Counterfeit goods is an international problem. Counterfeiting is prevalent in high-quality status goods. Fake Cartier watches made with inferior parts and unenforceable warranties selling at bargain prices are a fraud on the consumer and hurts Cartier’s reputation. “Counterfeiting is the act of producing or selling a product with a sham trademark that is an intentional and calculated reproduction of the genuine trademark”.
Counterfeiting is not limited to high end products. Recently counterfeit Cialis medication to relieve erectile dysfunction was found being imported from Asia. People believing this medication is genuine run the risk of serious health problems.
Section 32 of the Lanham act found at 15 U.S.C. section 1114 addresses liability for the copying or a registered trademark and specifically deals with the penalties for intentionally making a counterfeit mark. The civil penalties are spelled out in 15 U.S.C. section 1116. In addition to strict civil penalties there can also be criminal exposure.
Often times innocent merchants can sell goods bearing a counterfeit trademark without knowledge the goods are not genuine. Innocence is no defense. There is strict liability for selling counterfeit goods. Naturally is you get sued for trademark infringement claiming you sold counterfeit goods there are defenses you can assert in that litigation.
source McCarthy on Trademarks