted out a sentence on several men convicted in a multinational fake drug scam, “This is a case of greed motivated by immense profits. These sentences are designed to deter others from being involved in the lucrative business.”

But, as seen in the cases above, not all judges seem to understand the damage that counterfeiting inflicts on both the local and global economies. Many still consider it a victimless crime and underestimate the very real damage it can cause.

When it comes to sentencing, the value of the goods is a major determining factor (one would hope…but see item 2 above) in the severity of the sentence imposed, many have advocated a universal statutory definition of the damage. Further, there is a growing trend to impose stiffer penalties on those who manufacture counterfeit items (drugs and medicines, for example) that cause bodily injury or death - even inadvertently.

In fact, former US Attorney-General, Alberto Gonzales, has urged the enactment of a comprehensive legislative proposal entitled “The Intellectual Property Act of 2007.” This includes measures that would:

·         Increase the maximum penalty for counterfeiting offenses to 20 years’ imprisonment when the defendant knowingly or recklessly causes or attempts to cause serious bodily injury, and the maximum penalty to life imprisonment when the defendant knowingly or recklessly causes or attempts to cause death

·         Provide stronger penalties for repeat offenders of copyright laws

·         Implement broad forfeiture reforms to ensure the ability to forfeit property derived from or used in the commission of criminal intellectual property offenses

·         Strengthen restitution provisions for certain intellectual property crimes (e.g., criminal copyright and DMCA offenses

·         Ensure that the exportation and transshipment of copyright-infringing goods – just like that of counterfeit goods – is a crime

The forfeiture clause especially adds a real bite to the prosecutor’s bark and effectively closes down the counterfeiter’s business. According to Hermann, surrendering the fake merchandise and the manufacturing equipment prevents the counterfeiter from just handing off the business to an associate and in effect continuing his operation.

Furthermore, she stated that a loophole in the law (which was closed just recently) prevented label makers from being prosecuted the way counterfeit goods manufacturers were. As we all know, without fake labels, there would be no fake goods.

There is till a long way to go, but with concerted efforts by government, law enforcement and technology providers, brand owners can now see a little light at the end of the tunnel.