Knockoffs, Infringing Products And Counterfeits – Trademark

In the dazzling world of haute couture and high-end fashion, the
allure of luxury goods and logos has always been tantalizing. Yet,
as coveted as these items are, their prices often place them out of
reach for the average consumer. Enter the shadowy realm of luxury
counterfeiting—a phenomenon as old as the concept of fashion
itself.

Nowhere is the impact of luxury counterfeiting more palpable
than in the bustling streets of fashion capitals like New York
City, where vendors peddle counterfeit wares with impunity in
tourist hotspots like Times Square and Canal Street. But the
internet has emerged as the new frontier for counterfeiters,
presenting a formidable challenge for brands striving to protect
their image and integrity.

Since the pandemic, the online marketplace for these goods has
surged. It is now easy to find third-party vendors selling fake,
defective or counterfeit goods. Now, more than ever, it is
important for designers to understand the differences between legal
knockoffs, infringing products and counterfeits, so they can
protect their brand from fashion thieves.

Trends In Counterfeit Designer Goods

The surge in counterfeit designer clothing gained momentum in
the late 1970s, coinciding with the rise of designer jeans.
Suddenly, conspicuous labeling and brand identity became synonymous
with status and reputation, with the Levi’s back pocket logo
standing out as a prime example. This trend has only intensified
over the years, fueled by an appetite for logo-driven items and
propelled by advancements in technology that facilitate the
production and distribution of fake goods.

Fast forward to the present day, and the extent of luxury
counterfeiting is staggering. In 2020 alone, the fashion industry
suffered losses exceeding $50 billion due to counterfeit sales, a
figure projected to soar to $81 billion by 2026. To put this into
perspective, the global trade in counterfeit goods accounted for
more than $500 billion in 2016, constituting 38% of the legitimate
fashion industry’s value.

Identifying Knockoffs And Counterfeits

If you encounter a design or product in the marketplace that is
similar to your own, it can be frustrating. Sometimes these copies
or knockoffs are legal, but if they are not, they may be infringing
upon your IP rights.

Knockoffs

It is a common misconception that knockoffs are always illegal.
A knockoff is legal if: (i) the copy does not incorporate any of
the original IP, (ii) the quality of the knockoff is different than
the product it is copying, and (iii) the copier does not intend on
misleading consumers into believing its product is the original
product.

Knockoffs are common in “fast fashion”—a
sub-industry in which retailers sell less expensive versions of the
latest designer fashion trends. For example, if a fast fashion
retailer sells a very similar dress to the dress worn by an A-list
superstar on the red carpet, there is likely no legal recourse
available to the original designer if the retailer is not using the
designer’s brand name, changed the print slightly and used less
expensive fabric. When these retailers produce legal knockoffs,
their goal is usually for consumers to achieve a similar style to
the original without paying full cost.

A copycat version of a product is also legal when the original
product is ineligible for IP protection. For example, black
underwear is a basic, common and useful product that is not
entitled to protection.

Counterfeits

To counterfeit is to distribute or manufacture a good that
utilizes a mark that is identical to, or substantially
indistinguishable from, a federally registered trademark. The
counterfeiter (i) must have intentionally used the trademark
knowing its use was counterfeit, or (ii) was willfully blind and
deliberately disregarded the trademark owner’s use.

An example of a counterfeit item would be a handbag that looks
identical to a Louis Vuitton handbag because its print, label, logo
and design are a near exact replication of the original bag.

Certain counterfeit products, especially beauty products, have
the potential to cause physical harm to consumers as well as
reputational damage to businesses. The counterfeit product’s
marketing, packaging and design may be identical to the high-end
brand. However, the counterfeit product is manufactured with
cheaper and harsher chemicals. If a consumer has an allergic
reaction to the counterfeit product, they may incorrectly believe
that it was caused by the high-end brand, damaging the brand’s
reputation.

How Do Fashion Designers Protect Their Designs From Fashion
Thieves?

The ramifications of this illicit market are far-reaching, not
only siphoning revenue from legitimate luxury brands but also
fostering a parallel economy that undermines fair competition. In
response, brands are compelled to engage in a relentless battle to
safeguard their intellectual property, resorting to round-the-clock
efforts to police their trademarks and combat counterfeiters.
Intellectual property (IP) law provide designers with much-needed
protection.

Within IP law, fashion brands most often utilize trademark,
copyright, and sometimes even patent law. It is common practice for
designers to trademark their brand’s name, logo, symbol or
unique phrase to use as a source and quality identifier to
establish brand recognition. Under Star Athletica, L.L.C. v.
Varsity Brands, Inc., 137 S. Ct. 1002 (2017), certain elements of
clothing design can also be eligible for copyright protection.
Decorative, non-functional features on a useful product, such as a
complex bow or sweat-wicking fiber, may also be eligible for patent
protection.

Some designers may even pursue criminal actions by reporting the
counterfeiting to the appropriate law enforcement authorities.
Factors that authorities often examine before deciding whether to
bring criminal charges include: (i) the involvement of organized
crime, (ii) public health and safety concerns and (iii) the amount
of loss and harm.

Conclusion

The repercussions for luxury brands are profound, as
counterfeiting not only erodes revenue streams but also undermines
brands’ carefully cultivated goodwill, exclusivity and
prestige. In response, brands must adopt a multi-faceted legal
strategy, actively monitoring online platforms, pursuing legal
action against counterfeiters, and collaborating with law
enforcement agencies to stem the tide of illicit trade.

Protecting your brand is not only critical to your
business’s success, it is also crucial for consumer protection.
Understanding the nuances of the counterfeit luxury landscape
prepares you in the event your designs or products are sold in the
marketplace without your consent.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.