B.A.F.F.L.E.D. Fashion Law
The Battle of Counterfeits in Big Cities, Part 2--
Last week we talked about the fight big cities are having against counterfeits. Places like Chicago, New York, and Atlanta--largely because of their transportation centers--are consistently working to keep the counterfeit market in check within their borders. Today, we're going to talk about how the counterfeit chain begins.
How do counterfeits come to the market in the first place?
Counterfeits are considered products purporting to be part of a popular designer brand, but sold in what we'll call a shady way. Designer items are sold directly from their source, or through licensing agreements permitting items to be sold in other outlets. An example of such licensing would be Christian Louboutin shoes being sold at Bloomingdale's. Bloomingdale's has an agreement with Louboutin allowing them to sell their shoes in the store.
What happens in the counterfeit market is contrary to direct sales or licensing agreements. Items which look a lot like the real deal show up in places the designer has not authorized, and the price is always far less than the true value or market price of the item. Often, counterfeits circulate through the market innocently, when consumers buy them from sources they trust, like friends having "purse parties" or donations to charitable organizations. However, the source to these innocent consumers is far from innocent. They may start at a place like Canal St. in NYC or boutiques claiming to have deals on designer items. The items come in in droves. Here's how the chain starts.
Gray Market Production
We know the black market is where items are sold illegally. Well, the gray market is somewhat similar. The gray market is created when factories licensed to produce designer goods under certain terms and conditions step outside those boundaries and create their own, infringing items.
As an example, a factory is licensed to produce Chanel bags under the protocol provided by Chanel. Bags are to be made from 9am local time to 5pm, using specific materials and methods. At 5:30, the production continues, but the items are 1) unauthorized by Chanel, and 2) produced in such a way to make consumers believe the goods are Chanel, but protect the infringing bag-maker from a quick infringement, contracting, and licensing lawsuit. The goods get shipped, and in the best cases, they're stopped at customs to protect designers and consumers from infringing products. No worries, the lawsuit does come later.
This gray market method is one of the largest sources of counterfeit goods and is the baseline of a billion-dollar market. To curb the negative effects of this market, a myriad of things must be done: legislation, brand vigilance, accurate contracting, policing, and more.
Share with us how you feel about counterfeits, fakes, and knockoffs. Let's keep the conversation going.
Stay tuned for more on international production and fashion labor.
*Designer goods is a fairly loose term when used in this article. It does not describe high priced goods only, it includes items at any price point, but specifically those protected by a trademark or brand recognition in some way. Price is not a factor.
Last week we talked about the fight big cities are having against counterfeits. Places like Chicago, New York, and Atlanta--largely because of their transportation centers--are consistently working to keep the counterfeit market in check within their borders. Today, we're going to talk about how the counterfeit chain begins.
How do counterfeits come to the market in the first place?
Counterfeits are considered products purporting to be part of a popular designer brand, but sold in what we'll call a shady way. Designer items are sold directly from their source, or through licensing agreements permitting items to be sold in other outlets. An example of such licensing would be Christian Louboutin shoes being sold at Bloomingdale's. Bloomingdale's has an agreement with Louboutin allowing them to sell their shoes in the store.
What happens in the counterfeit market is contrary to direct sales or licensing agreements. Items which look a lot like the real deal show up in places the designer has not authorized, and the price is always far less than the true value or market price of the item. Often, counterfeits circulate through the market innocently, when consumers buy them from sources they trust, like friends having "purse parties" or donations to charitable organizations. However, the source to these innocent consumers is far from innocent. They may start at a place like Canal St. in NYC or boutiques claiming to have deals on designer items. The items come in in droves. Here's how the chain starts.
Gray Market Production
We know the black market is where items are sold illegally. Well, the gray market is somewhat similar. The gray market is created when factories licensed to produce designer goods under certain terms and conditions step outside those boundaries and create their own, infringing items.
As an example, a factory is licensed to produce Chanel bags under the protocol provided by Chanel. Bags are to be made from 9am local time to 5pm, using specific materials and methods. At 5:30, the production continues, but the items are 1) unauthorized by Chanel, and 2) produced in such a way to make consumers believe the goods are Chanel, but protect the infringing bag-maker from a quick infringement, contracting, and licensing lawsuit. The goods get shipped, and in the best cases, they're stopped at customs to protect designers and consumers from infringing products. No worries, the lawsuit does come later.
This gray market method is one of the largest sources of counterfeit goods and is the baseline of a billion-dollar market. To curb the negative effects of this market, a myriad of things must be done: legislation, brand vigilance, accurate contracting, policing, and more.
Share with us how you feel about counterfeits, fakes, and knockoffs. Let's keep the conversation going.
Stay tuned for more on international production and fashion labor.
*Designer goods is a fairly loose term when used in this article. It does not describe high priced goods only, it includes items at any price point, but specifically those protected by a trademark or brand recognition in some way. Price is not a factor.
B.A.F.F.L.E.D. Fashion Law
The Battle of Counterfeits in Big Cities: Part 1--
Is your city struggling with the counterfeit market? Mine is. Chicago, like many other cities is doing its best to protect the intellectual property of fashion designers. Because the counterfeit industry is a billion-dollar market, both the federal and local governments must stay on their toes in this battle.
The Legislature and Fashion Law: Partners Against Crime
Just recently, NYC Councilwoman Margaret Chin again filed an ordinance to punish purchasers of counterfeit goods. Canal Street in New York, as well as various other locations are widely known for their stock of counterfeit goods. Many put this shopping spot on their itinerary when heading to the Big Apple. Will this legislation deter tourists from heading to NYC?
Although her legislation has not reached the point of passing, she's quite adamant about the need. Designers surely agree. Concerns have come up about the reason for punishing the consumer, but the sale of counterfeits is already a punishable offense. And to be honest, consumers know when they're buying a fake. There are so many signs. Chin said. “If you go into a back room, basement or van, you probably know what you’re doing is not legal.” Well put Councilwoman.
As we've noted before, designer products are in the market in 4 classes:
(1) The real thing
(2) The real thing....but the designer finds something about it imperfect for sale
(3) A great fake; looks real, but it's not. This item is a counterfeit.
(4) A terrible fake. Sellers and buyers should know and do better. These are knockoffs, when Coach "C"s become Gs, Gucci "G"s look like Cs, and maybe this bag is sold at a mall kiosk. Tell tale signs are evident it's not real.
This diagram from our friends at Fox Rothschild helps determine a fake Louis Vuitton. We'll share more tips as this series continues.
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Law Enforcement Does Their Part: My beloved Chicago is also fighting the battle against fakes. From September 2011 through the same time in 2012, Chicago saw more than 100,000 fakes seized, totaling to more than $5million. In conjunction with the U.S. Immigration and Customs Enforcement's Office of Homeland Security Investigations, the Cook County Sheriff has worked to follow the trail of the counterfeit, often leading them to flea markets and even purse parties. They are then often able to follow the trail back to the source.
The trail of the counterfeit is what makes this phenomenon so interesting. The route is quite interesting and includes pieces like contracts, licensing, and labor agreements.
Stay tuned for next week's Part 2 on counterfeits in big cities, where we'll trace the trail of counterfeits to their source.
The Legislature and Fashion Law: Partners Against Crime
Just recently, NYC Councilwoman Margaret Chin again filed an ordinance to punish purchasers of counterfeit goods. Canal Street in New York, as well as various other locations are widely known for their stock of counterfeit goods. Many put this shopping spot on their itinerary when heading to the Big Apple. Will this legislation deter tourists from heading to NYC?
Although her legislation has not reached the point of passing, she's quite adamant about the need. Designers surely agree. Concerns have come up about the reason for punishing the consumer, but the sale of counterfeits is already a punishable offense. And to be honest, consumers know when they're buying a fake. There are so many signs. Chin said. “If you go into a back room, basement or van, you probably know what you’re doing is not legal.” Well put Councilwoman.
As we've noted before, designer products are in the market in 4 classes:
(1) The real thing
(2) The real thing....but the designer finds something about it imperfect for sale
(3) A great fake; looks real, but it's not. This item is a counterfeit.
(4) A terrible fake. Sellers and buyers should know and do better. These are knockoffs, when Coach "C"s become Gs, Gucci "G"s look like Cs, and maybe this bag is sold at a mall kiosk. Tell tale signs are evident it's not real.
This diagram from our friends at Fox Rothschild helps determine a fake Louis Vuitton. We'll share more tips as this series continues.
.jpeg)
Law Enforcement Does Their Part: My beloved Chicago is also fighting the battle against fakes. From September 2011 through the same time in 2012, Chicago saw more than 100,000 fakes seized, totaling to more than $5million. In conjunction with the U.S. Immigration and Customs Enforcement's Office of Homeland Security Investigations, the Cook County Sheriff has worked to follow the trail of the counterfeit, often leading them to flea markets and even purse parties. They are then often able to follow the trail back to the source.
The trail of the counterfeit is what makes this phenomenon so interesting. The route is quite interesting and includes pieces like contracts, licensing, and labor agreements.
Stay tuned for next week's Part 2 on counterfeits in big cities, where we'll trace the trail of counterfeits to their source.