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1 December 2016Trademarks

Jury finds 5-Hour Energy counterfeiters guilty

A jury at a California district court has found two US citizens guilty of illegally selling counterfeit versions of energy drink 5-Hour Energy, which is manufactured by Living Essentials.

On Monday, November 28, a jury at the US District Court for the Northern District of California ruled that the defendants (pdf) Joseph and Adriana Shayota were guilty of running a counterfeit operation.

The case centred on the husband and wife and a group of 11 people who set up an operation to counterfeit bottles of 5-Hour Energy. The fake bottles are now out of circulation.

The US Department of Justice (DoJ) charged the counterfeiters in June last year with conspiracy to traffic in counterfeit goods, conspiracy to commit criminal copyright infringement, and conspiracy to introduce misbranded food into interstate commerce.

In an unsealed indictment filed by the DoJ, it alleged that the 11 defendants illegally repackaged the counterfeit 5-Hour Energy bottles.

Living Essentials owns trademarks for the term ‘5-Hour Energy’ at the US Patent and Trademark Office, as well as copyright for graphical elements on the products’ labelling.

The counterfeiters did not receive a licence from Living Essentials.

5-Hour Energy is a “shot” which contains no sugar, four calories and “as much caffeine” as a leading cup of coffee.

One member remains a fugitive.

The defendants were accused by 5-Hour Energy of setting up an illegal factory in San Diego that repackaged more than 350,000 bottles of fake 5-hour Energy bottles and then selling them for a price that was 15% lower than the genuine products.

Additionally, the defendants mixed unregulated ingredients in plastic vats in an unsanitary facility and used untrained workers. In 2012, the operation was discovered and shut down.

According to the DoJ, from 2011 to 2012 the defendants ordered more than 7 million counterfeit label sleeves and “hundreds of thousands” of fake display boxes.

Geoffrey Potter, chair of the anti-counterfeiting practice at law firm Patterson Belknap Webb & Tyler, and who served as lead counsel in the case, said: “Quick action by the company and federal authorities ensured that all remaining counterfeits were removed from stores years ago, and today only authentic bottles of 5-Hour Energy can be found in stores. Consumers can purchase the product with complete assurance that they are buying a safe authentic product."

He added: “Criminal convictions profoundly change counterfeiters’ risk-versus-reward calculations.”

Potter continued: “No one knows what went into the counterfeit bottles, over 1 million of which were unwittingly consumed by hundreds of thousands of Americans. I expect that the judge will recognise that this was an especially evil and dangerous crime when she sentences the defendants.”

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Trademarks
27 April 2017   Walid Jamil, a member of an operation that sold counterfeit versions of energy drink 5-Hour Energy, was sentenced to seven years in prison yesterday.