Elizabeth Holmes writes for the Wall Street Journal that increasingly “fake” handbags,
are made of high-quality materials, with zippers and grommets boasting the brand name, and are stamped with what appears to be the proper manufacturing location and date. They’re fooling even savvy shoppers, especially online.
As the quality has increased, so have the prices. Karineh Gurjian-Angelo snagged an Yves Saint Laurent bag on eBay for $300 and when it arrived the quality made her think, “Wow, it is real.”
Of course it’s a real bag. She just bought it for a fraction of what YSL sells theirs for–more than $1,500. Who made the bag doesn’t make it less real.
Spying a Channel bag in a consignment store that she thought had been manufactured by Channel, student and fashion blogger Vickie Laliotis, put the bag to the smell test. “I figured, well, why would they make a fake out of such nice leather?”
To sell more bags perhaps?
However, the War on Bags continues. Holmes writes,
Last year, U.S. agents conducted nearly 20,000 seizures of goods that infringed on intellectual property rights, an increase of 34% from 2010, according to a report from U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement. In 2001, there were about 3,600 seizures.
Footwear was the top commodity seized, the government agencies said. Clothes and handbags ranked third and fourth, respectively.
Success with this war will match that of the wars on drugs, poverty, and terrorism.
“Fake” bag producers continue to improve their products. Elizabeth Bernstein, whose job it is to spot knock offs for Portero, an online second-hand luxury-goods retailer says, “They’re making better and better fakes every day.”
{ 68 comments }
I can testify to the amazing quality of some fakes. It is hard to spot the difference. Not much of a handbag afficiando myself, I do enjoy some measure of happiness when wifey’s eyes sparkle at the sight of a new, awesome knockoff bag.
Here is the irony and of course, the unintended consequences of any “war on…”: These fake bag makers have rightfully improved their product and raised their prices. Now instead of being cheap and low quality knock-offs that anyone can spot, they are one small step away from being “designer” companies themselves. All they need is the marketing infrastructure to understand how to capitalize on that. Either way, competition is going to win, it’s just that now these copy-cats can directly compete with the high-end. They would have been better off letting the copy-cats copy and keeping the market segmentation there. Now there will really be no differentiation.
The true irony is that genuine bags will be mistaken for fake ones and fake bags will be mistaken for real ones. Cases of customs seizing the genuine stuff will happen. This is so vindicating.
But if somebody claims their bag was made by Channel or YSL and it wasn’t, that’s fraud. That’s different than the IP issue.
True. However, Channel and YSL would have no case in the matter. The party wronged was the one who purchased the bag, and the reparations would be limited to a full refund on the bag itself because proving any damages beyond that point for buying a fashion accessory are effectively impossible.
“But if somebody claims their bag was made by Channel or YSL and it wasn’t, that’s fraud. That’s different than the IP issue.”
Uh? Here’s the scenario you’re describing: two women meet, the first tells the second, “See this bag? It’s a Channel.” The second woman looks at the bag and says, “Oh, no, it is not. You’re lying and I’ll sue you for fraud.”
I seriously hope you’re not suggesting that every single lie – even when it causes no objective damage – constitutes “fraud”.
It’s not fraud because Woman A didn’t promise something to Woman B conditional on the bag being Channel and then failed to deliver. Woman A simply made a claim that the bag was Channel.
First off, it’s “CHANEL”
Then,
>>But if somebody claims their bag was made by Channel or YSL and it wasn’t, that’s fraud. That’s different than the IP issue.
If you don’t want a “fake” you know where to find it. If you want a “fake”, you know where to find it. End of story.
This reminds me of:
Getting up, he hurried into his study, returned at once with two cigarette lighters which he set down on the coffee table. “Look at these. Look the same, don’t they? Well, listen. One has historicity in it.” He grinned at her. “Pick them up. Go ahead. One’s worth, oh, maybe forty or fifty thousand dollars on the collectors’ market.”
The girl gingerly picked up the two lighters and examined them.
“Don’t you feel it?” he kidded her. “The historicity?”
She said, “What is ‘historicity’?”
“When a thing has history in it. Listen. One of those two Zippo lighters was in Franklin D. Roosevelt’s pocket when he was assassinated. And one wasn’t. One has historicity, a hell of a lot of it. As much as any object ever had. And one has nothing. Can you feel it?” He nudged her. “You can’t. You can’t tell which is which. There’s no ‘mystical plasmic presence,’ no ‘aura’ around it.”
“Gee,” the girl said, awed. “Is that really true? That he had one of those on him that day?”
“Sure. And I know which it is. You see my point. It’s all a big racket; they’re playing it on themselves. I mean, a gun goes through a famous battle, like the Meuse-Argonne, and it’s the same as if it hadn’t, unless you know. It’s in here.” He tapped his head. “In the mind, not the gun. I used to be a collector. In fact, that’s how I got into this business. I collected stamps. Early British colonies.”
Poor collectors, FDR wasn’t assassinated.
Dammit man, that’s from a PKD story. FDR _was_ assassinated in there.
Never heard of it.
http://en.wikipedia.org/wiki/The_Man_in_the_High_Castle
Full text at one of those literature sites hosted in the RUS.
I’ll check it out sometime.
I’m waiting for the day that the knock-offs are better than the original.
for what they cost, I’m pretty sure they have always been.
It worked out that way for ‘PC compatible’ computers.
oh hat tip:
Anybody that is curious on what allowed PC compatible revolution you should look the pain that had to go through to reverse engineer the IBM bios and create a copyright-free functional equivalent of it. If IBM was able to convince the courts that the PC clones infringed on IBM’s copyright or they had some patent over a function of the BIOS then the PC revolution would of never happened.
http://en.wikipedia.org/wiki/Columbia_Data_Products
I bought a $12 pair of knock-off Orange PUMA shoes in Beijing which are infinitely more comfortable than the ones made in Germany. Having owned both, the knock-offs are way more gentle on my knees.
It’s a good thing that the government is protecting me from cheap, quality merchandise.
Can you imagine what would happen if our children got a hold of affordable, high-quality merchandise?
I’m glad someone’s looking out for the children (and that someone is government. the government cares)
No kidding. Remember that browser called Internet Explorer they almost gave away for free?
I also remember all the high quality open source software, such as LAME mp3 encoder, GhostScript PDF distillers (parts of), and ffmpeg multi-codec decoder/encoder that the government says I can’t use because they do not charge any money for it.
Yay patent system!
>browser called Internet Explorer they almost gave away for free
Well,ok, it was like a bloody AIDS-infected second hand syringe but some people used it I hear.
To illustrate my sheer stupidity regarding the world in which I live, it required many discussions with my intellectual superiors to understand in what reality the government spent resources tracking and punishing these imitators.
I think I can follow the tortured logic, although every line of reasoning seems to end badly in practice.
WOW. This is a very good anecdote, and I say that with sincere earnest. I am learning of the Austrian School, Libertarian ways so to speak, and this is another example of Government fallacies with unintended consequences.
With all due respect, how does the quality of the fake have anything to do with 1) if it IS a fake and 2) whether that’s good or bad.
What I think you are really pointing out here is that manufacturers who make fakes are capable of making bags of approximately the same quality levels as the originals. This is no different than saying that a particular counterfeiter prints money that is almost exactly as “good” as the authentic bills.
The issue is not quality. The issue is who owns the brand? If the brand had no value to the counterfeiters, they would just sell high quality bags under their own brand.
Obviously, the brand value is being misappropriated to someone who has not incurred the investment to make it valuable.
I love fakes. Much to her dismay, I sometimes beseech my lady to dress up like certain Hollywood babes for my pure selfish satisfaction. Is she thus depriving the real hollywood dames something? Should I send a check to CAA? Should the check be drawn on “good” fiat currency or home made?
Bitcoin
Wildberry,
I thought you said ideas cannot be owned? Nevertheless, the issue is of course whether the customer was defrauded or not. What a third party, the so called “brand owner”, thinks about the situation, is irrelevant. Unless, of course, causality is a sufficient condition for a rights violation, which you cowardly refuse to clarify.
Do you really think calling me a coward in every post obligates me to respond yet again to your drivel?
Your first sentence is non sequitur. The rest is an example of how you turn the facts on their head to reach your foregone conclusion.
This is not JUST an issue of whether the customer was defrauded. The brand owner is not a third party, but a party with a cause of action against the person “passing off”.
As to the last (you now opening and closing with “coward”?), check you mail.
http://blog.mises.org/17442/how-government-values-life-and-ip/comment-page-1/#comment-790728
No, in fact this is all that is going on. And that is ONLY if the person who is buying the purse does not already understand that it’s a knock-off going into the purchase.
If the person selling the knock-off purse is not hiding the fact that it’s a knock-off then there is no fraud against any party involved at all.
You say this as if there is no controversey about this. Is that what you mean, or only that your VIEW is that this is the only interpreation of the facts that could be possibly acknowledged?
You stated your opinion, I stated mine.
Wildberry,
It is not a non-sequitur. It is a simple composite sentence, which you failed to respond to. So you think that ideas can be owned or not?
We’re now back to the causality, which you fail to address for months. The only reason why you conclude that the “brand owner” is somehow involved in this is that there is a causal relationship between the copied bag, and an original bag. You do not know what happened in between, whether there are any contractual violations or theft involved. The copied bag obviously does not belong to the manufacturer of the original, and probably never did. So you’re again stuck without a clear explanation why your claim is relevant.
MERE IDEAS CANNOT BE OWNED.
The issue is not causality, whatever you might mean in this instance by “causality”.
This is a trademark problem.
Sincerely,
“MERE IDEAS CANNOT BE OWNED.” – But outside of throwing a body of law and legal precedent you can’t properly delineate where IP becomes more than “mere” ideas.
“The issue is not causality, whatever you might mean in this instance by “causality”.”
If you don’t understand his use of the term how can you know that it’s not the issue?
But beyond that, the meaning isn’t changing between instances. Causality has always been in reference to the act that both preceded and caused the original to come into existence.
If you write a book the act of writing was the cause of the original manuscript of the book. In the case of a trademark the basis is registering with the government.
However, you just called the one who registered the trademark an “owner.” However, what is it that they own? Apparently they own a word or phrase, but you say that ideas aren’t ownable. How can it be that you think it’s not ok to own ideas but it is ok to own a handful of words or even just a single word in certain contexts?
It’s clearly inconsistent to call this ownership if you are going to declare that ideas can’t be owned, so either your language is imprecise or you are conflating trademark with copyright.
The reason that we will “conflate” these is we don’t see any of them as legitimate ownership and all are merely government privileges granted by limiting others rights.
Since you do view them in that way there is the strong appearance of intellectual dishonesty when you start off talking about the “owner” of a brand and then jump to saying “This is a trademark problem” whenever the error is pointed out.
Wildberry,
so, the problem is not that someone is producing/selling a copied bag, but that they are using the same logo as the original bag?
Wildberry,
You might recall that many months ago, I said that if you cannot provide an example of interaction with ideas without involvement of physical property, that proves that you are contradicting yourself. I was claiming that if I was wrong, it would be trivial to refute me by providing a counterexample. You tried to wriggle out of that very hard, to the extent where you started denying elementary logic, until you started ignoring it.
Now you admit that I was correct all along. By IP, you do not mean the ownership of abstract concepts. You mean the ownership of physical goods, which already belong to someone else. There is no third option.
You’re screwed now.
@Matthew Swaringen July 1, 2011 at 5:15 pm
With all due respect, this is rediculous. If you think there is no distinction between the idea of “sun” and the novel, “The Sun Also Rises” then I would like to hear how you would argue that no reasonable, rational person can tell the difference.
An another approach would be for you to familiarize yourself with the legal distinction made in the copyright statute and case law, or read a book about copyrights that gives you a thurough understanding.
Can you imagine a “debate” on AET between, say Mises and Hayek, and someone that has never cracked a book on the subject, asking in a blog “So, what exactly to dyou mean by praxeology? You have never deliliated where sociology ends and praxeology begins”.
And even more relevant, in the act of copying, the original is the actual cause of the copy. The proximate cause is the volitional act of the copier.
A trademark is not “caused” by registering. A trade mark is caused by the manufacturer, for example, creating a relationship between the mark and his goods. That is what “causes” a trademark.
As for the rest, you seem to be confused between the meaning of copyright and trademark.
Finally, whether you believe ownership rights are legitimate has nothing to do with the conflating of distinctions in order to make that case. If you have a case, it should be possible to make it without distorting the meaning of words to suit your purpose.
I have never seen any argument that demonstrates that there is no actual distinction betwen “ideas” and “an original work or authorship”. Care to be the first?
@ Peter Surda July 2, 2011 at 2:13 am
You mean you just now figured out what I meant when I said this is a trademark problem?
I think that should tell you something about how prepared you are to defend your anti-IP position. You don’t seem to appreciate the distinction between copyrights and trademarks.
Perhaps you and Matthew could team up as study partners.
Wildberry,
No Wildberry, my point is that you probably do not understand your own argument.
I posed a clear question. Where’s the answer? Nowhere. Instead you start complaining again.
I explained it several times already, only for you to ignore it. Your hypocrisy knows no bounds.
But if you ask Stephan Kinsella, he will tell you that intellectual property does not exist so the counterfeiters are justified, besides their product looks and feel the same. Just like my fake McDonald’s example.
The real ones are produced in some authorized factory. What if the producers of the fake ones contacted these authorized factories and had them produce more than they were contracted to; would what they produce be fakes or real ones? Presumably they’d be real. Would that change anything? If not, then the fact that the ones under discussion are different, fake, isn’t relevant (except to any buyers who believed they were the real thing, but that’s not the focus). If this hypothetical situation were the case, they would merely be cracking down on sales of the exact same handbags that were merely produced beyond the factory’s quota. I believe that the current situation isn’t fundamentally any different than thus.
No. Very possible the “real” ones are produced in the same Malaysian sweat shop as the fakes. Buy Crocs from eBay for $9. They are “real”. Prove they are not. Plus the stamps are cool.
Shay, you almost accurately described what I heard they do in China. Let’s say we have a factory working on 3 shifts a day, two of which are ‘official’ and produce the goods for which they were contracted for. The 3rd shift is ‘off the books’ and made with the same capital equipment with slightly inferior materials, and sold as low priced knockoffs.
Personally, I don’t really see anything wrong, except the part of the cost of the capital equipment and space shd have been charged to the 3rd shift.
Having experience dealing with large numbers of flash media from manufacturers in china I know that name-brand companies will actually go to the ‘gray market’ and purchase knock-offs of their own brands in order to pad out orders.
That is… if they are running short then they will go and buy products that infringe on their own trademarks as long as the knock-off is good enough quality.
Yes.
But using this blog as a platform for the name calling, again. Guys! C’mon.
That is in itself potentially fraudulent, isn’t it? On the other hand, if the “white market” manufacturer is sourcing their product from other manufacturers, then they are in fact putting their own reputation on the line, which implies that they are “proper” sources of manufacturing.
I think the controversial case is where a supplier sells under a brand without the consent or knowledge of that trademark owner.
That is what you get when you throw copyrights, patents and trademarks all in the same basket.
The issue discussed in this article has nothing to do with the “intellectual property” behind bags and clothing items.
The article is about manufacturers that engage in fraud, namely, selling counterfeit merchandise.
The question of whether the State is the appropriate agent to enforce trademarks is a separate problem.
Yes, Augusto. Exactly right.
But trademark IS intellectual property claim.
“The article is about manufacturers that engage in fraud, namely, selling counterfeit merchandise.”
Fraud as defined by whom? Clients or trademark “owners”?:) As was said before – if you want original you know where to go. People mostly buy “counterfeit merchandise” knowingly – in rest of the cases you can always return your purchase and don’t recommend this particular seller to anyone else. Thus banning “counterfeit merchandise” is not in the best interest of consumer. which would face limited competition. In a free market to stay on top you must outdo not only competition but also yourself. Literally in this case
Fraud is an issue between seller and buyer.
Trademark infringement is an issue between the holder of the trademark, and a manufacturer/seller who brands their goods with a brand that misrepresents their true origin of manufacture.
If the brand mark is part of the economic calculation of the buyer, misappropriating that mark is an illegal taking.
Funny how you switch the debate when you’re disproved. Nobody here’s defending people who sell copies as the genuine article.
Are you reading what I said, or just giving me heat?
The issue here is that some are saying that the ONLY issue is fraud between buyer and seller. I disagree, since the use of someone else’s mark is a misrepresentation of the origin of the product, one of the main purposes of trademark protection.
In addition, the mark owner has an investment that has resulted in consumer good will towards that brand. To label your products with that brand is a taking, causing harm to the mark holder.
What has been disproved, and where is the switch?
Wildberry,
Yet, you fail to provide an explanation why this affects rights of anyone else than the buyer. The “trademark owner” is not a party to the contract, nor does he own the good being traded. Why is his opinion relevant in any way? I’ll give you a hint:
- because the trade is causally related to a good the “trademark owner” produced
- because the “trademark owner” does not like it
I.e. we’re back to the question that you refuse to answer.
Since you guys really want to argue about the nature of your arguments, rather than the actual factual basis of the arguments, I think I’m gonna go off on a little tangent here. Which usually brings all these posts to a crashing halt. First, it’s all a bunch of legal-ese. Suppose you have an idea for a great new wheelbarrow and you tell someone about it, and they say, ‘let’s build it’. And you say ‘don’t wanna’. And they go ahead and build it. Which side of the fence does that fall on? And second, or “B” as some of you might need to follow, and I want you to follow. The trademark thing has gotten to be kind of a pimp and whore relationship. KitchenAid used to be considered one of the top brands in appliances, price wise and quality. They have a line of kitchen utensils like whisks, that are THE worst on the market. You are WAY better off buying label-less at Sam’s Club. And the tub on my KitchenAid washer showed a rust spot the week after the warantee expired. I never had a rust spot before and haven’t had one since. Please, don’t bring TSP into this mix.
I long for the day people will buy stuff for what they’re worth and useful for, not for bragging about how luxurious and expensive it is.
Why won’t people buy breifcases because they are useful and look good instead of because it’s called Louis Vuitton etc.
People buy to show off, status symbol, to show they are better than you etc. They couldn’t care less about the bag because a 5 cent grocery store bag could be used to transport your goods.
I think I will buy a grocery store bag for five cents and tape a Channel brand on it, LOL
A bag is a bag, right ? If you insist that it’s written Channel on it, no problem, that can be arranged, I’ve got a hi-liter pen.
What if the buyer bought the same bag at a flea market but there was no brand name on it, then put the Channel brand on it by himself, who’s the guilty party now ?
What if a company would sell no name bags that look and feel the same as the original and shipped the brand name tag separately for the buyer to place on the bag ?
Who’s the counterfeiter now ? And such a stratagem would make it across the border easily.
Once again: Chanel
Oh the irony
My heart is bursting with admiration for that bon mot. And so cool the way you didn’t say, “GOTCHA.” But I was not the first to bring up the misspelling which is why I said ‘once again.’ Still I am so f-ing flattered. Today’s blog subject, cattle branding.
. . . and how can I find out how to do that cool linking thing?
Thanks for the correction Madame Virginia Llorca.
I have get it ,thanks.I have get it ,thanks.
Even big companies fake their own products, by producing cheaper knock-offs and selling them through factory outlets as if they are the real thing. What should they do, sue themselves? Or rather, maybe some of the customers who fall for this racket should sue them for fraud.
Sometimes they don’t even bother to push their own knockoffs through special channels such as outlet stores, they simply move production to a different factory which uses cheaper materials and less quality control, and carry on selling the gadgets through their usual channels, eating up and destroying their own brand. Which leads to the question, what does a “brand name” or “trademark” really mean? If you’re buying cost-reduced crap because you’re underemployed, underpaid, you have no savings and no home equity, and your money is eaten up by income tax, sales tax and property tax then do you really care whether you bought “genuine” or “fake” cost-reduced crap?
It’s the same old lesson: inflation destroys people, destroys companies, destroys reputations, destroys morality, destroys civilization.
for what they cost, I’m pretty sure they have always been.nice post
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