Legal Question in Intellectual Property in Massachusetts

Re: knock offs vs the real thing - what is my liability

To answer your questions:

1) No

2) Huge, if you are carrying infringing products.

There are substantial state and Federal penalties and civil damages available to owners of infringed upon Trademarks.

Call or e-mail for further assistance.

Re: knock offs vs the real thing - what is my liability

No, you cannot rely on your suppliers if what they sell is actually counterfeit, BUT, your liability is not goint to be great if you had no reason to know that the stuff was not genuine. Easiest test is that if you are buying product at 10% of the price charged by the producer's own supply chain, you have reason to know that something smells wrong; if you are only undercutting by 10-20%, then your reliance upon your supplier's assurances would be reasonable. Likeliest end result in such cases is that you would be paying some modest penalty and entering into a "we won't do it again" type agreement. You are most unlikely to be lumped in with people further up the chain who are knowingly affixing fraudulent trademark labels, etc.

Best wishes,

LDWG

Re: knock offs vs the real thing - what is my liability

Most intellectual property rights are subject to a strict liability standard. This means that you are liable whether you act knowingly or not. Your liability would be the profits lost by the trademark owner for the sales made by you, i.e., their profit on each bottle of perfume times the number of bottles you sold. This liability can be increased if you knowlingly sell fakes.

While you cannot depend solely upon the word of your "legitimate wholesaler," you can include in your purchase agreement an indeminification provision. This would allow you to require the wholesaler to pay your liability, and possibly your attorney costs, if they provide you with knock off products. You should seek advice from an attorney to ensure that your contracts provide sufficient protection.