California Apparel News

How do you protect your brand if hundreds of Chinese websites are selling knockoffs of your premium-denim jeans? 

If you’re True Religion, you take them to court and win a nearly $900 million judgment.

Last year, True Religion sued 106 defendants representing 282 Chinese websites that carried names such as TrueReglionJeans4Outlet.com, TrueReligion2Cheap.com and CheaperTrueReligionJeans.net. After making buys on the websites and verifying that the jeans were fakes, True Religion sued in U.S. District Court in New York to shut down the websites.

In a March 12 default judgment, Judge Harold Baer ruled that the websites were willfully counterfeiting the True Religion trademark and needed to shut down and pay up.

Deborah Greaves, in-house counsel for True Religion, said the Los Angeles company doesn’t really expect to collect all that money. But it was able to disable the websites and collect money from their PayPal accounts, which might be enough to cover attorneys’ fees.

However, as soon as True Religion shutters one website, another 20 pop up. “It’s like whack a mole,” said Greaves, who has been very aggressive in protecting the True Religion brand ever since she was hired by the company in 2007. “You just have to hope that after a while, when we chase them and disable them and make it difficult to do business, they will decide there is another brand they can focus on that won’t give them as much grief. Honestly, we can’t give up. What are we going to do? Roll over and let them destroy the brand, or fight?”

Greaves was speaking at a panel on protecting brand names and dealing with counterfeiting. It was held April 19 in Vernon, Calif., and organized by the California Fashion Association, a Los Angeles trade group representing the apparel and textile industry in California.

Joining Greaves on the panel were attorneys Mark Brutzkus of Ezra Brutzkus Gubner; Michelle Cooke of Steptoe & Johnson; Jeffrey Kapor of Buchalter Nemer; and Gregory Weisman of Ritholz, Levy, Sanders, Chidekel & Fields. Also joining the panel was Kevin Sullivan, executive vice president at Wells Fargo Capital Finance, and Ilse Metchek, president of the California Fashion Association.

Going to the Web

Metchek noted that the top three counterfeit purchases these days are music, movies and brand-name clothing. Fake products now represent 5 percent to 7 percent of all global trade.

About 25 percent of people who purchase fake goods know they are counterfeit. Another 73 percent bought the knockoffs just because they were there. “There are a lot of people buying fake Louis Vuitton bags who don’t know who he is,” Metchek said.

Greaves observed that counterfeiters were changing their tactics. In the past, many of the faux True Religion blue jeans were made in Chinese factories and often were shipped in large containers to the Port of Los Angeles or the Port of Long Beach.

The downside to that is if they were caught by customs officials, the entire shipment was confiscated and a great deal of money was lost.

Selling fake jeans through websites is a safer way of getting counterfeit goods across international borders. And tracking the owners of the websites is difficult. Sometimes Web operators steal identities and register the sites under those stolen names. “In a recent case where we served notice on an American website [selling fake True Religion jeans], we found out the woman we thought owned the website had purchased [something] from the website and they had stolen her identity to register the domain name,” Greaves said.

Apparel brands battling counterfeit websites had hoped that SOPA (the Stop Online Piracy Act) and PIPA (the Protect Intellectual-Property Act) would have been approved by Congress to give the brands more ammunition to shut down foreign websites selling counterfeit goods or infringing on intellectual property. But the two laws basically are dead after Google and other websites fought them.

Opponents believed the proposed legislation threatened free speech and innovation and enabled law enforcement to block access to entire Internet domains because of infringing content posted on a blog or website.

Greaves said that brands with a registered copyright can use the Digital Millennium Copyright Act to get a cease-and-desist order to shut down a domestic website selling fake goods. Recently, Louis Vuitton used the legislation to sue Akanoc Solutions in Northern California. The Internet-service provider was hosting numerous websites that sold counterfeit Louis Vuitton goods.

Louis Vuitton sent Akanoc 18 notices of trademark/copyright infringement, but Akanoc refused to remove the infringing websites. After a trial, Louis Vuitton won an $11 million judgment.

Brand building

To protect a brand name, the panel’s attorneys suggested coming up with a brand-portfolio strategy that takes into account where your brand will be sold and manufactured.

Mark Brutzkus said that brands not only have to register their trademarks in countries where their products are sold but in the countries where they are manufactured. Many counterfeit items come out of factories that are using extra labels or buttons to make the products look more genuine. “In your manufacturing agreement, you should make factories account for trims and rivets and anything to do with the manufacture of the good,” he said.

Greg Weisman explained that trademark registrations in foreign countries can get very expensive because registrations are not for just a brand name but for every apparel, accessories and raw-material group. “A leather handbag is different from a cloth handbag,” Weisman said.

He also urged companies not to develop various logos for different products or sub-brands. Each new logo or sub-brand has to have its own registration, which gets expensive.

In addition, companies need to research each new brand name and logo to make sure there are no other claimants. “The risk goes deep,” he said. “If you put these goods into commerce and there is a claimant, they can go after your retailer to seek indemnity,” he noted.

Tips for protecting a brand’s name included meeting with U.S. customs officials who work at the ports to inform them about your brand and train them to detect fake goods.

To protect themselves, many brands subscribe to a trademark-watch service that notifies them when someone in a foreign country tries to register their trademark or a name similar to it.