Search on Google anything connected with the fashion industry fighting against counterfeits and you will get all sorts of features: some of them will provide you with percentages of seized fake products; others will maybe offer readers tips on how to spot a fake product and then there are the various articles about e-commerce giants à la Amazon or Alibaba introducing new policies to remove sellers offering counterfeit goods from their sites.
If you're a fashion company, depending on the country where you're based or your resources, you may turn to teams of expert lawyers or to tech solutions tailored on your needs such as the blockchain, that can help recognising original and fake goods.
Yet there are things that can only be discovered with proper investigations: in a previous post we looked for example at faux cashmere yarns and cashmere garments in Italy, but the Italian Guardia di Finanza (Tax Police) last week closed another interesting investigation, called Operation "Eden Brand" and revolving around counterfeit products and laundering money.
The operation was launched in October 2017 when the Rimini Tax Police started an investigation focused on a group producing and selling thousands of fake garments after registering in San Marino famous labels internationally protected by copyrights.
This is not the first time San Marino appears in investigations in conjunction with fashion or trendy brands. Trademark laws are different from country to country and, while in some places such as the USA the party that is the first to actually use the trademark is the party that enjoys the trademark rights, in other countries such as San Marino the party that is the first to file a trademark application enjoys its rights (you maintain this registration using the trademark within 5 years).
This is the same trick used by Italy-based companies to exploit popular brands such as Supreme (registered in San Marino as Supreme Italia under the name of a UK-based company called International Brand Firm Ltd. (IBF), that licences it to the Italian Trade Direct s.r.l.), a practice called "legal fake", as the brand is registered in a proper trademark office, but not by the original founders.
Operation "Eden Brand" developed in less than a year, during this time the police discovered manufacturing, stocking and selling plants. Four entrepreneurs – among them the manager of a company based in San Marino – were arrested and the police also seized 3 companies, plus shares, houses, a boat and financial reports, while they found in five safety boxes in banks over 1,6 million euro.
Among the 500 fake garments the police seized there were designs labelled Thrasher, Adidas, Fila, Vans, Nike, Gucci, MC Donalds, Lacoste, Supreme, Vetements, Pyrex, Rolex, Don Perignon, Balenciaga, Stan Smith, New Balance, Tommy, Dior, Nike, Levi’s, Hermés, Moet et Chandon – in a nutshell some of trendiest brands out there at the moment. The manufactured items were sold to consumers all over Italy also in proper clothing stores and boutiques, often mixed with original products.
In an intercepted call one of the entrepreneurs can be heard saying "I've earned a million euros in six months (…) I pay 7 euro for a sweat, I sell it for 34 euros and in a shop it retails for 100."
The sold items earned the group a profit of 2 million euros in a few months; the illicit profits were then self-recycled by the company itself.
But what's the reason behind this proliferation of fake merchandise? In a way it is encouraged by luxury firms themselves.
Many brands out there represent indeed status at the moment: most people wear a branded item because they've seen that celebrity or influencer doing the same, because they've seen it on the red carpet or on Instagram, and not because they know it is made with high quality materials. In a way the logo is more important than the quality for most of us which means that it becomes easier for counterfeiters to produce such items (how difficult it is to reproduce a T-shirt with a large logo for example?).
Besides, with production often relocated to low-cost countries, producing a fake has become easier, considering that controls on certain manufacturing and production stages may have relaxed (and it is not a secret that some suppliers manufacture more goods than those commissioned to then sell the surplus products…).
Logos can be replicated, but quality is difficult to duplicate, that should be food for thought for luxury brands. That said, the time may have come to introduce new disciplines in fashion (and fashion law) courses: teaching how to spot conterfeits and maybe looking at some of the investigations by corps like the Guardia di Finanza that may tie in with trademark laws, may help forming more professionals well-versed in copyright law and capable of spotting fakes/legal fakes.
Rispondi