Kramer Levin's Anti-Counterfeiting Litigation Practice: An Aggressive Response To A Big Challenge

Monday, October 1, 2007 - 00:00

Editor: Mr. Potter, would you tell our readers something about your professional experience?

Potter: I am a 1988 graduate of NYU Law School, and for the past 15 years I have been a litigator at Kramer Levin. Over the course of my career I have handled a wide variety of complex business litigation and internal investigations. In recent years, an increasing docket of cases involving counterfeit products has claimed my attention.

Editor: You have been involved in the firm's anti-counterfeiting litigation practice for some time. Would you give us an overview of the practice?

Potter: In 1995 we were asked to handle a counterfeiting matter for Procter & Gamble. Since then, our anti-counterfeiting practice has grown substantially. We represent major corporations across many industries in prosecuting anti-counterfeiting actions. Some of our current representations are: Johnson & Johnson (counterfeit LifeScan brand blood glucose test strips); the Procter & Gamble Company (counterfeit Pantene and Head & Shoulders brand shampoos); Alcoa, Inc. (counterfeit Reynolds Wrap brand aluminum foil); and Church & Dwight Co., Inc. (counterfeit Trojan brand condoms). We are handling other actions that are non-public.

For each case we assemble a team. About a dozen lawyers are involved in these cases on an ongoing basis. We also call upon lawyers from a variety of departments with the appropriate language skills.

We don't do what I refer to as "whack-a-mole" cases, where a superficial effort is made to remove easily found counterfeits that are inevitably replaced by new counterfeits. We specialize in large aggressive litigation targeting the entire distribution and manufacturing chain and the equipment, inventory, capital and people that support it. When we are done, the problem is over. This scale effort only makes sense when a highly valuable brand is confronted by a serious counterfeiting threat. It is especially suitable when the counterfeits present potential health and safety risks or can cause death.

Our approach is also favored by trademark owners who are not only interested in shutting down those that are pirating their products today, but also in deterring others. Counterfeiters tend to avoid companies that are known to aggressively protect their products.

Editor: What kind of language skills are involved?

Potter: Virtually all of the cases we handle require, at some point or other, a familiarity with Mandarin or Cantonese. We also have handled cases that have involved more than a dozen other languages. This reflects the global nature of counterfeiting. While we do use professional translators, having lawyers with the requisite language skills to review e-mails, banking documents and the like enables us to move quickly in an arena where speed is of the essence.

Editor: What role does law enforcement play in fighting counterfeiting?

Potter: Dialing 911 does not work. While it is important to coordinate closely with law enforcement, customs authorities, prosecutors, and heath and regulatory authorities, it is nave to expect the government to solve your counterfeiting problem. While the government can, and does, seize counterfeits and put people in prison, the government brings too few cases and usually acts at a pace that is unacceptable to trademark owners concerned with protecting their brands, business partners and customers.

Editor: How can companies protect their brands against counterfeiters?

Potter: We live in a "Self Help" jurisdiction. To protect your brand you must mount your own offensive against the counterfeiters. Fortunately, Congress has given trademark owners awesome powers to pursue and stop counterfeiters. While each action presents unique challenges, often we start with the counterfeit for sale at retail and with the aid of experienced private investigators and court orders work rapidly up through the distribution pyramid to the manufacturer by following the counterfeit products, the money and the counterfeiters' e-mail, telephone and physical trail.

Editor: Do you file a lawsuit?

Potter: We commence an anti-counterfeiting action in United States Federal court. It is a secret, non-public action filed under seal. We obtain orders from the court directing law enforcement to accompany us on raids, at locations nationwide, against those dealing in the counterfeits. The orders permit us to break locks, open vaults and arrest anyone who interferes. We are entitled to seize documents, computers, Blackberries, mobile phones, counterfeits and anything used to manufacture or package the counterfeits.

We obtain orders allowing us to freeze the bank accounts of those that sell and manufacture the counterfeits. We obtain temporary restraining orders and then preliminary and permanent injunctions against those who sell, distribute and manufacture the counterfeits.

We obtain expedited discovery orders, requiring non-parties such as banks, telephone companies, credit card companies, internet providers, freight forwarders, customs brokers, component manufacturers and the like to produce documents within 72 hours, and we conduct depositions immediately. It is not unusual for us to serve in one action more than 500 non-party subpoenas.

Typically we conduct sequential seizure raids leading us up the chain of distribution, with each seizure providing the information needed for the next seizure. Often we conduct waves of seizures every other day. The typical pattern begins with daytime seizures and interrogations, followed by reviewing seized documents and computer drives, followed by drafting papers overnight, followed the next morning with an ex parte court hearing to obtain the next seizure order, followed by scheduling and assembling law enforcement and seizure teams, followed the next day by more seizures. This pattern repeats until the trail ends.

Editor: Do you obtain judgment against counterfeiters?

Potter: Yes. In addition to injunctive relief, we have obtained tens of millions of dollars in judgments for our clients and have seized and destroyed millions of counterfeit products.

To enforce judgments and to put counterfeiters out of business, we have obtained worldwide asset freezes directing banks globally to freeze accounts belonging to counterfeiters.

Editor: From your experience, is the record of China in regard to the enforcement of the laws on its books concerning counterfeits improving?

Potter: China is interesting. Most counterfeits originate in China. However, once you succeed in getting the attention of the Chinese authorities, they can act decisively and quickly. Indeed, it can be far more difficult, and more frustrating, to try to get American law enforcement and prosecutors to bring and pursue a criminal prosecution.

Last month, based on the evidence we assembled in a U.S. anti-counterfeiting action, a counterfeiter was sentenced to 40 months in a Chinese prison. Prison has a deterrent effect beyond any monetary judgment. It completely alters the cost benefit analysis for counterfeiters. After the evidence has been assembled, I always want to present the case to law enforcement.

Editor: Do you assist clients with avoiding counterfeiting problems?

Potter: We counsel clients on best practices for proactively securing products and packaging against counterfeiters and on developing programs to guard and monitor distribution channels. We also work with clients' public relations professionals to assist clients with crafting appropriate communication to the public and government concerning counterfeits.

Editor: What about the future? Where would you like to see this practice in, say, five years?

Potter: I have children. Some of the counterfeit products that I deal with can hurt people. I would be delighted to see the demise of anti-counterfeiting work. Unfortunately, over at least the next five years this is going to be a growth area.

Anti-counterfeiting litigation is extremely interesting. Every time a new project comes into the office, associates line up at my door seeking to join the team. It is also a practice area that offers something that other areas may not: every time we bring a counterfeiter down, we are, in a modest way, helping to make the world a better place.

Please email the interviewee at gpotter@kramerlevin.com with questions about this interview.