Will Chinese Tariffs Further Fuel Fakes?
If you've been watching national news lately, you know the president is pushing for tariffs on items imported from China. This has a major impact on local and state governments in America, who rely on Chinese companies for some of their infrastructure items like railcars, for example. Certainly we support domestic jobs and manufacturing, but the reality is, much has moved overseas. These are the cards dealt.
Imposing these tariffs could really hit closer to home--literally, if clothing and beauty items are swept into the list. The likelihood is there. Not only would items like synthetic and human hair be included, but lipstick, shampoos, and other essentials. Consumers will really flock to small business if that becomes the case (which we support!). The tariffs could also have an impact on the creative industry, in further flourishing the counterfeit market. Like the now-shifting market in Iran, the love for high fashion, but barriers to enter the market can call for desperate measures.
Counterfeit luxury items are sold openly in Iran. It's almost a market necessity, as the global economy was long cut off because of international sanctions. Importers have struggled to bring good into the country. Consumers haven't let their wants struggle. Neither have knockoff merchants. As many sanctions have been relaxed over the last couple years, the market is sliding toward change, but not easily. Despite super conservative leadership in Iran, counterfeiters found ways to get consumers what they wanted--even if it meant taking on detested Western ways of loving luxury.
The proposed Chinese tariffs in America could make for a similar situation. Sure, there's already a counterfeit market here, and it's unlikely there won't always be one. But, if brands are cut off in such a way to create burdens consumers aren't used to, counterfeiters will definitely find a way to meet demand--whatever it takes. When it comes to counterfeits in the health and beauty industry, it's more than just bags with questionable logos. Formulas and chemical compounds are at stake. Health is a whole different ballgame.
As hearings continue on this issue in D.C., it is worth keeping an eye on. Will counterfeits be king?
Technology One-Ups Counterfeits
Just when the counterfeit market thought it was gaining, particularly with retail experiencing a stumbling block, technology has stepped in to do what it does best--change the game. To fight back against fakes in the market, the folks at Entrupy created a scanner to determine the real from the fake.
Obviously you can train a machine to do almost anything these days. Now, this machine-learning system can scan an item and with up to 98.5% accuracy, determine whether it's the real deal or just another really good copy. As you know, goods are in the market in 4 different classes. This device will be able to separate the 1s from the 2s with almost complete certainty. Because of its advanced technology, it will also be improving its accuracy with every use.
Entrupy won't be marketed to the individual consumer, but primarily geared toward retailers looking to ensure they are selling genuine products, and not gray market goods--those made in legit factories, but outside contracted terms. This device will also put gray marketers on the defense, forcing them to find ways to defeat the system. The goal of the scanner is to ensure trust in what consumers are purchasing.
"We built Entrupy as a scalable and versatile platform in response to the rapidly growing counterfeiting issue and need for trust when it comes to product transactions." Vidyuth Srinivasan, Entrupy's co-founder told Digital Trends.
This device will most certainly give the gray market a run for its money. It may press legislators to act on further protecting designs as well.
For more on gray market goods, click here.
B.A.F.F.L.E.D. Fashion Law
Burberry Trailblazes "See Now, Buy Now"; Skirts Fakes
With smartphones being more commonplace than almost
any other item in our daily lives, they've had both positive and harmful affects on the fashion industry. The "Runway to Rack" model has created its own lane in fashion, and unfortunately hurt designers. This is the business model allowing a photo of a runway design to immediately hit a manufacturing table, and in as little as 2 weeks--a fast fashion rack. Luxury, and even startup brands have struggled with this quite a bit in the last decade or so. Technology, talent, and sales all cut both ways.
any other item in our daily lives, they've had both positive and harmful affects on the fashion industry. The "Runway to Rack" model has created its own lane in fashion, and unfortunately hurt designers. This is the business model allowing a photo of a runway design to immediately hit a manufacturing table, and in as little as 2 weeks--a fast fashion rack. Luxury, and even startup brands have struggled with this quite a bit in the last decade or so. Technology, talent, and sales all cut both ways.
"See Now, Buy Now"
Burberry is changing the tide. Starting in September, the iconic British luxury brand will start hosting only 2 runway shows a year, and make the looks seen on the runway immediately available for purchase. Versus Versace has endeavored on something similar. This will certainly help in circumventing how the "Runway to Rack" method has cramped high fashion's brand protection.
More Changes Coming?
This new approach will continue Burberry's show of leadership in digital marketing, as well as complement the CFDA's review of the traditional fashion calendar. Social media is clearly showing it is here to stay. Burberry is showing its longevity is, too.
Thanks to Fashionista.com for this tip!
B.A.F.F.L.E.D. Fashion Law
Fab Fashion Law News from 2015--
It's the time of year--and frankly the last day--do to these listicles discussing the year that was. While we've retired our weekly Tuesday Tops feature (which still has great stuff to check out), we still like the idea of compiling solid, handy lists.
Since fashion law is our specialty, and we want you to stay as up-to-date as possible on our favorite field, we're listing the Top Fashion Law Stories of 2015. Let's hit it backwards, starting with last week...
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Fashion Law Is Back on Capitol Hill--Child Labor Laws for Fashion Shows
Blissful Ignorance: Abercrombie Can't Pretend They Didn't Know They Were Discriminating By: Dana Martin
Why You Should Care About Fashion Law By: Dana Martin
Can't wait for more fashion law news in 2016!
B.A.F.F.L.E.D. Fashion Law
Big Brands Keep Fighting Fakes--
Counterfeiting is about 2% of world trade--equating to about $1trillion, according to the International Chamber of Commerce. Make no mistake, many purchasers of counterfeits were never going to purchase the real thing anyways. But, some were, and got bamboozled. Whether they were looking for the real thing or just something to pass at a quick glance, the harm done by fakes doesn't change. There's a cost far greater than the black market price.
Counterfeits are making waves in the fashion industry and it's nothing good. In recent months, designers have had to step their protection game up in several ways, just to keep the infringers at bay. As reported earlier this week, Christian Louboutin, Jimmy Choo, Celine and others have sought a slew of design patents to protect their creations.
The lack of copyright protection in America makes protection a bit of a challenge. Trade dress, trademark, and patents are heavily depended on, but take some time to secure. Stella McCartney had to sue Steve Madden for infringement on her "Falabella" bag--a bag already holding 2 design patents for its continuous chain design. Tory Burch also came up big recently in fighting for her "Isis Cross" trademark. She won $38.9M in a lawsuit against Lin & J to protect her trademark. Despite claiming victory over YSL, Louboutin is still awaiting trademark validity from the EU. This stems from their 2013 battle with Van Haren infringing on the red soles.
While keeping us showered with designs for the new season, designers have to keep an eye on the counterfeit market. According to NetNames, a London-based brand protection firm, counterfeiting is getting a consistent boost from e-commerce, channeling sales up about 15%. Much of the items are sourced through China--nearly 70%. The raw materials are there. The factories are there. And, the labor is pretty inexpensive. An NYC couple was was just charged with conspiring to traffic counterfeits after being caught with over 130,000 counterfeit items in their rented warehouse. Many of the goods were said to have been sourced from China. It's the largest source, but certainly not the only.
Counterfeiting is about 2% of world trade--equating to about $1trillion, according to the International Chamber of Commerce. Make no mistake, many purchasers of counterfeits were never going to purchase the real thing anyways. But, some were, and got bamboozled. Whether they were looking for the real thing or just something to pass at a quick glance, the harm done by fakes doesn't change. There's a cost far greater than the black market price. B.A.F.F.L.E.D. Fashion Law
Designers Focus In On Internet Vigilance--
Many established designers were hesitant to embrace the virtual world. After all, their namesake founders began the collections in small shops or even rooms in their homes. Soon enough, the internet world caught on, and the ease of shopping made for big benefits to seasoned luxury retailers.
Then came the negatives.
Designers must be forever cautious of how they market their brand and where they allow it to be exploited. Just recently, Gucci owner Kering sued China's largest e-commerce brand over harboring fakes on the site. Nearly $82billion is lost annually to designers' fight against fakes. Many designers are putting millions into this vigilance--millions away from the design shop and brand promotion. Although the money is a major factor, let us not forget the disregard for brand reputation, too. It's so similar to one's personal reputation. Guard it with your life.
Many established designers were hesitant to embrace the virtual world. After all, their namesake founders began the collections in small shops or even rooms in their homes. Soon enough, the internet world caught on, and the ease of shopping made for big benefits to seasoned luxury retailers. Then came the negatives.
Despite the plethora of advantages to e-commerce, burdens and disadvantages come along as well. While luxury brands bring customer experience to the fingertips, so too, do counterfeiters and gray market producers. As we've discussed here many times, gray market goods are those produced in legitimate luxury factory settings, but outside of legitimate production terms. Counterfeiters usually take it a step further, producing their own look-alike items. These goods are generally 2's and 3's in the marketplace. Remember the Rating System?
Why Does This Really Matter? Everyone is Making Money?
With so many online squatters, luxury brands are forced to keep up constant vigilance over their brands online. This becomes extremely difficult when the internet is flooded with search terms, improper image use, licensing breaches, and sites changing every single day. But, who cares? The reputable brands get money from their base, and the counterfeit market gets money from their, wholly separate base, right? Nope.
We've discussed the great downside of counterfeits--the funding they provide for human trafficking and other horrible crimes. There is a damage to the designer, too (not eclipsing the trafficking, of course--just separate).
The crime to the brand--whether luxury founded in the 1800s or worked on tirelessly in a university studio this year-- hurts the bottom line. It hurts more, the name; the reputation. The problem here is the compromise to one's rights, image to the public, and invitation for confusion when consumers are looking for the right item to suit them.
B.A.F.F.L.E.D. Fashion Law
Fashion Law and the Local Economy--
Fashion law is in fact taking over the globe. But, its impact is local in nature, too. Despite there being an ongoing battle for protection of fashion designs at the national level in the U.S., many large cities, are doing their part to protect brands as well as their local economies.
While fashion trends change almost faster than the seasons, brands are made to last forever. Creators set out to achieve longevity. In recent years, there have been a number of efforts to curb harm to brands. Whether it be through the sale of fakes, thereby infringing on trademarks, or even penalizing the consumers of fakes, local governments are taking no prisoners in preserving the integrity of fashion.
What's been happening?!
What's set to happen next?
Local governments are pressed to keep up the services they've been able to provide. We need smooth streets and snow plowed, right? Losing out on tax revenue is no help. Locales with counterfeit districts, like Canal St. in NYC are watching for dealers who skimp residents of their service money and are issuing penalties left and right. Cities with flea markets are heavily watching the products coming through their borders, too. Many large flea markets have been the scene of busts when local or federal authorities uncover fakes sold by vendors.
Surely fashion industry leaders like Susan Scafidi and Diane von Furstenberg will continue working with the CFDA on federal legislation as well.
We'll continue watching the counterfeit scene. You should do the same. Fakes are never in fashion.
Fashion law is in fact taking over the globe. But, its impact is local in nature, too. Despite there being an ongoing battle for protection of fashion designs at the national level in the U.S., many large cities, are doing their part to protect brands as well as their local economies.
While fashion trends change almost faster than the seasons, brands are made to last forever. Creators set out to achieve longevity. In recent years, there have been a number of efforts to curb harm to brands. Whether it be through the sale of fakes, thereby infringing on trademarks, or even penalizing the consumers of fakes, local governments are taking no prisoners in preserving the integrity of fashion.
What's been happening?!
- Both coasts are equipped with amazing fashion law programs to help train upcoming lawyers in this billion-dollar industry. The Fashion Law Institute at Fordham and the Fashion Law Project at Loyola dig deeply into fashion law issues. Being in the garment districts of the nation's 2 largest cities doesn't hurt either.
- In 2011, the New York City Bar Association established a fashion law committee. Many bar associations across the country have held symposiums on the topic since then.
- In 2013, NY Councilwoman Margaret Chin introduced an ordinance to penalize counterfeit purchasers. It's not far-fetched--Italy, France, and England all penalize consumers for purchasing fakes. The NYC measure didn't pass, but it definitely got the attention of counterfeiters and the impact tax avoidance has on the local economy. She introduces a subsequent effort to prohibit the storage or sale of fake goods in any NYC building. She's not giving up on this.
- Chicago makes necessary use of its Trademark Violation Ordinance, which revokes the business licenses of retailers possessing and selling counterfeits. O'Hare Airport, recently named the busiest in the U.S. has uncovered millions in fakes at their international gates as well.
- North Carolina isn't playing any games either. The Secretary of State's office led police throughout NC on Operation Faux Pas, seizing more than $12million in fakes across the state.
What's set to happen next?
Local governments are pressed to keep up the services they've been able to provide. We need smooth streets and snow plowed, right? Losing out on tax revenue is no help. Locales with counterfeit districts, like Canal St. in NYC are watching for dealers who skimp residents of their service money and are issuing penalties left and right. Cities with flea markets are heavily watching the products coming through their borders, too. Many large flea markets have been the scene of busts when local or federal authorities uncover fakes sold by vendors.
Surely fashion industry leaders like Susan Scafidi and Diane von Furstenberg will continue working with the CFDA on federal legislation as well.
We'll continue watching the counterfeit scene. You should do the same. Fakes are never in fashion.
B.A.F.F.L.E.D. Fashion Law
The Latest in Fashion Law: News & Updates--
A lot has been going on in fashion law lately, so we want to make sure you're up to speed. Here's the latest:
Ralph Lauren forced to destroy knockoffs
In October, Converse sued a bunch of designers who infringed on their famous Chuck Taylor shoe. Now, as part of their settlement, RL has decided to destroy their 36 infringing styles, along with all molds and materials used to make them. Trademark protection is everything. Even big brands get caught up in it.
Seahawks are protecting their fans
Just in time for the Super Bowl, the Seattle Seahawks are working to trademark the number "12" and "boom". After successfully registering "Legion of Boom", efforts to secure "12th man"and just the number "12" in jersey font have proven a bit more difficult because of marks already in use. The Seahawks aren't giving up, though. They're working to find as much specificity as possible to protect what's pushed them to their 2nd Super Bowl in 2 years. Good luck!
Federal Agents Seize Super Bowl Fakes
While Seattle is trying to protect their brand, the NFL is working to do the same for theirs. Just this past weekend, near Phoenix, about $1million in knockoff NFL merchandise was seized by the feds. Merchandise included watches, other jewelry, and even flasks. Yikes.
"Faking It" exhibit continues at FIT
New York's Fashion Institute of Technology recently launched an exhibit in their museum examining the history of copying, both authorized and unauthorized, as the $600billion counterfeit industry continues to threaten designers. Faking It: Originals, Copies and Counterfeits displays genuine and copied items from designers like Louis Vuitton and Coco Chanel--2 designers who have actually stood on opposite sides of the issue. Following Charles Fredrick Worth's debut of a label in his designs in 1903, brands like Louis Vuitton have worked tirelessly to protect themselves against fakes. Meanwhile Madam Chanel once said "One should not bother to protect that which dies the minute it is born". Is she right?
Patrons of the exhibit get to check out bags, suits, dresses and more, all while comparing the real to the fake. A little fashion law history is laid out as well. The exhibit lasts until April 25th.
Louis Vuitton and Google partner to fight fakes
Continuing their quest to forever protect their well-known brand, LVMH is now working with Google to keep the conglomerate safe on the internet. After filing many lawsuits against Google for harboring ads and sales of infringing merchandise, the 2 major brands have signed a cooperation agreement, promising to end their legal dispute. The deal provides for each side to combine their resources to keep counterfeit LV items from being marketed and sold via the internet giant.
Is this the start of stronger crackdowns? Let's keep watching.
A lot has been going on in fashion law lately, so we want to make sure you're up to speed. Here's the latest:
Ralph Lauren forced to destroy knockoffs
In October, Converse sued a bunch of designers who infringed on their famous Chuck Taylor shoe. Now, as part of their settlement, RL has decided to destroy their 36 infringing styles, along with all molds and materials used to make them. Trademark protection is everything. Even big brands get caught up in it.
Seahawks are protecting their fans
Just in time for the Super Bowl, the Seattle Seahawks are working to trademark the number "12" and "boom". After successfully registering "Legion of Boom", efforts to secure "12th man"and just the number "12" in jersey font have proven a bit more difficult because of marks already in use. The Seahawks aren't giving up, though. They're working to find as much specificity as possible to protect what's pushed them to their 2nd Super Bowl in 2 years. Good luck!
Federal Agents Seize Super Bowl Fakes
While Seattle is trying to protect their brand, the NFL is working to do the same for theirs. Just this past weekend, near Phoenix, about $1million in knockoff NFL merchandise was seized by the feds. Merchandise included watches, other jewelry, and even flasks. Yikes.
"Faking It" exhibit continues at FIT
New York's Fashion Institute of Technology recently launched an exhibit in their museum examining the history of copying, both authorized and unauthorized, as the $600billion counterfeit industry continues to threaten designers. Faking It: Originals, Copies and Counterfeits displays genuine and copied items from designers like Louis Vuitton and Coco Chanel--2 designers who have actually stood on opposite sides of the issue. Following Charles Fredrick Worth's debut of a label in his designs in 1903, brands like Louis Vuitton have worked tirelessly to protect themselves against fakes. Meanwhile Madam Chanel once said "One should not bother to protect that which dies the minute it is born". Is she right?
 |
| Afternoon Dress by Charles Fredrick Worth (1903) |
Patrons of the exhibit get to check out bags, suits, dresses and more, all while comparing the real to the fake. A little fashion law history is laid out as well. The exhibit lasts until April 25th.
Louis Vuitton and Google partner to fight fakes
Continuing their quest to forever protect their well-known brand, LVMH is now working with Google to keep the conglomerate safe on the internet. After filing many lawsuits against Google for harboring ads and sales of infringing merchandise, the 2 major brands have signed a cooperation agreement, promising to end their legal dispute. The deal provides for each side to combine their resources to keep counterfeit LV items from being marketed and sold via the internet giant.
Is this the start of stronger crackdowns? Let's keep watching.
B.A.F.F.L.E.D. Fashion Law
How to Spot Fake Merchandise--
This topic has been visited a few times--on this site through various posts, and by some of our fashion law friends. However, a reminder is always good, especially as e-commerce continues to dominate. We want to make sure you're fully aware of what you're buying, and why you shouldn't be buying items not properly sourced to the right designer.Here's some guidance on purchasing the right pieces:
It's improperly placed
If it's not in an approved retailer, is positioned in a mall kiosk, or is sold on a street corner or out of a trunk--it's fake!
The price is too good to be true
Real luxury goods come at a cost. When you enter their stores, they'll tell you you're making and investment, not a purchase. If the price is way beyond right, it's not real. No hardworking designer--established or rising--is short selling their work.
It doesn't look quite right
Does the design look just a tad bit off? Are the letters skewed? Are the letters wrong?! If anything about the item is not right--it's fake. Artists are perfectionists, and they don't let imperfect products hit the market. If an item looks off, don't buy it.
The signs are obvious
This is when logos are incorrect. Trademarks are terribly infringed, and real artistry is compromised. You know you are dealing with a fake when all of the 3 above are present. You can also be sure when the seller can barely give you facts about the brand. Frequenting designer shops--even department stores--you'll find knowledgeable sales associates who know about what their selling. When you can't get a straight story on what you're buying, keep your money.
It's produced in the gray market
Gray market goods skirt the line of infringement. Their crafty, shifty ways to make goods seem legit. They're not. Gray market goods are produced at legitimate factories, but under illegitimate terms. These goods are categorically fake. Don't support them. They're made contrary to the factory's terms with the designer, skim designers of their rightful money, and impair brand quality in the market. How would you want your hard work treated? As Fashion Law Trailblazer Susan Scafidi points out in this news spot on Superfakes, these items often fund organized crime and terrorism.
The Rating System
(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. We still discourage purchase of these.
(4) A terrible fake. Sellers and buyers should know and do better. Smh.
Be careful when shopping and make sure your purchases are legit on all levels. For more, check out our 3-part series on The Battle Against Counterfeits.
B.A.F.F.L.E.D. Fashion Law
The Battle of Counterfeits in Big Cities, Part 3--
Not too long ago, we started talking about the fight large American cities have against counterfeits in their markets. We discussed how they get to the market, and what legislatures and law enforcement are doing to counter the problem. Today, we're taking things a little bit further. Here are 3 additional points about the counterfeit market.
Counterfeits v. Employment
The Cost Hits Local Governments, Too
It doesn't get the news coverage it may deserve to help alleviate it, but the fake trade has been linked to drug trafficking, child labor, and even terrorism. Counterfeiting often feeds drug rings and are literally accessories in human trafficking. Further, children are frequently used to produce illegal items. The Zara factory in Argentina was investigated and shut down earlier this year because of poor working conditions, no breaks for adult workers, and consistent use of children in their labor force. The investigation also included a search into whether or not unauthorized products were made. The gray market is heavily sustained by child labor.
Not too long ago, we started talking about the fight large American cities have against counterfeits in their markets. We discussed how they get to the market, and what legislatures and law enforcement are doing to counter the problem. Today, we're taking things a little bit further. Here are 3 additional points about the counterfeit market.
Counterfeits v. Employment
Counterfeits are directly responsible for the loss of over 750,000 American jobs. As we mentioned before, having particular global locations be responsible for certain pieces in the economic cycle is not a bad idea. it works well in many ways. However, having local jobs is necessary in every nation. It may be more efficient for a nation or city to produce certain products because of their climate or other unique settings. But, moving jobs overseas to keep profits sky high is not helpful to the overall economy. It is also a detriment to the receiving nations, where they often work for wages and in conditions Americans would never accept. We also can't forget how much counterfeits cost the actual brands. This starts a chain reaction as well. International copyright piracy has cost U.S. companies $9billion in trade losses.
The Cost Hits Local Governments, Too
In NYC alone, counterfeit sales cost residents about $1billion in lost sales tax. This is doing the same in places like Chicago, Atlanta, LA and other areas with large fashion constituencies. Local governments are already struggling to keep services and necessities available. Missing additional tax revenue is not helpful. Sure, some tourists make it a point to visit the counterfeit markets when traveling, but this takes away from the money used for local infrastructure and contributes to the financial hardships in which many cities have found themselves.
There is a Social Cost
There is a Social Cost
It doesn't get the news coverage it may deserve to help alleviate it, but the fake trade has been linked to drug trafficking, child labor, and even terrorism. Counterfeiting often feeds drug rings and are literally accessories in human trafficking. Further, children are frequently used to produce illegal items. The Zara factory in Argentina was investigated and shut down earlier this year because of poor working conditions, no breaks for adult workers, and consistent use of children in their labor force. The investigation also included a search into whether or not unauthorized products were made. The gray market is heavily sustained by child labor.
Harper's Bazaar has been extremely active in the battle against counterfeits in their Fakes are Never in Fashion campaign. Check them out and see what you can do to help keep fakes out of the market.