What’s the harm in buying a Gucci, Prada, Fendi, or Dior designer bag knock-off? Who does it hurt? You might save hundreds of dollars and, well, it may look almost the same as the real one.
“Plenty” and “Lots of people!” answers Ross Bulla, president of The Treadstone Group, Inc. “Intellectual property infringement, including counterfeit manufacturing, is perceived to be a victimless crime—but it definitely is not,” maintains Bulla. “Companies suffer hundreds of millions of dollars in lost revenue which, in turn, results in job losses which, in turn, affect the entire economy.”
Bulla also cites brand damage for companies whose names are tarnished when counterfeit products fall apart or fail to fulfill their purpose. Even more serious, some counterfeit products can affect health and safety and even result in death, according to Bulla.
“Plus, we do know that counterfeit products have been used to sponsor and fund terrorist activities,” says Bulla. The protection of trademarks and design patents is just one of the areas of security expertise of The Treadstone Group, a 10-year-old company located in Denver, N.C.
The Treadstone Group is a global security risk mitigation and investigations firm which specializes in investigation and enforcement and acquisition of intellectual property rights; physical security risk assessments; and security consulting and litigation support. Intellectual property is defined as intangible assets that are proprietary to a particular owner; the most common properties are trademarks, patents, copyrights, trade secrets or domain names.
The nature of the work is extremely confidential and so, too, is Treadstone’s customer list which represents many of the largest brand owners in the world—Fortune 500, 100 and 50 companies in a wide range of industries including soft drink manufacturers, retail, automobile, consumer services and pharmaceuticals.
“We’re working with every industry I can think of and certainly have customers that are among the top 10 most well known brands.” says Bulla. “We also have smaller companies and start-ups, but many of them are multinationals.”
Sixty percent of Treadstone clients are businesses in the United States; 40 percent are abroad. Clients include corporate security departments, law enforcement agencies, event planners, transportation companies, high-profile delegates and speakers, local, state and national candidates and elected officials, contract security vendors and hotel and venue owners and managers.
While most of the firm’s investigation clients come from the private sector, some of its security consulting work is government-related. The company also offers training for law enforcement agencies.
“We’ve just instructed a course in dignitary protection for law enforcement through a local community college in preparation for the Democratic National Convention and are providing services to public and private sector clients involved in the DNC,” says Bulla.
The Treadstone Group operates with just five full-time investigators but employs a large group of sub-contractors around the world.
“Today, we may have an investigation in Russia; tomorrow, Istanbul; next day, Latin America,” says Bulla. “That’s probably the most challenging thing; coordinating all the subcontractors. On any given day, we will have five to 20 subcontractors at work in 20 different places, somewhere in the world.”
Name is Everything
Protection of intellectual property rights has become a huge industry with values measured in the hundreds of millions of dollars. Treadstone investigates how trademarks are used—in what types of services, where they are marketed and the critical question of how long they’ve been used in commerce.
“Trademarks exist to prevent customer confusion,” explains Bulla. “If you like a trademark that is used to sell shoes, you might be able to use it to sell tires, but you couldn’t use it to sell socks—too similar a purpose,” explains Bulla. “If both companies are doing the same thing, then it comes down to who was using the trademark first.”
Similar considerations go into a company’s trade dress, or design concept. For instance, most people (where Time magazine is marketed) could identify Time magazine without actually seeing the name on the front of the magazine, so no one else can copy that. The same is true for the TGIF Restaurant chain’s red and white striped awnings and uniforms and the overall image of McDonald’s, according to Bulla.
The company also anonymously purchases trademark rights, domain names and patents on behalf of its clients. “We buy domain names for $100,000 from owners that may have paid in the single digits for them,” says Bulla. “Domain name owners are either the first to buy them or they paid a lot of money for them.”
Negotiations aren’t always easy. “When telephone negotiations fail, I literally fly into a town and knock on someone’s door to offer them instant retirement if they will sell their domain name to my client.” Domain names have been sold for as much as $8 million, according to Bulla.
Every investigation involves privacy issues. “We always have to be cognizant of whether it is legal to obtain certain types of information,” says Bulla. “We don’t knowingly break any privacy laws.”
Treadstone investigators, including Bulla, are private investigators, licensed by the State Department of Justice. Bulla is board-certified in security management and physical security. Continuing education is required to keep abreast of laws.
A Darker Side
Criminals infringing on design patents and engaging in counterfeit manufacturing and diversion activities bring about especially dangerous challenges. Very often, income from these activities is used to fund or supply terrorists. Bulla cites the large anti-terrorist busts in response to an illicit operation to divert counterfeit cigarettes here in North Carolina.
An ongoing problem exists with the purchase of large numbers of mobile phone handsets for the purpose of facilitating terrorism. All but the handsets are discarded. The handsets are then used by terrorist cells to make one phone call before being thrown away. Or the handsets are re-flashed or re-programmed to operate on a local carrier.
Worse yet, the phones can be used to detonate IED’s in Afghanistan and Iraq, according to Bulla, who confirms that some of their investigations have resulted in terrorism charges being brought.
Even when money is the chief motivator for counterfeit manufacturing, the results can be deadly. “Five percent of our medications in the United States are counterfeit,” says Bulla, who says they can be found in major retail stores. “Another problem is the redistribution of drugs that were manufactured according to the lower standards of other countries, back into the United States.”
Examples abound. According to Bulla, the American helicopter crash during the Iran hostage crisis was due to counterfeit products on the aircraft. “The counterfeit parts couldn’t withstand the conditions of the desert.” Bulla recounts other cases involving poisonous baby formula, exploding batteries, and teabags filled with sweepings off the factory floor including sawdust and rat droppings.
In certain countries, the problems are exacerbated by governments turning a blind eye. “In China there is a fake Apple store right across the street from the real one. The government makes money from it; there is no way to shut it down,” says Bulla in disgust.
Even in America, consumer education is the most difficult challenge. “There are documentary specials and news reports but consumers have short attention spans,” says Bulla, adding that it is also necessary to educate legislators to the loss revenue, job impact, damage to brands and dangers to consumers. As of now, most cases are handled in civil courts.
Building the Case
The Treadstone Group’s security consulting and litigation support division conducts investigations primarily for attorneys who represent clients or are in-house attorneys for corporate clients. To determine facts in civil claims, it interviews and vets witnesses—including field experts—and investigates backgrounds and reconstructs accidents to see if there is anything different from police reports.
“We’re looking for anything that would challenge credibility in a legal proceeding,” asserts Bulla.
On the physical side of security, The Treadstone Group provides security risk assessments for facilities around the world to identify vulnerabilities and make recommendations. The company’s team examines a facility’s physical access controls with regard to persons and vehicles and how they screen them.
It also looks at how the facility is protected physically and technologically with barriers, barricades, alarms, lighting, intrusion detection devices, guard forces and credentialing systems.
“Most of our work comes out of concern for terrorism, but we don’t focus solely on anti-terrorism. We also focus on preventing illicit entry, workplace violence and demonstrators,” says Bulla.
Law Enforcement Dream
“From the time I was four or five years old, I wanted to be a police officer or federal agent,” remembers Bulla, who grew up in Graham, N.C. After high school, he attended UNC Charlotte. His double major in criminal justice and psychology was purposely planned to prepare him to become a behavioral scientist with the Federal Bureau of Investigation, but inability to meet the vision requirements kept him out of the federal agency.
Bulla first went to work as operations manager with the Blockbuster Pavilion, now known as the Verizon Wireless Amphitheater, and continued to do security risk assessment and security management work within the private sector. He was then hired by the Atlanta Olympics and became one of its lead instructors, developing all of the security training programs for the 1996 Olympics.
“I fell into intellectual property by accident,” says Bulla. “I was working as a branch manager for a security guard company in Charlotte and a former secret service agent hired me for a company who did intellectual property investigations. I managed the anti-counterfeiting for a major auto parts manufacturer. That was my start.”
The company closed in 2001 but Bulla was armed with knowledge, experience and contacts. In 2002, he opened The Treadstone Group.
Fans of author Robert Ludlum’s Bourne Identity book series and the subsequent film versions will instantly recognize Treadstone as the name of the fictitious, CIA-backed, secret organization which programmed former agents into morally vacuous assassins.
“By the time the movie came out, everybody wanted to name their company Treadstone, but I had already registered the trademark rights,” smiles Bulla.
Despite a busy work schedule, Bulla is also committed to the local community. He says he’s aiming at a higher level of service with a run for the North Carolina Senate.
Bulla insists that he is not jaded by the job. “I see as many good guys as bad buys,” he says, adding that a lot of infringement is unintentional. “I look forward to coming to work every day; I always have.”
“I’m fascinated every day by the reality that a little unassuming building in a small town in Lincoln County and a handful of employees are involved in acquiring trademarks for major companies and investigating the world’s largest brands,” muses Bulla.
“I go home and see our work on national television, in magazines and newspapers—every day. The result of our work is visible everywhere.”