Monday, 22 February 2010

Fendi defends its rights

A success story from across the pond: news has reached Fashionista that Fendi has won a long standing legal wrangle in New York against a discount retailer selling counterfeit Fendi branded goods for over 20 years.

Burlington Coat Factory Warehouse Corp. has been ordered to pay $4.7 million in damages for knowingly infringing Fendi's trade marks. This is a massive damages award and one which reflects the severity of continued trade mark infringement spanning more than 2 decades. The claim cannot have come as a shock to Burlington, whose continued sale of counterfeit Fendi goods was in breach of an injunction granted against it in 1987 for the same infringing activity.

Fendi first sued Burlington in 1986 for the purchase of counterfeit Fendi marked goods. Despite the 1987 injunction preventing Burlington from sellling any Fendi goods without Fendi's permission (which, let's face it, Fendi are unlikely to give), Burlington continued to do so until Fendi eventually lost patience and sued for infringement in 2006. If the fear of breaching a court injunction wasn't enough to stop Burlington, maybe a multi-million dollar fine will be?

So has justice triumphed at last? The sale of counterfeit goods is an issue which plagues the luxury fashion houses, devauling and potentially runing brands and reputations. At worst, a brand may need to be abandoned if counterfeits have led to the brand being perceived as "chavvy" or anything less than luxurious. At best, a huge injection of capital and excellent PR and advertising will be needed to turn around public perception. Either way, the threat to brand owners posed by counterfeit goods - which so many consumers laugh off as being irrelevant or fabricated - is a real one.

The counterfeit item appeals to those consumers who want to buy into the look of a luxury brand without paying the price tag associated with it or waiting on the waiting list. But the price tag and the waiting lists are there for a reason: to acknowledge the time, effort and creativity taken to develop the coveted item; to reflect the quality of the workmanship and materials used; and, of course, to maintain exclusivity and to afford the brand - and its customers - a certain status. But where the coveted bag is seen adorning every other arm, the exclusivity is lost and with it, the brand's value and reputation (and, admittedly, a chunk of its profits).

So will an almost $5 million fine be a wake up call for counterfeiters? Call her cynical, but Fashionista says "no". As long as there is demand, there will always be supply. For every infringer caught and fined, there are many many more. On the plus side however, it is not just the manufacturers of fakes who are liable - sellers can't escape - and that has to be some (small) comfort to brand owners, as sellers are easier to identify and sue.

The war against counterfeiters may not have been won, but at least this one battle has been, and that's a good start.


Steve said...

Fashionista is quite an economist. That's why the trademark owners have to go after the retailers -- to reduce demand.