FL_Module_7

MODULE 7: FASHION LAW AND CRIME

Brand Counterfeiting

Brand Counterfeiting is ‘the illegal activity of producing and selling a cheap copy
of a popular product using the brand name of the original product1’. Counterfeiting
originally started with forgery of currency and documents but with time has
expanded to imitation of clothing, watches, company logos, brands etc.

It is a growing menace that affects the consumers and businesses in all parts of the
world. The constant development in technology has resulted in a mushroom
growth of this despicable marauding activity which is a form piracy in common
trade parlance. Technological developments have also rendered sophistication to
the replicated products resulting in either deceiving the customers into thinking
that they are purchasing the original product or convincing them that they can
deceive others through the imitated product. In some cases brand counterfeiting is
carried out by producing the goods in the same factory as that of the authentic
product and by using the same material.

Recent times have seen an evolution of brands and everyone now wants to
associate themselves with the latest fashion trends. This has resulted in people
resorting to buying counterfeited articles which are 45-50% cheaper and can easily
pass off as originals. Brand counterfeiting in Fashion Industry results in patent and
trademark infringement.

1 https://dictionary.cambridge.org/dictionary/english/brand-counterfeiting

The growth of the business of brands coupled with their online presence can also
be attributable to the growth of brand counterfeiting because a brand owner cannot
exercise effective control on counterfeiting activities carried online unless it hires a
third party to do so. Brand counterfeiting seriously affects the business of the brand
owners resulting in loss of revenue from sales and profit margin2.

According to a research Global Business Survey 2018- Brand Protection
Challenges, 47% of brands are losing their revenue because of counterfeiting and
one in every three brands experienced a loss in sales of more than 10%. Further, it
causes severe damage to both the brand and the product reputation by fraudulent
warranty claims etc3.

Counterfeiting is termed as an advanced practice and is very difficult to counteract
because of its cross border nature. Business and brand owners are required to take
proactive steps in order to protect their brand. Therefore, a holistic, all
encompassing, multi layered approach with an end to end supply chain model
should be adopted because in most cases the perpetrators of counterfeiting are
within the supply chain and have a substantial inside information about the brand.
Lastly, stricter laws should be enacted in order to combat this menace so that
established as well as new brand owners do not stand at a financial risk because a
lot of hard work, investment and manpower goes into establishing a brand name
and customer base4.

2 https://www.indianretailer.com/article/whats-hot/trends/Counterfeiting-of-Brands-in-India.a326/
3https://www.markmonitor.com/brand-protection-domain-management-resources/anticounterfeiting
whitepapers-datasheets/g/online-brand-protection-business-global-survey-barometer-2018?cid=pr
4 https://www.datadotdna.com/how-counterfeiting-can-destroy-your-brand-business/

Product Counterfeiting

Product Counterfeiting is manufacturing fakes or making unauthorized replicas of
the real product. They are usually produced to exploit the commercial value of the
product being imitated5.

Product Counterfeiting has become a massive business today, where almost every
product is being imitated. Such products are very easy to identify because they are
sold at much lesser prices than their original counterparts. While most people do
not mind buying such copies, it is always discouraged to buy counterfeited
products because of their poor quality which ultimately damages the brand name of
the product imitated.

World Customs Organization in the year 2017, estimated that product
counterfeiting caused a loss in sales to the tune of $512 billion to various brand
owners because a lot of money goes into the production of original goods6.

Fashion Forgery

Fashion forgery comprises of production of affordable fashion by ripping off big
fashion companies and designers of their innovation and designs and
manufacturing cheaper versions by drawing inspiration from their work.

Example – Forever21 is a major culprit in knocking off other brands7.

5 https://en.wikipedia.org/wiki/Counterfeit
6 https://www.fraudguides.com/consumers/product-counterfeiting/
7 https://fashionforgery.wordpress.com/

Canal Street in New York.

Canal Street in New York's Chinatown is the place in New York City to buy fake
handbags, wallets, perfumes and watches. If the latest IT-bag goes beyond your
budget than this is where you'll able to find an ok fake one. You just need to know
how. There is a difference between "counterfeit" and "knockoff" bags. Counterfeit
bags are the same model, same color, same logo as the original. Knockoffs are
imitation bags, you could say that these models are inspired by the original model.
The "high quality fakes" require more "work". Walking on Canal you'll be
whispered at "Gucci, Prada or Chanel? Louis Vuitton, Coach"? If you nodd the
whisperer will ask you to follow him or her to a place where its not so crowded and
out of sight from the police. There you'll be shown a brochure out of which you
can take your pick. A runner then goes out to get it. Or you'll be asked to follow
and you'll be taken to a secret store. Which is sort of scary and exciting. A back
alley, or a dark stairway that leads to some basement. As soon as you step in the
door is closed behind you. No one is to know about it.
It's not illegal in New York to buy fake stuff, but it's against the law to sell it. The
sellers risk a huge penalty and all their goods will be taken in posession. That's
why every now and then you'll see streetvendors grabbing their stuff and running
away. It's a constant cat and mouse play between the sellers and the police.8

Law enforcement officials routinely patrol Canal Street due to the large volume of
counterfeit merchandise sold in the area. Fake designer watches, handbags, and

8 https://www.newyorkcitytrippers.com/posts/canal-street-gucci-prada

perfumes are sold at a fraction of the cost of the real designer merchandise. In
2007, undercover police officers pretended to be real shoppers in an area
commonly called "Counterfeit Triangle," which covers Walker, Baxter, Centre,
and Canal Street in Lower Manhattan. The officers were able to buy fake designer
merchandise for very low prices. As an example, they purchased a Prada handbag
for $40 that would originally cost $1,000. The 40 undercover shopping sprees
resulted in 32 shops in the area shut down, a civil lawsuit filed against the property
owners, and about $1 million worth of counterfeit items confiscated by the
authorities According to New York City Mayor Bloomerg, the sales of counterfeit
merchandise rob the city of $1 billion in sales tax a year. He calls that system of
selling counterfeit goods "an organized crime". Just after Thanksgiving in 2010,
New York City's anti-counterfeiting squad raided a number of vendors on Canal
Street, which resulted in the closure of 16 stores.9

9 The Crimes of Fashion The Effects of Trademark and Copyright Infringement in the Fashion Industry- Carolyn
Marcelo