A common question for trademark lawyers is what is the difference between a "counterfeit" product and a "knockoff" product?
The term counterfeit is strictly defined by federal law. The term knockoff is used colloquially to describe those products that copy or imitate other products, but which may or may not be illegal under trademark laws.
The key difference is whether or not the product contains a brand name or logo that is identical to a registered trademark.
In the United States, the federal Lanham Act is the key statute defining trademark laws. Sections 32 and 43 of the Lanham Act allow trademark owners to pursue civil lawsuits. Additionally, those who knowingly sell counterfeit goods are subject to criminal prosecution.
A counterfeiter is one who intentionally and identically (or nearly identically) copies a federally registered trademark and places the fake logo or name on goods that are not authentic. These products are considered illegal because they clearly are intended to confuse consumers at the point of sale, and are a fraud on the public. Someone can be a counterfeiter even if he doesn't make the products, but sells them to others.
"Knockoff" is a broader category, and can include products that have a confusingly similar overall appearance to a well-known product, but which do not contain any identical logos or federally registered brand names. Those who sell such products may still be sued by the trademark owner because these products can still cause consumer confusion, even if they do not contain counterfeit logos or brand names. However, these type of "knockoffs" cannot be criminally prosecuted.
Trademark owners may bring civil lawsuits against both types of targets: (a) those who produce and sell counterfeit products; and (b) those who produce and sell knockoffs.
The Lanham Act provides a variety of remedies to trademark owners, depending on the factual circumstances and the products involved. These remedies include imposing hefty fines, injunctions, destruction of the counterfeit goods, as well as litigation costs and, in exceptional cases, making the infringer pay the trademark owners' attorneys' fees and investigative expenses.
If you call a counterfeit product a "replica," can you still be sued and/or criminally prosecuted? The answer is absolutely yes.
The product itself is still considered a fraud, regardless of the specific manner in which it is marketed and sold. It is intended to confuse consumers, both before, at or after the point of sale. Calling thousands of fake watches sold online "replicas" makes them no less harmful to the brand owners, whose brands become diluted and tarnished as a result of the flood of fakes on the marketplace.
Further, there is no guarantee that the counterfeit watch will not be given as a gift, or re-sold later to an unsuspecting consumer. Therefore, merely calling a counterfeit product a "replica" does not make it legal to sell it.
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