Counterfeits: a Sign of Success
WHO is the best person to consult about what's hot in the ever-changing world of fashion? A clothing designer? A frequent shopper? A pollster?
Industry insiders say it is none of the above. Find a professional product counterfeiter instead. These forgers, who produce everything from sneakers to sweat shirts to car parts, are a leading gauge of America's fickle tastes.
"We have a saying: If you're not being ripped off, you've got a problem. It's a forewarning that your product is not hot," says Kenneth Umans, a New York lawyer who handles trademark infringement cases for Champion, Cartier, Chanel, and other companies that produce fashionable products. "Conversely, the fastest way to know if your product is hot is if you have a counterfeiting problem."
Experts say counterfeiting is a multimillion-dollar industry. Forgers typically buy their basic product, such as blank shirts or logo-less watches, in the Far East. Importing these goods into the United States is not illegal.
But once here, forgers set up illicit factories to stamp their goods with whatever brand name happens to be popular. The merchandise, usually of inferior quality, is then sold for a fraction of the cost of the original through flea markets, street vendors, and small retail outlets.
While certain brand names have enduring appeal to consumers and counterfeiters alike - names such as Gucci, Rolex, Cartier - much of the burgeoning counterfeiting business revolves around what experts call the "flavor of the month": today's fashionable products.
One company that has recently discovered the pervasiveness of counterfeiting is B.U.M. Equipment, a division of Los Angeles-based Chauvin International Ltd. B.U.M., which makes sweat shirts, T-shirts, and other sports-wear, was virtually unknown a few years ago. But recently its products have become "hot": Sales have rocketed to more than $100 million annually.
JUST as B.U.M. products began to sell briskly at retailers such as Macy's and Robinson's, so cheap imitations started cropping up at flea markets around the country. B.U.M. executives began to worry that, like Louis Vuitton and Izod Lacoste before them, their brand name's cachet would be damaged by badly made rip-offs.
Following the lead of more established firms like Levi Strauss and Walt Disney Company, which have programs to combat forgers, B.U.M. decided to strike back. Although forging brand names is illegal under the 1946 Trademark Act, federal prosecutors are usually too burdened with more serious cases, many of them drug-related, to pursue criminal action against counterfeiters.
Virtually the only route open to manufacturers is costly, protracted civil litigation. In the 1970s, when product counterfeiting first became a major problem, company attorneys would try to get federal courts to issue restraining orders against the culprits. But since the forgers often evaded these orders, companies now pursue a more aggressive strategy: seizing phony merchandise under court order.
That is the route B.U.M. took, hiring private investigative firms and attorneys around the country to go after the forgers.
In Boston, B.U.M. hired a local detective agency which sent an agent to the Taunton, Mass., flea market in February to set up shop alongside other vendors. Before long, other merchants were offering to sell the detective counterfeit B.U.M. goods.
The detective put in a large order for 60 dozen "B.U.M." sweat shirts and shirts. He agreed to take delivery of the merchandise on April 29 in a parking lot in Dedham, Mass. When the counterfeiters showed up with the goods, the agency's detectives acting under a court order confiscated the merchandise and served temporary restraining orders.
But the case, which is in federal district court in Boston, shows how hard it is to stop counterfeiters. Two of the men apprehended had been fined and issued restraining orders last year for copying the B.U.M. logo.
Mark Schonfeld, a Boston attorney representing B.U.M., says most of the counterfeiters he catches are "small-fry." The company strategy is usually to offer these vendors a reduced fine in return for help in catching the manufacturers of the copies.
These big-time operators are far more elusive. Last year, B.U.M. filed suit against a company in Brockton, Mass., that it claimed was producing phony logos on sophisticated silk-screen equipment. But the owner of the company hired a lawyer and is fighting the charges in court.