OpSec Blog

 Insights on Anti-Counterfeiting & Brand Protection Solutions

Commentary: Case Clothesed

Posted by admin on Jul 12, 2010 9:16:26 AM
A United States District Court ruled in favor of Fendi this week against the bargain retailer Filene’s Basement, ordering the defendant to pay punitive damages and as well as restrictions on the sale of Fendi products without Fendi’s written permission.  They must also turn over all in-stock Fendi items to the fashion house.  Fendi also recently received a settlement from Burlington Coat factory on the same grounds. Earlier this year, Burberry sued T.J. Maxx and Marshalls over the sale of alleged counterfeits.

The perception of discount retailers has changed over the past few years.  Now, more and more, high-end goods appear on these shelves and many  designers have partnered with these stores and produced ready-to-wear lines.  H&M comes to mind when thinking of one of the first chains to bridge the gap between couture and off the rack.  Gap, Target, and K-Mart are also part of this movement.  As I read about the verdict, I began to think of my shopping experiences.  I, as many of the readers out there, happen to love a bargain.  Why not? You save money and feel a sense of accomplishment—you’ve become an educated consumer who makes savvy choices, and your wallet thanks you too.  Since these stores have become a more popular destination for discounted products, we have grown accustomed to the highly reduced prices offered even if it’s from a 2008 collection (most of us are happy to own ‘the best’ regardless of when it hit the runway).  Reminiscing on all the ‘deals’ I’ve acquired, I began to wonder if some of the deals I believed I got was because the item was actually a fake or diverted product.  Come to think of it, a designer skirt I bought a few years back had Japanese writing on the tag—was this a grey market product, intended to be sold in Japan but somehow made its way to the US?  Was I so blinded by price that I purchased diverted goods?

This brings the implications of the Fendi v. Filene's Basement case full circle.  Consumers do not want to be duped when they believe they are buying from a trusted source, discount retailers do not want to sell counterfeit goods unwittingly, and brand owners want to protect their consumers, image, revenues, and trademarks.

It is quite clear that brands, especially ones with a high percentage of knock-offs like  luxury designers, will make an example of how serious they are about the theft of their intellectual property and trademarks. Coach just recently sued the city of Chicago for knock-off items being sold at flea markets.  The landscape also changes as the presence of many discounted retailers that carry designer goods are actually unauthorized distributors of the products. This convolutes the supply chain and provides one more hole for diverted or counterfeit products to seep in.  It was not proven that Filene’s basement had any knowledge of the fakes being sold but the product was identified definitively as counterfeits.

Keep your eyes peeled for more of these cases to come.  Until next time, case clothesed.

Please visit OpSec Security for anti-counterfeiting and brand protection solutions.

Topics: Gray Market Diversion, Luxury Goods

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