Harshini Tippareddy | October 16, 2017
Beauty rituals have existed for thousands of centuries, with people from all cultures trying to discover the elusive “fountain of youth”. However, gone are the days where women used beet juice for rosy cheeks or crushed mulberries for lip stains. Today, the United States has the largest cosmetics market in the world with projected revenue of over $62 billion in 2016.  With the rise of YouTube beauty channels and the increased attention on skin care, women and men alike are on the search for effective and affordable beauty products. However, anyone who has been to Sephora, Ulta, or any beauty aisle knows that cosmetics can cost a pretty penny. These steep price tags have given rise to counterfeiters re-creating cosmetics and selling them as the real deal. In 2015, U.S. companies lost approximately $800 million to $1 billion due to counterfeited products.  Below, I will talk through two cases that detail the detriment of cosmetic counterfeits.
Estée Lauder Cosmetics Ltd., et al., v. Get Your Mac On, LLC, et al.
In 2013, Estée Lauder and its subsidiary Make-up Art Cosmetics, Inc. (MAC) filed a lawsuit against Get Your Mac On, LLC for trademark counterfeiting and infringement, among several other claims.  Get Your Mac On sold products alleged to be genuine MAC products on their website.  The website advertised that all their products were “100% authentic” and absolutely not fake.  Estée Lauder learned that Target Australia sold these counterfeit MAC products that it received from Get Your Mac On.  Neither Get Your Mac On nor Target Australia had license or authorization by Estée Lauder to advertise, distribute, sell, or offer to sell genuine MAC products.  The Court awarded MAC over $1.8 million after winning its lawsuit.
What’s the Big Deal?
In 2011, the Chamber of Commerce estimated that counterfeiting caused a loss of $250 billion in revenue for American businesses.  Although businesses are often at a disadvantage when combatting counterfeiters, they are not the only ones suffering. An estimated loss of 750,000 jobs in the U.S. is due to counterfeiting.  While overseas counterfeit markets are profiting off of the consumers in America, it is our economy that is taking a toll.
Johnson & Johnson Consumer Companies, Inc. v. Aini, et al.
Johnson & Johnson Consumer Companies (Johnson), a seller of health and beauty products, owns a line of skin care products under the trade name “AMBI”.  Johnson sued a large group of retailors for allegedly selling counterfeit products.  The two AMBI skin bleach products at issue in this case are the AMBI Special Skin Discoloration Fade Cream (AMBI Special) and AMBI Extra Skin Discoloration Fade Cream (AMBI Extra).  Undercover investigators purchased the allegedly counterfeit AMBI Special and AMBI Extra products from each of the retailors.  To the untrained eye, it is nearly impossible to differentiate between the genuine AMBI products and the counterfeits.  Based on tests conducted on a few of the counterfeit samples revealed that they contained only 0.03-0.04% of the active skin bleach ingredient in contrast with the 2% in the genuine products.  The retailors claimed that their products were past versions and therefore not counterfeit.  Even so, the Court held that these prior versions of the AMBI bleach products are materially different from Johnson’s products under the Lanham Act, and consequently, they are counterfeit.  The Court allowed Johnson to destroy any seized counterfeit AMBI products in its possession. 
What’s the Big Deal?
Three words. Counterfeited skin bleach. Need I say more? Skin bleach, in general, is a highly controversial product with many side effects. In the case above, the Court noted that the allegedly counterfeit products did not contain warnings to the consumer that were listed on the retailer’s actual products.  The packaging did not mention the following warnings: the possible side effect of temporary skin darkening, instructions to discontinue if there was no improvement after three months, and that the product not be used for sunburn prevention. Furthermore, the products did not contain expiration dates and batch codes.  A prospective consumer of the AMBI products would find the warnings and expiration date useful and relevant to avoid any detrimental effects of using the cream after this date. 
Message to Businesses
If you own a product and want to know how to protect it and your brand, here’s what you should do:
- Register your trademark! It is essential for brand protection.
- Counterfeits are not legal. Prove that the products were illegally manufactured.
- Get a warranty from the supplier verifying the authenticity of the products and support it with an indemnity for any infringement claims.
The Lanham Act (aka the Trademark Act of 1946) is a federal statute that governs trademarks, service marks, and unfair competition.  If you’re planning to fight a trademark infringement claim under the Lanham Act, you should be prepared to prove the following:
- They are owner of the valid, protectable trademark;
- The infringer used the trademark in commerce without the registrant’s consent;
- It has caused confusion among consumers 
Message to Consumers
Often, purchasers are unaware that they are buying counterfeit cosmetics. The products are often manufactured in order to replicate the originally trademarked product in both look and design. However, the materials and chemicals used in these products are vastly different. Unfortunately, the inner composition of these products is not visible to the naked eye so many purchasers fall into the trap. Consumers are endangering their health and wellbeing by using these unregulated cosmetics. Through proper channels, the Food and Drug Administration (FDA) regulates cosmetics that enter the mainstream commerce. However, due to counterfeits entering the market through backend channels, the FDA is unable to verify the products before consumers buy them. These cosmetics can contain many chemicals that, if not carefully regulated and manufactured, can be harmful to people. In 2012, Lynn Lavigne of New Jersey was sentenced in federal court for selling counterfeit MAC cosmetic products.  The investigation by Homeland Security was the result of a complaint filed by one purchaser who had a rash on her eyelid within minutes of using the product. 
Look for these signs when buying a product:
- Note the pricing – counterfeits are cheaper than the real deal
- Check the label – counterfeits often have uneven fonts, inconsistent patterns, incorrect shades, etc.
- Know your grammar – counterfeits, especially from overseas, will often have spelling errors
- Check the returns policy – most counterfeiters don’t want their product back
Be careful and be cognizant of what and where you are buying cosmetic products. The affordable price tag might be appealing, but the mysterious composition of the product is not worth risking your body and your health over.
 MarketResearch.com, The U.S. Beauty and Cosmetics Market Expected to Exceed $62 Billion in 2016, PRNewswire (2016), http://www.prnewswire.com/news-releases/marketresearchcom-the-us-beauty-and-cosmetics-market-expected-to-exceed-62-billion-in-2016-300209081.html
 Simon Pitman, Fake Online Fragrance Sales in the US Could Be Costing Companies $1 Billion A Year, Cosmetics Designs , http://www.cosmeticsdesign.com/Regulation-Safety/Fake-online-fragrance-sales-in-the-US-could-be-costing-companies-1-billion-a-year.
 Estee Lauder Cosmetics Ltd., et al. v. Get Your Mac On, LLC, et al., 2105 WL 274133 1, 7 (2015).
 Suraj Commuri, The Impact of Counterfeiting on Genuine-Item Consumer’s Brand Relationships, 73 Journal of Marketing 86, 86–98 (2009), available at http://bear.warrington.ufl.edu/weitz/mar7786/Articles/comuti%202009%20counterfeit.pdf
 Kevin Lewis, The Fake and the Fatal: The Consequences of Counterfeits, The Park Place Economist 47, 48–50 (2009), available at https://www.iwu.edu/economics/PPE17/lewis.pdf
 Johnson & Johnson Consumer Co., Inc. v. Aini et al., 540 F.Supp.2d 374, 399 (E.D. N.Y. 2008).
 Id. at 382
 Id. at 384
 Id. at 387
 Id. at 398
 Id. at 386
 15 U.S.C.A. § 1127
 15 U.S.C.A. §§ 1114(1)(a)-(b)
 News Release, U.S. Immigration and Customs Enforcement, New Jersey Woman Sentenced for Selling Counterfeit Cosmetics, available at https://www.ice.gov/news/releases/new-jersey-woman-sentenced-selling-counterfeit-cosmetics