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
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
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.
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.