Following a decline last year, seizures of counterfeit luxury goods are back on the rise in 2021.
Eddy Wang, deputy special agent in charge of Homeland Security Investigations in Los Angeles, said the Department of Homeland Security (DHS) projects it will seize “nearly $1 billion worth of counterfeit luxury goods” between the 2020 and 2021 fiscal years—periods it defines as ending Sept. 30.
After a year where much of the department’s power went toward fighting counterfeit PPE and Covid-19 testing kits, Wang said, the DHS is anticipating a 38 percent increase in the number of items seized in fiscal 2021 compared to 2020, a 73 percent jump in the value of items seized and a 20 percent decline in the number of seizures. “So that kind of tells us that there are larger shipments of these counterfeit goods coming over,” Wang added.
The products traditionally most counterfeited—handbags, wallets, apparel, belts and footwear—continue to dominate, Wang said. What has changed is the skill and speed with which counterfeiters produce their fakes. For the most popular of items—Nike’s Dior and Travis Scott collaborations, for example—Wang said counterfeiters are now sending over shipments “almost contemporaneous” with official release dates.
“The counterfeiters, the counterfeit products… [have] evolved immensely,” Wang said. “The quality is much, much better. But what hasn’t changed is that counterfeiting is a low-risk and a high-reward crime of opportunity.”
Wang, along with leaders from LVMH and Kering, discussed the strategies brands can employ to fight counterfeiters and intellectual property infringement earlier this month at the Fashion Innovation Alliance’s Fashion Policy and Social Justice Summit.
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John Maltbie, director of IP, civil enforcement, Louis Vuitton Americas, has seen firsthand the speed with which counterfeiters can roll out fakes. In the case of one 2017 release, a collaboration between Louis Vuitton and Supreme, the label saw counterfeits popping up within days, he said.
“Counterfeiters are obviously quick to react, very savvy in terms of getting their product on the market,” Maltbie said. “But in terms of interacting with HSI, it’s just being responsive. I mean, you can register your trademarks and you can record them with customs, but if you don’t answer the phone and respond when they ask you for feedback, you’ve sort of wasted your money.”
Ewa Abrams, general counsel, Kering Americas, said “the name of the game” is collaboration. “We, as lawyers and those in charge of brand enforcement, are collaborating with law enforcement.” Given the proliferation of counterfeits online and on social media, brands are forced to use physical means—seizures, lawsuits, cease and desist letters—to fight what is essentially a digital problem, she said. To play catch up, businesses must rely on law enforcement, Abrams added.
Olivera Medenica, a partner at Dunnington Bartholow & Miller, works as an outside counsel for brands. She too stressed the importance of communicating with law enforcement and creating a predictable flow of information. This can involve things as simple as giving customs somebody to contact when recording a trademark, she said.
“We make it easy for law enforcement to contact us so that we don’t become a second priority,” Medenica added. “It’s about relationships and making it easy for both sides.”
Working with law enforcement may be important, but collaboration with others can be a central element of some companies’ business. To avoid any tricky disagreements down the line over intellectual property, Abrams recommended brands prioritize transparency.
“There are different components that each party brings to the table, whether it be a decal, a shoe design, a shape, a colorway, and it’s important to identify which brand and which designer owns that piece, how the collaboration works together, how long it’s used for… and what approval rates are attached to it,” Abrams said.
Early transparency is also important should issues with counterfeiting arise. This means spelling out things like who picks up the tab should infringement occur and who receives any potential damages. “Sometimes those aren’t sort of front of mind when you’re at the contract stage, but it will—if it’s a successful collaboration—it will certainly come up at some point,” Maltbie said.
Combining environmental and social justice
As companies explore various avenues for lowering their environmental impact, many have turned to regenerative agriculture. In April, Allbirds committed to sourcing 100 percent of its wool products from regenerative sources by December 2025. The North Face’s partnership with agricultural innovation company Indigo Ag is expected to roll out its first apparel items next fall. The outdoor brand’s parent company, VF Corp., plans on sourcing 100 percent of its natural materials from regenerative agriculture by 2030.
Whitney Bauck, an independent journalist who has written about regenerative agriculture, discussed the practice in another panel at the summit. She advised brands interested in adopting regenerative practices to invest in the people who have utilized them for years—namely indigenous and colonized communities.
“There are indigenous land trusts and indigenous agriculturists who are trying to preserve the practices that were handed down to them, as well as sort of the mindset behind all of that,” Bauck said. “You can’t just rip this practice out of context and apply it somewhere else and think everything’s going to work out. There really is a sort of holistic worldview that comes into this form of land management.”
Tracy Reese, the designer behind the sustainable fashion line Hope for Flowers, said part of her brand’s mission is not simply responsible design, but also educating her community on the unseen costs of fashion.
Specifically, she highlighted the skewed power dynamic that has long existed between brands and manufacturers. Looking back on when she first entered the industry more than 30 years ago, Reese recalled how uncomfortable she felt at first with “this ‘you have to do this because I’m the customer’ kind of attitude” that brands seemed to have.
“There was always this rush to appease the customer, who was usually Caucasian,” Reese said. “It became this sort of colonial relationship of ‘You in this country are kind of at the service of the Western world.’”
Until the fashion industry moves away from this mindset and thinks of its manufacturing partners as equals, Reese said, the issues with equity—whether that’s in terms of environmental justice or the ability to make a living wage—will persist. In her view, the solution boils down to education.
“What concerns me a lot is people in Black and brown communities, we don’t realize that we are part of this cycle of abuse and we’re abusing our own sisters and brothers in other countries with our addiction to inexpensive throwaway items,” Reese said. “And we have to educate our communities that even though you might not have hundreds and hundreds of dollars to spend on clothing, it’s better to buy less and buy quality than to buy a bunch of cheap things and dispose of them.”