The seaports of Elizabeth and Newark are the largest source of counterfeit goods in a region that accounted for approximately 40% of all the goods seized nationwide previous year (Kwoh). Thanks to better technology, the value of seized counterfeit goods continues to increase each year. This dilemma has motivated the New Jersey and New York U.S. Customs and Border Protection (CBP) officials to consider donating some of the goods to poor and homeless, probably inspired by similar programs in Los Angeles, Detroit, and San Francisco. To ensure that the program doesn’t deviate from its real purpose, the emphasis will be on essentials such as shoes and clothing etc. The similar program in Los Angeles has been in place for nearly ten years now. Initially, the trademark owners hesitated over participating in the program but since then have become more cooperative. In additional to local charities, the counterfeit goods are also donated to third world countries such as India, China, Vietnam, and Cambodia.
The benefits of the program are that it is helping the poor and homeless in these tough economic times and is focusing on essential goods which contribute more towards the overall well being of the society as compared to recreational goods or fashion items. In addition, the program has been well designed as it takes steps not to violate the spirit of copyright laws by seeking approval of the trademark owners and accommodating their requests. Moreover, it is an effective method of disposing counterfeit items because not only it does social good but it also allows CPB to save costs that would otherwise be spent on shredding or incinerating the goods. Another benefit of the program is that it brings international goodwill to the U.S. because a signification amount of the counterfeit goods is donated to the third world countries.
But the costs (both direct and indirect) of the program may outweigh the benefits. First of all, the purpose of the copyright laws is to prevent the existence of counterfeit goods in any form no matter how noble the intention may be. Only the trademark owner has the right to license its products or allow imitations. Even though the program does seek approval from the trademark owners but it is possible that many of them give permission to protect public goodwill or ensure continuous cooperation of the CPB regarding seizure of counterfeit goods. Moreover, even if the logos are removed from the products, certain brands have specific non-logo design elements that may be harder to remove and would stay on the knockoffs. In addition, trademark owners have no control over the quality of knockoffs and even though the CPB may do its best to identify products with hazardous elements, they can’t give absolute guarantee to the trademark owners. Thus, any knockoff product with hazardous element may have the potential to hurt the reputation of the trademark owner. . If all the goods are donated to third world countries in order to defend against potential hazardous elements in knockoffs, it will unethical on the part of the U.S. to apply different standards towards third world countries than what it would apply to its own citizens.
Even if the knockoff products are only donated, they may cheapen the value of the specific brands because many brands thrive on exclusivity. In addition, there is no guarantee that the knockoff products may not be sold by those to whom they are donated. As long as the products are not destroyed, the risk will always be there for them to flood the market. An alternative for CPB may be to sell the recyclable counterfeit goods to recycling companies and donating the proceeds to the charities. Even though, the indirect costs are high and the program should not be pursued but because the indirect costs are more difficult to measure, it would be difficult to convince the CPB otherwise.
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