In the News
February 1, 2006
High-end Consumer Goods are Going Global, and the Fakers Are Right Behind
By Mathew B. Rabin
We all know the stories of fake Rolex watches and knockoff Louis Vuitton bags that can be had for a small fraction of the original's price, sometimes only footsteps from retailers of the real deal. Given the unbeatable prices, and the less-than-handcrafted quality, buyers of counterfeits traditionally didn't see any harm. But as apparel and other luxury good manufacturers move production offshore, those counterfeiters are taking notice, improving quality by moving next door and taking a tremendous toll on the bottom line for the legit good producer.
Over $500 billion in sales are generated annually from the sale of counterfeit goods. Although only 5% of that comes from luxury good knockoffs, that share is growing at an alarming rate. What once were crude copies, the fakes are now being made in the same cities in Asia as the legitimate brands, giving counterfeiters much better access to the real items. A recent Wall Street Journal article highlighted that this proximity, along with better manufacturing technology, has increased the illicit profit from the fakes such that for every dollar spent on producing and selling a counterfeit good, $10 is made in profit—roughly the same profit margin made from narco-trafficking.
And the manufacturers of the genuine articles are taking notice. They are utilizing new legal tactics: Some such as LVMH Moët Hennessy Louis Vuitton SA have gone after the storefronts that sell the counterfeits; others have targeted the sellers' landlords, credit-card companies who have vendors as customers—each link in the supply chain from the fake maker to the consumer.
As with any violation of intellectual property rights, the response to the violator must be swift, comprehensive and meaningful. Our practice can counsel the clothing manufacturer or other property-holder regarding legal recourse available against the violator, here in the US and overseas. Whether this means bringing litigation against the counterfeiter in the US, working with property-rights consultants in Asia or liaising with governmental agencies and law enforcement in Europe, we can assist. If the counterfeiter is challenged aggressively and thoroughly, at each possible step from manufacture to distribution, their profit margin will shrink, and they will move on.
Source: "Bagging Fakers and Sellers," The Wall Street Journal, January 31, 2006
This article, Copyright 2006 Mathew B. Rabin, A Professional Law Corporation.