Crackdown on Counterfeit Couture

Crackdown on Counterfeit Couture

Fashion design is finally getting the protection it deserves.   In April, the European Union renewed a selective distribution regulation,[1] set to expire in May, which will allow makers of brand name goods to decide how their products are distributed.  The regulation will also permit makers to sell exclusively to retailers with brick-and-mortar shops, as opposed to exclusively online retailers.[2]   According to luxury brand makers, such as Gucci and LVMH Moët Hennessy Louis Vuitton, this regulation will afford companies more control over the distribution of their goods, allowing companies greater monitoring of their brand image while simultaneously decreasing trade in counterfeit goods.[3]   Additionally, just this month, Italian police in the beach town of Jesolo fined an Austrian tourist € 1,000 ($1225 USD) for purchasing a knock-off Louis Vuitton purse.[4]  The crackdown stems from a new initiative by the local mayor to reduce the number of counterfeit vendors who peddle bags and apparel on the beach.[5]  As part of this effort, the town has formed a new twenty person squad.[6]  A similar effort is being undertaken in another Italian beach town; in Forte dei Marmi, police will use quad bikes to chase beach vendors.[7]

On the other side of the Atlantic, similar efforts are underway to stem the tide of counterfeit goods.  In the United States, which has generally been less protective than the E.U. of fashion and trademark law, a new trend has emerged in American jurisprudence that is friendlier to fashion industry protection.  On Friday, June 11th, a jury in the U.S. District Court for the Eastern District of Virginia found both Chong Lam and Siu Yung Chan guilty[8] of one count of conspiracy to traffic in counterfeit goods, two counts of trafficking in counterfeit handbags and other goods, and two counts of illegally smuggling counterfeit goods into the U.S.[9]  Defendants ran one of the largest counterfeit luxury goods operations in the United States, and dealt mostly in fake Burberry, Louis Vuitton, Gucci, Coach, Fendi and Chanel handbags.[10]  At trial, the U.S. attorney presented evidence showing that Lam and Chan had imported approximately 300,000 counterfeit luxury goods from China.[11] 

This ruling comes on the heels of a decision[12] from a federal judge in New York, ordering Liz Claiborne Inc. and its subsidiary, Lucky Brand Dungarees Inc., to pay $300,000 to Marcel Fashion Group for trademark infringement.[13]  In the decision, "Judge Laura Taylor Swain ruled Lucky Brand's name, along with its use of the phrase "get lucky" and other references to "lucky" violate a trademark for Marcel Fashion Group's "Get Lucky" clothing line."[14]  This order followed a verdict in favor of Marcel, in which jurors found that Lucky Brand infringed on Marcel's trademark.[15]

Although still awaiting further Congressional action, the Design Piracy Prohibition Act[16] is another important step toward securing greater design protection in the U.S.  This bill would take a more elementary approach than the aforementioned E.U. legislation, which acts in tandem with other fashion industry laws already in place in the region.  If enacted, the Design Piracy Prohibition Act would provide legal protections to fashion designs, including protecting "the appearance as a whole of an article of apparel, including its ornamentation" as well as "original elements of the article of apparel or the original arrangement or placement of original or non-original elements as incorporated in the overall appearance of the article of apparel."[17]  The Act provides liability and secondary liability for design infringement, and lays out monetary remedies for misrepresenting the legitimacy of a fashion design.[18]  This bill is a step in the right direction for fashion law protection in the United States, but no action on the bill has occurred since April 2009, leaving the fate of the bill, and the fate of design protection in the U.S., uncertain.

The European Union continues to be at the forefront of fashion design protection.  Important initial steps have been taken in the U.S., however, with the recent federal decision in US v. Lam, and the 2009 introduction of the Design Piracy Prevention Act in the House of Representatives.  If fashion industry protection is to become robust, more has to be done at the congressional level, instead of relying on courts to afford protection on a case-by-case basis.



[1] According to the new regulation, "selective distribution system means a distribution system where the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria and where these distributors undertake not to sell such goods or services to unauthorized distributors within the territory reserved by the supplier to operate that system." 

[2] See Joelle Diderich, Luxe Groups, E-tailers Approve of EU Rules, WOMEN'S WEAR DAILY, April 21, 2010.

[3] See Joelle Diderich, Luxe Groups, E-tailers Approve of EU Rules, WOMEN'S WEAR DAILY, April 21, 2010.

[4] See Tom Kington, The fake Louis Vuitton purse that seemed a bargain but cost euros 1,000, THE GUARDIAN (LONDON), June 8, 2010.

[5] See Tom Kington, The fake Louis Vuitton purse that seemed a bargain but cost euros 1,000, THE GUARDIAN (LONDON), June 8, 2010.

[6] See Tom Kington, The fake Louis Vuitton purse that seemed a bargain but cost euros 1,000, THE GUARDIAN (LONDON), June 8, 2010.

[7] See Tom Kington, The fake Louis Vuitton purse that seemed a bargain but cost euros 1,000, THE GUARDIAN (LONDON), June 8, 2010.

[8] See Verdict Form, United States v. Lam, et al., Case 3:07-cr-00374 (E.D. Va. 2010)

[9] See Alexandra Steigrad, Luxury Counterfeiters Found Guilty, WOMEN'S WEAR DAILY, June 11, 2010.

[10] See http://www.justice.gov/opa/pr/2010/June/10-crm-687.html.

[11] See http://www.justice.gov/opa/pr/2010/June/10-crm-687.html.

[12] See Alexandra Steigrad, Claiborne Told to Pay $300K in Trademark Case, WOMEN'S WEAR DAILY, June 3, 2010.

[13] See Alexandra Steigrad, Claiborne Told to Pay $300K in Trademark Case, WOMEN'S WEAR DAILY, June 3, 2010 .

[14] http://www.crainsnewyork.com/article/20100602/FREE/100609953.

[15] See Alexandra Steigrad, Claiborne Told to Pay $300K in Trademark Case, WOMEN'S WEAR DAILY, June 3, 2010.

[16] 2009 H.R. 2196

[17] 2009 H.R. 2196; 17 USCS § 1301(7)(B)

[18] See 2009 H.R. 2196; 17 USCS §§ 1323, 1327