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Cracking Down on Cigar Counterfeiters

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In the most rewarding new industries, there is often a convergence of factors that make them lucrative and sustainable. Factors like the emergence of new technologies, a ripening of the consumer market, or a political climate that spawns laws and regulations that give a particular business model oomph can revolutionize an industry. Over the last two decades, the counterfeit cigar industry in the United States saw all three of these factors converge to create the perfect storm of the illicit trades market.

It began in the 1960's as the trade of authentic Cuban cigars was banned in the United States. This immediately created a situation in which there was a consumer demand for a product that was all but inaccessible through conventional retail channels. More recently, the explosion of computer and printing technology has allowed for the easy duplication of cigar boxes, labels and seals of authenticity. Finally, the growing popularity of cigars over the last fifteen years has fueled a consumer market that is eager to get its hands on any kind of Cuban cigar possible.

In this environment, producing counterfeit cigars is all but the perfect business move. Add to this fact that the punishment in the U.S. for this type of counterfeiting is among the most minimal for illicit, black-market crimes, and the reward seems well worth the risk.

Altadis, USA has consistently been a prime target for counterfeiters with the reputation of its ubiquitous cigar lines. Montecristo, Romeo y Julieta, and H. Upmann are all among the most notoriously spoofed cigar lines in the United States, and Altadis is beginning a major crackdown.

On March 25th, 2005, Altadis, USA was awarded $3.5 million in counterfeiting and trademark infringement against two Florida corporations. The corporations have now been disbanded. In addition to the damages, the counterfeiters were ordered to recall their entire product line including promotional and packaging material and deliver it to Altadis for destruction. The participants in the two corporations are also permanently enjoined from employing graphics that are confusingly similar to trademarks within the Altadis cigar line.

The cigar boom of the late 1990's brought with it two major problems - the first was the proliferation of sub-par cigar lines and the second was the increased circulation of counterfeit cigars. Sub-par cigars have, for the most part, been filtered-out with the rapid decline in consumption that occurred between 1997 and 2001. Companies that did not have a strong foundation in quality were forced out of business. Now, it looks like, major corporations are finally stepping up to weed-out the proliferation of counterfeit cigars.

In the 2005 United States cigar market, you would be hard-pressed to find someone who would disagree with the fact that there are more higher-quality handmade cigars available at better prices than ever before. To ultimately do serious damage to the counterfeit cigar industry, it will take the efforts of Altadis redoubled and spread all over the globe. But now that the counterfeiters are being taken to task, maybe we can all have the confidence that we get what we pay for.

WASHINGTON (Reuters) President Barack Obama will call for cutting the top 35 percent corporate tax rate as early as this month, according to two sources close to the administration.

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