Beware Pervasive Trademark Scams During COVID-19

By Ann Fort and Cameron Murphy
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Law360 (March 27, 2020, 2:03 PM EDT) --
Ann Fort
Ann Fort
Cameron Murphy
Cameron Murphy
Strong brands are prime targets for trademark scams in times of crisis like the COVID-19 pandemic because of the trust and goodwill those brands have built with the consuming public.

Brands in the medical products sphere should be on particularly high alert at this time because trademark pirates have strong incentives to capitalize on public concern and fear relating to the spread of the coronavirus.

Scammers and fraudsters will use well-known trademarks to impersonate the brand or to imply that there is a trusted relationship, like a sponsorship or affiliation, all to divert business or information that was intended for the brand. 

Know your scams!

Impersonation methods can be active or passive. Active measures involve affirmative efforts to obtain personal identifying information or the payment of money. This generally takes the form of conveying false offers, impersonating customer support, fake smartphone applications and phishing attacks.

Common themes for phishing attacks include piquing the target's interest with enticing offers, imparting a sense of urgency and impersonating known senders. Expect phishing attacks to masquerade as trusted health, news and government sources purporting to offer urgent updates and legitimate information on the latest COVID-19 information.

Security watchdog organizations have reported that these emails attempt to mimic local hospital organizations and the Centers for Disease Control and Prevention and contain attachments with the latest statistics on the pandemic in your area. Another common tactic scammers use is posing as a medical expert offering advice on safety measures. One of the more creative phishing attempts impersonated FedEx Corp. and offered updates on the impact of coronavirus on pending shipments.

However, the most effective phishing attacks will likely pretend to come from your own organization and pronounce new workplace policies relating to the virus with a link to the new policy. Due to heightened anxieties surrounding this ever-escalating public health crisis, employees and consumers who would otherwise be cautious are that much more likely to click on links and to open attachments they normally would not.

Fraudsters will often use false accounts on Facebook, Twitter and LinkedIn to lure customers into providing their sign-on credentials or signing up for bogus support services. Scammers will even apply to register identical or similar trademarks to make their actions look more legitimate. Companies should also be on the lookout for fraudulent mobile phone applications offering coronavirus updates, because they could contain malware that will encrypt a user's phone and demand bitcoin as a ransom.

Passive methods, like cybersquatting and unauthorized co-branding, can cause lost sales and significant harm to a brand's reputation. Cybersquatting is one of the most common methods used to hijack goodwill because it is nearly impossible to control every possible variation of a brand's official domain name. Opportunists will find unused top-level domains, like .net instead of .com, purchase domains with common typos or simply add words on to the brand's domain name. 

Once they own the domain, cyberpirates may park the domain name and profit by hosting ads or offering counterfeit products. The ads, similarly to phishing attacks, will try to create a sense of urgency surrounding a limited time offer or limited product supply. These limited-supply offers often belie that there is, in fact, no product supply and the criminals are soliciting payment for goods they do not have and never intend to ship. When there is a supply of goods, it is often counterfeit, posing a significant public threat because these goods are inferior to the genuine product and do not operate as intended or meet stringent quality control specification. 

For example, U.S. Customs and Border Protection, which inspects imported products, seized shipments of counterfeit COVID-19 test kits just last week. Interpol has stepped-up its enforcement efforts to tackle illegal online sales of medical products and medicines and has made 121 arrests in a global operation involving more than 90 countries. According to Interpol, about one-third of the advertisements it examined related to counterfeit face masks, and many of the other ads focused on substandard hand sanitizers and unauthorized antiviral medications.

Hunt down the pirates!

A brand's best resource to spot these pirates are its own business people. The brand's employees will have the most knowledge about brand usage standards and those that are, or are not, authorized to use the brand's marks. Consider offering a bounty program to reward employees for spotting and reporting potential trademark infringement. 

If you have elected not to use a watch service, you might reconsider. Scammers work fast, and even the most attentive of your employees can't be everywhere at once. Invest in a watch service that covers domain name registrations as well as international registration applications. Some services will monitor social media looking for your pirated brands.

Because trademark rights are territorial, watch services can keep a vigilant eye on foreign jurisdictions where the brand may be well-known, even though it lacks local operations or distribution relationships in the area. Watch services provide reliable notice of trademark pirates' efforts to secure trademark rights and domain names, allowing the brand to intervene before losing the rights to its trademark. 

Watch services can patrol social media and online marketplaces for copycats. Enlisting outside counsel to secure a watch service can have significant cost benefits versus handling the task in-house, because law firms can take advantage of bulk discounts on behalf of their large client bases.

How to respond?

It is not always clear-cut as to whether potentially infringing activity will warrant legal proceedings, but potential harm to the public and the business should be the most important considerations in this decision-making process. 

Depending on the situation, especially if it involves a wayward partner or an overzealous fan, consider having a business person (with the oversight and assistance of counsel) make the first communication with the offending party. Not only is this an economical approach; it also might open up a dialogue that can guide later formal legal action, if that becomes necessary. 

If initial requests to cease the infringing activity are not honored, a wide array of tools are available, including domain name arbitration, e-commerce and social media takedown processes, and, as a last resort, civil litigation. 

Of these, domain name disputes offer the most options for remedy. Brand owners can rely on host terms-of-service requests, Uniform Domain-Name Dispute-Resolution Proceedings, Uniform Rapid Suspension for new generic top-level domain names, Public Interest Commitment Dispute Resolution Procedure, Trademark Post-Delegation Dispute Resolution Procedure, Sunrise Dispute Resolution Policy and the Anticybersquatting Consumer Protection Act.

Register those brands!

There are many different avenues to guard against opportunistic trademark pirates, but having registered intellectual property rights in all your key markets is often a prerequisite to enforcement programs. For example, e-commerce platforms like Amazon.com require proof of your rights for any takedown action. Without registered rights, it is also difficult to persuade infringers to cease their harmful conduct.

Luckily, electronic filing is available with the U.S. Patent and Trademark Office, the Internet Corporation for Assigned Names and Numbers, the World Intellectual Property Organization and many other intellectual property organizations, which is helpful in tumultuous times like these because services are available even if the physical offices are closed.

Conclusion

Scammers may not have reinvented the wheel in terms of the techniques that they are applying, but brand owners must be on heightened alert so they can detect trademark pirates quickly and take the necessary action to protect their brands' goodwill and the consuming public. COVID-19-related trademark scams are certain to persist for the foreseeable future, and brands must adjust to this new reality.



Ann Fort is a partner and Cameron C. Murphy is an associate at Eversheds Sutherland.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

For a reprint of this article, please contact reprints@law360.com.

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