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  When Imposters Knock Off Profits   When Imposters Knock Off Profits  Diane O’Brien  
When Imposters Knock Off Profits “Purse parties” are the newest trend in the counterfeit fashion trade, an industry that is running rampant worldwide. Fashion isn’t the only type of brand susceptible to copycats. Pharmaceuticals, beverages, toys, furniture, software, electronics -- you name a brand niche and it has most likely fallen victim to counterfeiting. The International Chamber of Commerce estimates that the counterfeiting industry comprises five to seven percent of global trade and is worth roughly US$ 450 to 500 billion.

Knock-offs of luxury fashion brand accessories, like purses, make up just a fraction of the counterfeit trade industry but they are among the most prominent offenses. Louis Vuitton, Gucci, Kate Spade, Christian Dior and Burberry are just some of the big-name (and big-price) brands that are relentlessly knocked off. The replicated accessories go beyond just purses to include wallets, sunglasses, scarves and more.

There’s a lot of profit in counterfeiting. Knock-offs in the US are priced one-sixth to one-eighth of the retail value of an authentic product. When a simple wool Burberry scarf retails for US$ 200, a Christian Dior belt can bring in US$ 400 and big-brand purses, like Louis Vuitton, can sell for over US$ 1000, it’s easy to see how merchants can make ten times their manufacturing costs for mass-produced counterfeit goods.

It seems silly to get worked up over fashion fakes when there are knock-offs that can cause physical harm, even death, when dealing in fake pharmaceuticals or counterfeit automotive parts. Why even worry about the superficial world of the knock-off fashion industry? Is there any real harm in letting someone a little short of cash get the Louis purse they’ve always dreamed about?

According to Ellen Goldstein, chairperson of the accessories design department at the Fashion Institute of Technology in New York City, fakes do harm the real brand. “It hurts the worth of the brand terribly; it cheapens the brand,” she says.

Goldstein goes on to explain, “People assume that this is a form of flattery, but the brands don’t. It’s stealing and it cuts back on authentic brands’ sales considerably.”

Tim Trainer, president of the International AntiCounterfeiting Coalition in Washington DC dismisses the theory that knock-off brands offer a type of free advertising and promotion for legitimate brands. “Counterfeiters trade off the backs of legitimate brands. They let the real brands pay for the marketing, advertising, develop the designs, and then they profit off of it.”

There’s no question that ripping off a fashion design is a crime, but busts like the one in Florida are rare. If the consequences of knock-offs are so severe for the real brands, why isn’t more being done to crackdown on this growing problem? In fact, if anything counterfeiting appears to be more prevalent than ever.

One used to have to shop big cities to find knock-offs. Now purse parties are replacing Tupperware parties, the web is saturated with sites dealing in fakes, store-fronts in strip malls advertise “imposter goods,” and most county fairs have booths loaded with knock-off goods. The brands being knocked off are, in most cases, multi-million dollar brands so the question remains why aren’t they doing more to protect their products?

“Brands do fight to protect themselves, but it’s a very long and arduous process,” says Goldstein. “Coach went through it and won, but it was a very long process.”

A process that in the end, just might not be worth it. Even if these brands have the money to spend in legal fees, it is a strenuous, drawn out course of action.

Instead brands like Kate Spade and Louis Vuitton tend to take matters into their own hands first by hiring private investigators to find where knock-offs of their brands are being sold. Convincing authorities to step-in is tough; they’re off fighting “real” crimes. So a typical next step is to have the brand’s lawyer send a threatening letter in hopes that it will scare merchants into shutting down shop or canceling their next purse party. Sometimes the threat is enough, sometimes it’s ignored or merchants just lie low for a while. After this, it’s a matter of trying to convince authorities to step in.

Then there’s the chance -- a good chance -- that authentic brands may not win over knock-offs in court. There are intricate details that go into brand protection and fashion design. Unlike other products, copyright protection is denied to fashion designs under the US Copyright Act. Trademarks are available to designs, but it’s a fine line between an actual counterfeit and a “creative interpretation.”

For instance, it’s still possible to find knock-offs of Coach’s popular demi bag despite the company’s fight; the fakes replace the trademarked Cs, adorning the small canvas bags, with Gs. The same goes for Burberry; although the company makes its stance about the trademarked plaid quite clear in communication materials, replicas of Burberry purses and scarves using variations of the colors are popular knock-off items. Even when legitimate brands win, punishment is usually only as harsh as a slap on the wrist.

On top of all this, while brands are putting forth all of this effort and money, the designs they are fighting to protect are already out of style, replaced by new ones.

What’s worse is that as the industry advances, so does the technology used to make the imitations. Goldstein speculates that counterfeiters attain authentic looks by purchasing the real purse, wallet or scarf and copy it detail for detail. “There are knock-offs now where you cannot tell the difference between the fake and the real,” she says.

Those mirror-image replicas mean more sales, even to consumers with distinguishing tastes. Anyone is up for saving money.

If there is a bright side to this whole dilemma, it’s that law enforcement is starting to become more involved in cracking down on the knock-off industry. That’s because counterfeiting fashion brands has a more serious consequence than just stealing legitimate brands’ designs.

“Consumers pay street prices for knock-offs and think they are just pulling one over on legitimate brands…. Narcotics, prostitution, weapons; [the money they spend] could be going to all those things,” explains Trainer.

Trainer says consumers need to step back and think of where the money they spend on knock-offs could be going. Just as selling knock-offs is a crime, a connection is drawn between counterfeit goods and funding for other crimes involving drugs and weapons. Now law enforcement is worried about a link between counterfeit goods and terrorism, which means since September 11, authorities have stepped up their pursuit of those knocking off fashion brands.

As Trainer explained, law enforcement is not so much concerned with brand protection, as it is looking at trade in fake luxury brand names and logos that can bring in enough money to fund crime (which was the case in the Florida purse party where law enforcement seized over US$ 40,000 in knock-offs). “There’s interest from authorities,” says Trainer. “But they are only interested in finding large quantities [that are funding crime] -- the major distribution centers. Knock-offs are coming from large, sophisticated distribution centers.”

Pinpointing the centers is only a guess, but many US sold fakes are suspected to come from Asia, primarily China, Thailand and South Korea.

Although the whole issue may first appear to be a simple yet rampant case of copycatting, in fact it demonstrates that there is a real need for stricter protection laws of luxury fashion brands, enforcement of those laws, and harsher punishments for merchants and makers of counterfeit goods. But as far as knocking out counterfeiting completely, Trainer says like other crime, it’ll never be gone and brands need to view counterfeit products just like any other competition.

Indeed FIT’s Goldstein agrees: “Counterfeiting will always exist. It’s the subculture of the fashion industry.”    



Diane O'Brien lives in San Francisco.

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