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December 31, 2005

Year in Review III: Counterfeit Conversations

There may be neither societal consensus nor legal clarity regarding copying, but that doesn't prevent it from being an ongoing topic of discussion within the luxury goods industry.

From a January 2005 feature in Harper's Bazaar magazine and accompanying Anticounterfeiting Summit in New York to a November/December 2005 WIPO symposium in Italy -- and many events in between -- concerned parties have come together to knock knockoffs.  And they hope you're listening.

Police raids and lawsuits have some effect on the distribution of counterfeits, but where there's consumer demand, there will be supply -- witness the "world's oldest profession."  If people stop buying illegal fakes, however, manufacturers will no longer bother to produce them. 

But how to reach the fashion-savvy but impecunious or price-resistant consumer?  The quality argument is often unpersuasive, especially to the person just seeking a disposable fashion fix.  Appeal to the rights of designers generates little sympathy when they are charging $15,000 or $20,000 for a handbag.  Laws aimed at punishing consumers, like the new legislation in Europe, are unpopular and difficult to enforce.  Attaching social stigma to counterfeits, however, is a relatively new approach.

So, let's talk.  What's wrong with counterfeits?

The sale of counterfeits is controlled by organized crime?  This one is too easy.  Prohibition, bootlegging, Al Capone, remember?  If you declare alcohol, counterfeits, or anything else illegal, it won't be sold at a PTA bake sale. 

Counterfeits fund terrorism?  Could be.  But didn't they (whoever They are) just say the same thing about drugs?  And fear of terrorism as a justification for government action doesn't have quite the same rhetorical value as it did a few years ago.

Counterfeits are manufactured using child labor?  Well, major corporations like Nike have been accused of the same thing.  Yet this claim tugs directly at the heartstrings of consumers, particularly women, and it is elaborated in the current issue of Harper's Bazaar in "The Human Cost of Fakes."  As the poet Margaret Widdemer wrote nearly a century ago, "I have shut my little sister in from life and light/(For a rose, for a ribbon, for a wreath across my hair.)"  Buyer's remorse, anyone?

Whether all of this reflects a desperate/manipulative effort by manufactuers to protect profit margins, a genuine desire to eliminate a social evil, or perhaps both, I leave for you to decide.  One thing is certain, though:  this conversation will continue into the new year and beyond.

Happy 2006!

December 30, 2005

Bursting Bubbles

Tomorrow night people all over the world will be popping corks from all over the world -- but it's only champagne if it's from Champagne.  France, that is.

Under both international agreements and national laws governing geographical indications, Champagne qualifies as a protected classification.  The idea is that the essential qualities of the beverage are attributable to its home territory, and if it's made anywhere else, it just isn't the same.  (A few California wineries were grandfathered in and continue to produce "champagne," but they're the exception to the rule.)

Of course, in blind tastings during my international intellectual property seminar at 3 different law schools, the students were generally unable to tell the difference between genuine and faux champagne.  I'm not sure whether this demonstrates that geographical indications are overrated or that future lawyers' tongues are sharper than their palates.  To their credit, my international LL.M. students always seem to do a bit better than their American classmates. 

So enjoy your Italian prosecco, Spanish cava, or good old American sparkling wine.  But if you call it champagne, you may be sentenced to a hangover.

December 29, 2005

Year in Review II: China Chic

The new China is a source of inexpensive manufacturing for established brands -- as well as for their counterfeit counterparts.  The new Chinese consumer forms an emerging market for luxury goods -- and a market hungry for knockoffs.  China is a source of inspiration for Western designers, even as it adopts and adapts European style. 

With the official end of textile import quotas on January 1, 2005, the P.R.C. loomed even larger on the interntional clothing/textile scene.  As the months passed and U.S. imports from China showed double-digit increases over 2004, domestic manufacturers from North Carolina, high-end European manufacturers, and manufacturers in small, impoverished nations that previously benefited from quotas joined forces in seeking protection from a common threat.  Textile and clothing manufacturers also developed strategies to stay one step ahead of China by emphasizing speed, flexibility, creativity, quality, and technological advances.  Meanwhile, Western importers enjoyed lower prices and worried about possible emergency protection measures.  In the end, both Europe and the U.S. reached agreements with China -- for the time being. 

So, what's the connection between luxury goods and knockoffs, manufacturing and consuming, quotas and innovation?  All of these elements have focused global attention on China as key to the future of the clothing/textile industry, and they have raised the stakes for the establishment and enforcement of legal norms -- including those governing copying. 

China is frequently criticized as a pirate's paradise, despite the official existence of intellectual property laws.  In fact, a trade publication recently cited the estimate that 1 in 5 women on Chinese city streets is carrying what appears to be a knockoff Louis Vuitton handbag.  For years, respected academic types have attributed China's comfort with copying to Confucian cultural norms.  As the insightful and incisive law professor Peter Yu has pointed out, however, you might as well attribute illegal downloading of music in the U.S. to Judeo-Christian communitarianism.  After all, the U.S. has its own history of intellectual property piracy to live down. 

Well, if it's not a cultural thing, what is China's story with respect to IP piracy?  According to Professor Yu -- with apologies for vastly oversimplifying his research -- China is pretty much the same as everywhere else.  In other words, China will work harder to protect luxury goods and other forms of IP when it has a stake in such protection.  Which explains why China allegedly places greater penalties on the counterfeiting of Beijing 2008 Olympic merchandise than on other knockoffs. 

OK, Olympic trinkets are one thing, but as for couture, is China likely to become a stakeholder?  Well, Armani and Vuitton aren't exactly worried yet, but China did sponsor a small U.S. exhibition of current, high-end Chinese designer gowns this year.  Its location?  Not in fashion capital New York, but political capital Washington, D.C.  Message:  we're in the game.  And in China, televised fashion awards shows with the spotlight on international stars like Chinese-American Vera Wang may inspire a new generation of young designers.

China chic?  Definitely an important element in reflecting back on the Year of the Rooster.  And don't forget to check out books of the same name by both fashion historian Valerie Steele and designer Vivienne Tam

December 27, 2005

Endangered Gators

Earlier this month Lacoste and the U.S. Marshal Service teamed up to conduct raids on 19 retailers and wholesalers across Puerto Rico.  The raids resulted in seizure of over $1 million in counterfeit Lacoste polos and other clothing -- and pending lawsuits against 27 defendants. 

Vacation advice?  Enjoy the beach; avoid the faux wildlife. 

Lacoste trademark

December 26, 2005

Year in Review I: Katrina and Counterfeits

Whether the culprit was global warming, mysterious astrological conjunctions, or sheer coincidence, 2005 was a bad year for water.  We began in the wake of a tsunami in the Indian Ocean and now end with the aftermath of Hurricane Katrina on the Gulf Coast -- events which the radiator pipes in my century-old landmark building felt compelled to imitate on a smaller scale, but that's another story. 

Our tale is one of U.S. Customs and counterfeits, laws and largesse.  It seems that the Bush Administration, while accused of ignoring the good citizens of New Orleans and surrounding areas, was in fact attempting to provide for their needs -- with counterfeit goods.  Warehouses full of fake trademarked items were emptied and the infringing contents sent to shelters, where the victims of Katrina were offered knockoff clothing, bedding, and even toys.  The Legal Times was kind enough to print my editorial on this curious federal strategy of seizing with one hand and redistributing with the other.  For the full text, please click here.

December 25, 2005

Merry Christmas and Happy Hannukah!

Or are we just celebrating Saturnalia knockoffs today?

December 24, 2005

Faux Ethics

Is a fake ever superior to an original?  Perhaps, at least with respect to claiming the moral high ground.

Take furs.  With the onset of winter weather and holiday parties, the minks, chinchillas, and sables that spent the summer in cold storage have returned to the streets.  In one of fashion's eternal cycles, pelts that were once considered the province of dowagers or Cruella DeVille are once again high fashion. 

This year, PETA has responded with somewhat more clever tactics than the flinging of dead animals or cream pies.  A holiday card sent to Vogue staffers depicted editor-in-chief Anna Wintour in one of her customary furs; the card opened to reveal a skeletal Anna in her lingerie flashing the reader and declaring, "Without fur ... I am nothing."

Yet the New York Times, in last week's Thursday Styles section, took the opportunity to remind us that as recently as 1989 "fun furs" were the preferred wrap of the stylishly dressed, or at least those who feared the red paint brigades.  This faux elegance raises questions that are more than skin deep, however:  Were the women photographed by the NYT some 16 years ago secretly longing for the real thing?  Indeed, do excellent copies exacerbate demand for natural furs?  At the end of the day, can humans really be expected to deny our status as clever carnivores at the top of the food -- or fashion -- chain?  Or, for the anti-Darwinists among us, what's up with that Genesis story -- does God prefer furs to fig leaves?

In short, which is "better" -- real or fake? 

December 23, 2005

Pearls of Great Price

In 1917 Pierre Cartier purchased a mansion on Fifth Avenue in New York from financier Morton Plant.  The price?  $100 plus a string of pearls coveted by Mrs. Plant and valued at $1 million.

In 1957 the same necklace was sold at auction for a mere $151,000.  The mansion still serves the Cartier jewelry company's flagship in New York, and were it ever to be sold, its value would be far greater than the 1917 figure.

The reason for the pearls' decline in value?  The scientific development of extraordinary knockoffs.

In the 1890s, several Japanese scientists were competing to develop a method of inducing oysters to produce round pearls.  Kokichi Mikimoto (yes, also a familiar name today on Fifth Avenue and elsewhere) was among these scientists.  By the 1920s, Mikimoto became the first to develop a commercially successful method of culturing pearls.  Despite an initial outcry against the "fake" pearls -- presumably from those lucky enough to own them -- the extreme scarcity of pearls harvested from coastal waters quickly made cultured pearls the industry standard.  Women everywhere could aspire to own what only a few decades before had been a means of displaying great wealth or royal status.

Kokichi Mikimoto

Today, it is a safe assumption that "pearls" offered for sale are cultured rather than natural.  And modern faux pearls have never seen the inside of an oyster. 

So, are those pearls in your Christmas stocking real?  It depends on who's asking -- and during which decade.

December 22, 2005

Project Copycat?

In Project Runway previews the past couple of weeks, the oracular Tim Gunn has admonished the competing designers, "Don't be copycats."  Apparently someone skipped kindergarten. 

Now some insist that Project Runway itself may be a knockoff.  Two separate lawsuits claim that ideas for "America's Runway" and "America's Fashion Designer Search," respectively, were pitched to defendants later involved in the development of Project Runway.

You can't copyright an idea, only its specific expression -- but it is alleged that the show is a bit too similar to the plaintiffs' pitches to be a coincidence.  But perhaps Heidi Klum et al. should be pleased.  Nobody ever sues a flop.


December 20, 2005

Intelligent Design

The As Four circle bag may just be the Platonic form of a handbag. 

The circle-within-a-circle design echoes As Four's usual complex petal shapes, which in turn reference the mathematical perfection of nature itself.  At the same time, the design reduces the handbag to its simplest possible form.  The circle bag is amusing, intelligent, and intuitively appealing.  Which may be why it has been continually copied, even by other boldfaced name designers. 

AsFourKateSpade circle bag

Gabi, Ange, & Adi, the three remaining designers of As Four, are by turns flattered, amused, bored, and frustrated by the constant attention to the circle bag and its copies.  As Gabi told me when I visited their downtown studio, "Our designs show that we are an intelligent company; the bag shows that we are an entertainment company." 

Like most successful young designers, As Four is focused on the future, not the past.  In our conversation, the three agreed that they have neither the time, the money, nor the interest to pursue elusive legal remedies against copyists.  In any case, as Adi reminded me, "everyone knows we're the original one, the first." 

Luckily for As Four fans and other connoisseurs of authentic design, As Four and Kate Spade have teamed up to reissue the bag for the holidays.  Their design, her colors -- a choice of bright pink or orange with a preppy polka-dot interior, perfect for a tropical vacation.  And if you order online by noon tomorrow, Kate Spade will provide a free shipping upgrade for delivery by December 24.

December 19, 2005

The Case of the Brown Paddington

Kudos to The Bag Snob for calling attention to intellectual property law's nasty little secret -- the power of the cease and desist letter.

Apparently the intrepid handbag blog was at the epicenter of a dispute regarding whether online merchant Sophisticated Spirit sells fakes, in particular one chocolate Chloe Paddington bag much desired by Bag Snob reader "X." 

chocolate Chloe Paddington bag

After seeing photos, Bag Snob concluded that the bag was not genuine.  Sophisticated Spirit's lawyer responded with a C&D letter requesting that Bag Snob

1) immediately remove all statements and references to "not allowed to say" from your website, (2) cease posting or allowing others to post statements or making any references to our client whatsoever, and (3) remove the Chloe photos that were taken from "not allowed to say" from your website.

As evident from the edited C&D, Bag Snob complied to avoid an expensive legal defense, but not before the original exchange was repeated (with much commentary) on The Purse Forum

I don't know whether the lust-inducing bag that launched a thousand messages was counterfeit or not, but I do have questions about the lawyer who sent the letter.

C&D letters are a useful legal tool, a first warning to alleged wrongdoers before additional legal action.  Chloe might send one to alleged counterfeit resellers, for example.  However, C&Ds can also have a chilling effect on legitimate and socially beneficial discussion, especially when the recipient doesn't have the money or time to defend against a lawsuit.  As Bag Snob put it, such actions can be "a disservice to the shopping community."  A responsible lawyer should be not only a zealous advocate for her client, but a guardian of the law itself -- and should thus refrain from overbroad demands or inappropriate threats.  (Check out the Chilling Effects Clearinghouse for an advocacy project on this issue.)

Beyond the question of misuse of C&Ds, it's not clear that sending the letter was good strategy.  Even if we assume that Sophisticated Spirit was NOT selling counterfeits, what has she gained?  Sending a C&D letter to an internet site can be like trying to put out a fire with gasoline.  There are probably more references to the Paddington dispute out there, including this post, than there would have been without a C&D.  Social groups react badly to being told to shut up.  Lawyers in the age of open internet communication should consider this when advising clients, even if it means saying, "No, I won't take your money and write a letter -- it would be bad for your business in the long run."

So, what could a good faith seller do?  First, realize that goodwill is the most valuable asset of almost any business, and work to build it.  The web is a locus of social networks that can create trust -- or the opposite.  Become part of the community and give potential buyers reason to trust (what was the seller's fashion background prior to retail?  why is the seller not likely to be fooled by shady suppliers?  how does the seller have access to scarce commodities like the latest "it" bag?  is the seller part of a trade organization with an anti-countefeiting policy?  does the seller have an open forum for feedback from buyers?).  Next, handle any disagreements quickly, professionally, and as quietly as possible. 

At the end of the day, the law can be a very blunt instrument.  (Think clubs and baby harp seals.)  Never underestimate the power of social networks and social controls, or the benefits of harnessing them.

December 18, 2005

Naughty or Nice?

Last week's Wall Street Journal reports that for international travelers, the latest trend in holiday giving is superior qualilty "bootleg bounty" purchased overseas, sometimes even in lookalike packaging.  According to the WSJ,

It may have once been considered tacky to give a knockoff purse or wallet as a gift.  Not any longer.  This holiday season, more gift givers are tapping a new source for presents:  Chinese counterfeit goods.

For holiday shoppers unwilling to tangle with U.S. Customs, New York seems to be an equally popular destination this weekend.  Not only is Chinatown buzzing with the usual muttered offers of "Vuitton" and "Prada" -- openly displayed, behind fake walls, or past locked basement doors -- but pushcart vendors have set up shop near some of Manhattan's priciest real estate.  Not happy with the prices at Saks, Barneys, or Bergdorf?  Just step outside.

Outside Bergdorf December 2005

BTW, the traffic cones aren't VIP parking.  They were placed by the traffic cop just outside the edge of the photo.  (More pics available on Flickr.  And post your own!)

The savvy traveler quoted in the WSJ claims that his family "didn't mind one bit" that the goods were fake.  Hmmm.  Tune in here for future reflections on the messages embedded in buying -- or giving -- counterfeits. 

In the meantime, attention shoppers:  if I'm untying the white ribbon around a certain little blue box in my stocking, it had better be the real deal. 


December 17, 2005

Lite Reading for Holiday Travel

Usually planes and trains are good places to catch up on paperwork, but sometimes it's nice to have something more engaging to distract from thoughts of accidents, terrorists, or the guy beside you hogging the armrest.  For holiday travel, consider reading Candace Bushnell's Lipstick Jungle.  As you would expect from the creator of Sex and the City, it's a chicklit special, filled with best girlfriends, cityscapes, and yes, a few scenes that might raise the eyebrows of the sweet little old lady sitting on your other side and showing you pictures of her grandkids. 

Best of all, one of the main characters is a fashion designer who faces down a shady business partner/counterfeiter and goes on to fame and fortune. 

Lipstick Jungle 

And if you need an emergency last-minute gift when you get to your destination, just borrow some wrapping paper!

December 16, 2005

Introducing our Patron Saint/Avenging Angel

Counterfeit Chic's Patron Saint/Avenging Angel, Gabrielle "Coco" Chanel, probably didn't invent the "little black dress" -- but she was famous for popularizing it and inspiring innumerable imitations.  Her response?

Fashion should slip out of your hands.  The very idea of protecting the seasonal arts is childish.  One should not bother to protect that which dies the minute it is born.


Today, her eponymous house -- or at least its counsel -- is a bit less forgiving.  In recent ads, Chanel, Inc., reminded fashion editors and advertisers that "even if we are flattered by such tributes to our fame as 'Chanel-issme, Chanel-ed, Chanels and Chanel-ized', PLEASE DON'T.  Our lawyers positively detest them."

This legally offended/artistically flattered dichotomy has been echoed by designers from Marc Jacobs to As Four.  So which is it?  How come the lawyers always get blamed?  And what would Mademoiselle herself think?  If anyone is channeling Chanel, please let me know!