Luxury brands are getting more aggressive about taking suspected counterfeiters to court.
After years of debate in the luxury industry about how to publicly tackle counterfeit goods, a growing number of high-end names from Gucci to Moncler and Alexander Wang are suing sellers of fakes, both in China and the West. The legal action comes as brands grapple with an explosion of fake goods on e-commerce and social-media platforms.
Fashion brand Alexander Wang, which sued the owners of 459 websites believed to be selling counterfeit handbags, footwear and clothing last year, won a $90 million judgement this month in a New York district court. The court froze the websites and transferred their domain names — many of which are believed to originate in China — to the designer.
Alexander Wang, in a statement, said it was “pleased” by the court’s verdict and would protect its brand by “maintaining constant vigilance on a global scale.”
The lawsuits are a “strategic change” for companies who haven’t always been vocal or public about their battle against fake goods, said Paolo Beconcino, a Beijing-based consultant for Squire Patton Boggs law firm, who represents half a dozen Western brands in lawsuits against counterfeiters. In the past, many brands focused mainly on raids and seizures of counterfeit goods to shut down shady manufacturers and sellers, but some have questioned how effective this tactic is at deterring production of fakes.
Luxury names are increasingly considering lawsuits because of the rising production of counterfeits, their growth online and links to organized crime networks, according to Delphine Sarfati-Sobreira, director general of Unifab, a Paris-based anticounterfeit group.
It can be hard to find out who is selling the counterfeit goods, and therefore who to sue, so the brands sometimes hire investigators and lawyers. No numbers are available on how many brands are filing lawsuits against counterfeiters.
Yet in China — the source of almost two-thirds of the estimated $1.2 billion worth of counterfeits seized by U.S. authorities in the 2014 fiscal year — the government has set up special courts in major cities to deal with a rising number of intellectual-property cases.
Between 2005 and 2014, the number of civil intellectual-property cases filed in Chinese courts increased nine-fold to 133,000, while criminal cases rose 10-fold to 11,000, according to an analysis of government data by Martin Dimitrov, an associate professor at Tulane University in New Orleans.
As a swelling middle class in developing countries propels demand for brand-name goods, the concern is that counterfeit products will hurt global brands’ reputation. Higher-quality counterfeits can also eat into sales of authentic goods.
“It’s pretty easy to live with at least some fakes if they don’t take much market share,” said Harley Lewin, a partner at McCarter & English who represents Alexander Wang and other global brands in cases against counterfeiters. “But when the legitimate retail market gets increasingly tight and tough, the impetus to crack down (on fakes) becomes just that much more urgent.”
In China, luxury down-jacket maker Moncler won a court case in November against a company selling jackets with the Italian company’s logo.
Gucci and other luxury brands owned by Paris-based Kering are also waging a legal battle against New York Stock Exchange-listed Alibaba and its sellers over the widespread sale of fake goods on the Chinese e-commerce giant’s platforms.
A U.S. judge this month dismissed part of the lawsuit, saying that Gucci and other plaintiffs had “failed to allege the existence of a conspiracy” between Alibaba and its merchants. The judge’s decision doesn’t affect other parts of Kering’s lawsuit, which alleges that Alibaba encourages the sale of fake goods on its sites.
Gucci declined to comment. Alibaba has said the complaint has no basis.
Moncler couldn’t immediately be reached for comment.
While fashion brand Alexander Wang “prefers to avoid confrontation and resolve matters amicably” in suspected counterfeiting cases, the company has been frustrated by the surge of fake products online, especially in China, according to Mr. Lewin, who represents the brand.
“After years of playing the whac-a-mole game, (Alexander Wang) decided to move in a more aggressive fashion as the counterfeiting of his goods had increased along with his own growth,” Mr. Lewin said.
By Kathy Chu @chukathy Courtesy The Wall Street Journal