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INTRODUCTION
On February 26, 2008, New York City law enforcement agents raided thirty-two shops in Chinatown's "Counterfeit Triangle," hauling away over $1 million in fake merchandise that included counterfeit Tiffany, Gucci, and Coach items.1 As a matter of law, those who knowingly used a counterfeit trademark in connection with a sale or distribution were subject to treble damages,2 in addition to ex parte seizure, as illustrated in this instance.3 The resulting case settled recently, in April 2010.4 In the interim, the city's actions prevented the sale of counterfeit goods from those shuttered storefronts.5
Subsequent comments by Mayor Michael Bloomberg and other officials illustrate how counterfeiting's harmful effects on trademark owners, consumers, and society justify aggressive action. Counterfeiting, the most egregious form of trademark infringement,6 "deprives legitimate businesses of customers," said Mayor Bloomberg in an April 2010 press release.7 Trademarks, which embody a company's quality and goodwill8 and enable the owner to compete in the marketplace,9 are an important business asset.10 Counterfeiting diminishes the trademark's value and the owner's business when lesser-quality goods are associated with the mark.11 Consumers are harmed when they pay for something that does not live up to the mark's reputation for good quality.12 Such inferior goods can also endanger consumers' safety or health when the product does not perform as expected.13 Finally, according to John Feinblatt, Chief Advisor to the Mayor for Policy and Strategic Planning, "[s]elling counterfeit goods is a form of organized crime."14 Counterfeiting diverts substantial amounts of money from the domestic and international economy15 to fund numerous illegal enterprises such as sweatshops, child labor, money laundering, violent gang activity, and terrorism.16
Indeed, counterfeiting is not just a New York City problem. It is well established that the harmful effects of counterfeiting on trademark owners, consumers, and society as a whole are very serious national and international problems.17 Because of this, the United States takes an aggressive stance against counterfeiting, enacting laws that punish counterfeiters and those who assist them with ex parte seizures,18 destruction of counterfeit merchandise upon seizures,19 treble damages,20 hefty fines,21 and imprisonment.22
There are harsh penalties for counterfeiting, but their effectiveness is greatly diminished if counterfeiters can easily avoid detection-a more difficult problem on the Internet than in the physical world.23 Offline, there is a...