You can ask anyone that knows me — there are not that many things that can bring me as much joy as shopping.
I know, it sounds shallow, but I can’t help it. I adore shopping, and all the tasks associated with finding and purchasing that “perfect” item. Fashion and style has long been one of my passions. If I could sit at home and fawn over style magazines, review blogs, and develop post after post of my own outfits, I would certainly love to do so.
But, alas, a girl’s got to eat (and shop obviously) so, therefore, my world of billable hours drones on.
Last week, the Wall Street Journal reported on a seemingly trite issue. A 31-year old student and Coach employee, Gina Kim, bought a $428 handbag with her employee discount. She realized she was constantly hesitant to use it due to the white material and her fear of it getting stained.
What did she decide to do? Like many others, she put it on eBay, hoping to find the designer handbag a different home. Um, WSJ, why are you reporting on this again? The news world slow that day? Well, here’s why — shortly after Gina submitted her eBay ad, she received a cease-and-desist letter from a law firm representing Coach.
In the letter, Coach accused her of selling counterfeit goods and threatened her with up to $2 million in penalties. The letter further instructed her to sign a statement admitting wrongdoing, along with a demand that she pay Coach $300. After receiving the letter, Gina wrote the law firm back through counsel, stating that Coach’s allegations were false. After this response to Coach, Gina received notification from eBay that her post was being reinstated on the site.
What did Coach do in its due diligence before sending its cease-and-desist letter to Gina? We aren’t sure. On first glance, it seems like Coach just sends these letters to anyone and everyone attempting to resell a Coach product. This is part of the reason why Gina and her attorneys filed a complaint in Seattle federal court alleging violations of the state Consumer Protection Act, along with additional claims.
The lawsuit requests class-action status and claims that Coach’s real motive for sending out these letters is to squeeze out the resale of used items. This would force people to pay MSRP to Coach for a new bag.
Jay Carlson, one of Gina’s attorneys, makes a good point. “If Coach wants to send letters threatening $2 million lawsuits against their own customers, they should at least do minimal investigation to see whether those claims are accurate. What we’re interested to see through discovery is how many people got this letter, got scared, signed it and simply paid Coach.”
While no one wants to advocate the bullying of consumers with outrageous threats of multimillion-dollar legal action (especially when they have not done any investigations to back up their claims), how do designers and retailers protect their products? Everyone knows that counterfeiting is a huge issue for designers and retailers — I mean, just take a walk down a busy D.C. neighborhood and you will encounter at least one knock-off handbag kiosk every few blocks.
Companies should have the rights to monitor sites such as Craigslist and eBay for counterfeit items, but they should also be mindful that consumers have a right to sell legitimate secondhand items. An Associated Press account of Gina’s story quoted an eBay representative noting that the company has a program called Verified Rights Owners, through which companies can flag items that appear to be counterfeit so that the auctions are shut down.
Joseph LaRocca, a senior advisor for asset protection at the National Retail Federation, said companies take a variety of steps to protect their intellectual property, including using programs like eBay’s, hiring contractors to search for knockoffs online and hiring private investigators. However, these programs should not infringe on a consumer’s right to resell products they originally purchased legitimately.
“That’s brand penetration,” he said. “It’s a good thing when everyone on the street is carrying your product. You just want to make sure they paid for it.”
LaRocca and Madison Riley, managing director at the retail consulting firm Kurt Salmon, both said companies typically investigate before taking legal action. This may involve buying items from a suspect seller and figuring out whether they’re really counterfeit.
This makes you wonder what Coach’s motives really are, considering a case like Gina’s. They seem to have sent out letters without any real suspicions that counterfeit products were being sold.
It will be interesting to see how the level of copyright protection in the world of fashion design evolves. A boutique group of IP lawyers who practice in the fashion world may see an increase in the need for their services in the next few years.
Late last year, the Innovative Design Protection and Piracy Prevention Act was unanimously passed by the Senate Judiciary Committee. The bill was sponsored by U.S. Sen. Charles Schumer, who worked with the Council of Fashion Designers of America and the American Apparel and Footwear Association to develop the legislation.
The bill provides three years of copyright protection for “unique and original designs.” It also provides an added level to the current protection of prints, unique elements, and jewelry. The maximum penalty is $50,000 in the aggregate or $1 per counterfeit item.
But you see what I mean when I say that Fashion IP lawyers are hearing the “cha-ching” as you try and decipher what exactly “unique and original designs” means. The bill amended Chapter 13 of the Copyright Act to create protection for original and novel fashion and accessory designers based upon a “substantially identical” standard, but that hardly creates a “bright-line” rule for interpretation.
Like I said, I have never practiced in the complicated world of IP for the fashion industry. What advice can I offer? Stick to reputable sample sale sites like Gilt Groupe, HauteLook, ideeli, and Ruelala. If it sounds too good to be true, it’s probably fake. So, if you see a pair of $800 Louboutins for a fraction of the price, think long and hard before you pull the trigger.