by Ray Connolly
The counterfeiters were stunned when FBI agents wearing flak jackets burst in, guns drawn.“We caught them red-handed,” says John Modine, API’s director of Certification Programs. “They were literally putting their counterfeit API Monogram on equipment used in oil drilling when the agents showed up. The Houston, Texas raid couldn’t have happened at a better time,” he says with a satisfied smile. “We shut them down.”
But the arrests came as no surprise to API’s Upstream
Group Director Doug Morris, who’d been working
with the feds on the case for months in his previous
role as an attorney with API’s General Counsel’s
Office. He admits his friends didn’t know what
to think when he started getting calls from FBI agents.
“I’d be at a party and the FBI would call,
so some people probably thought I was under investigation
or about to be arrested,” he recalls. In fact,
Morris and several colleagues were working with the
bureau to combat a counterfeiting operation that placed
API’s Monogram trademark on drilling equipment
that API had not certified as meeting its standards.
Morris had also been working closely with Modine, who is directly responsible for API’s product, equipment and personnel certification programs—including ongoing efforts to combat counterfeiting and misuse of the API trademark. “The API Monogram Program is based on more than 70 drilling, production and refining equipment standards that ensure that equipment and products are manufactured and personnel trained to meet industry requirements,” he explains. “So the stakes are very high in protecting the integrity of the program and responding rapidly to any criminal activity as soon as we detect it.”
Modine says API has experienced an increasing number of counterfeiting and trademark infringement cases as its Certification Programs have increased in use throughout the world. “In a sense, it’s a reflection of the value that the API trademark brings to oil field equipment and materials. People, including dishonest people, recognize that customers do not want to buy products that fail to meet API’s high-quality standards.”
Morris explained that misusing the Monogram violates two closely related laws. “Counterfeiting is making a forgery of a genuinely certified product bearing the API mark. In other words, counterfeiters pass the copied product off as a genuinely certified product. Trademark infringement, on the other hand, is applying a mark that is identical or similar to an API mark to a product in a manner that is likely to confuse consumers into believing erroneously that API has made, sponsored or certified the product. In other words, infringers do not make copies of genuine products, they simply make their products look like they were certified when they were not.”
Morris cited a couple of additional examples of API’s efforts to protect
its trademark:
- API is filing a case against a foreign organization
that put several of API’s trademarks on its
website to promote its business and then offered for
sale translated versions of API materials without
approval. API sent this organization a letter asking
it to stop, but it continued, so a lawsuit is being
filed against it.
- A U.S. manufacturer placed the trademark on a product not approved by API and kept it there for a period of time until discovered by API. When the manufacturer failed to voluntarily remove the logo, API filed suit against the manufacturer and eventually obtained injunction relief and damages.
The worst cases, says Gerardo Uria, manager of the API Monogram Program, involve putting the API trademark on equipment failing to meet API safety standards. “That is a dangerous practice that misleads buyers and could lead to accidents and malfunctions. Fortunately, we are not aware of any case so far where counterfeiting or misuse of an API trademark has led to an accident, but that is no reason to be complacent about this illegal activity. We do everything we can to identify and stop these practices.”
What is the motive for these crimes? In a word, money. “It’s to avoid the cost of producing a high-quality product meeting API standards,” says Uria. “The perpetrators are able to sell tens of thousands of dollars of un-certified equipment. They produce an inferior product and illegally place the API trademark on it, or they counterfeit an API-approved product. Either way, they save money. They also avoid having to pay the program and audit fees associated with being a valid Monogram Licensee”
Uria says that the counterfeiters will copy the trademark from API’s website, letterhead, or from equipment or materials that carry it. “They also create false certificates attesting to the validity of the trademark and show these to potential customers.”
Catching the counterfeiters is among API’s highest priorities. “We remain very vigilant for any kind of illegal activity,” Morris says. “We will occasionally get tipped off by a competing company disadvantaged by unauthorized use of the trademark. And API members often call our attention to questionable practices. For example, they will check our website directory of companies approved for use of the trademark and find that a company they are dealing with is not listed.”
Upon detecting misuse of the trademark, Morris says API will send a “cease and desist” letter and, if that fails to stop the activity, will undertake a lawsuit. If necessary, API will seek the assistance of law enforcement agencies, such as the FBI.
Looking ahead, Modine expects to see even more attempts to counterfeit or misuse
the API trademark as awareness and use of API’s Certification Programs becomes increasingly widespread in major nations of the developing world, including China. “The global energy market is changing dramatically,” he says, “and API is making a major effort to promote and market its Certification Programs, including the Monogram Program. We want to be absolutely sure that customers who rely on the API trademark as an assurance of the highest quality are not misled through fraud or other criminal activity. Too much is at stake to do otherwise.” |
