Luxury Brands Online Trademark Infringement : Are You Protected?

Prada, LV, Gucci, D&G, Rolex, Cartier, the list of luxury brands is endless. Every Dollar  invested in marketing these brands aims to feed the psychology of belonging to an elite group. They convey the perception of exclusivity and wealth to their buyers. It is not simply a matter of price, it is about the unique design aesthetic, which consumers associate with a certain lifestyle. Luxury brands build their reputation on how their product makes a consumer feel, which is what increases the desire to own these products.

For the entire luxury industry, their reputation derives from their branding and the high desirability they portray, part of which derives from celebrities appearing with these brands.  Customers purchasing these items then feel they belong to a VIP club, together with these high profile personalities, who are able to own such a luxury product.

“The goals of aspiration have undergone change. Luxury products must be accessible yet special while retaining their desirability,” says luxury textile designer David Abraham. “Today, the perception of luxury extends well beyond a mere physical product to something as ephemeral as an experience or a state of mind.”

The side-effect of that is the trigger for mass production of knock-offs and other scams. Fraudsters and counterfeiters want a piece of this lucrative pie, as they can make up to twice as much on a counterfeit luxury item compared to other brands. Since consumers are blinded by the exclusivity of the luxury brand name, they are often willing to spend significantly more for a cheaper unknown fake item, in order to have the appearance of owning the product. 

Trademark laws assist somewhat but are largely ineffective as they are difficult to enforce. And so: 

• A staggering 60% of all fake goods that are seized by federal authorities are counterfeit luxury items 
• Some 20% of Instagram posts about luxury fashion brands actively promote counterfeits

With counterfeit items, consumers gain the gratification of being seen to own these exclusive goods, without paying the often sky-high prices that genuine products from luxury brands have. Luxury brands sell a dream, and when that dream is unattainable, counterfeit manufacturers create access for those who can’t afford the real thing.

The greater concern luxury brands face

One of the unique concerns the luxury industry faces is that counterfeits flooding the market destroys their very reputation of exclusivity, which is one of the principal draws of these items. The very fact that counterfeits exist, can ruin their reputation. While most consumers purchasing a knock-off Chanel bag are aware it is a fake, they will still buy it. The ability to purchase a Chanel bag for a fraction of the price, then leads to this very item being seen everywhere, which destroys the image of exclusivity that the brand’s reputation is based on. If this bag can be seen everywhere, potential consumers might think twice before purchasing this brand, as it will no longer have the appearance of belonging to an elite VIP group. 

All forms of counterfeit scams are a direct attack on the reputation of luxury brands. While the same can be said of every brand, luxury brands build their reputation on a feeling of exclusivity among consumers, like being part of a VIP club, making their  reputation all the more important to them. 

Once a consumer purchases a counterfeit item they are unlikely to trust that luxury brand easily. This directly impacts the brands’ reputation, which is then difficult to restore. 

Luxury brands that have invested heavily (sometimes for hundreds of years) to create and maintain a sterling brand reputation are left grappling with ripped off and cheaper versions of their products. They have little choice but to adopt means to protect themselves and their clients from the risks of fakes both online and off. 

“Apparel and footwear brands are spending millions to identify and police malpractices via e-commerce and social media platforms,” says Steve Lamar, president of the American Apparel & Footwear Association (AAFA).

“Detection processes include waiting days and months for the removal of the illicit products,” he says, adding that brands spend millions of dollars each year on enforcement. “Every day it takes to remove a counterfeit product, an illicit seller, a fraudulent ad, or a fake website is another day that unsuspecting American consumers are able to be duped.”

Want to learn more about how to protect your business from counterfeits? 

Luxury brands and legal battles over trademark infringement

Counterfeits can be found on most online marketplaces and third party platforms, which is any platform developed externally to a company’s main website provider. But the phenomenon of online trademark infringement liability for an e-commerce marketplace is a complex issue that’s still unfolding and evolving, as these sites argue that they do not have control over the problematic, infringing content. 

Well-known luxury brands such as Chanel, Louis Vuitton, Prada, Fendi, Gucci and Dior were among the most counterfeited brands in the world, according to the Global Brand Counterfeiting Report. What’s clear is that the higher degree of public awareness there is around a specific brand, the higher the chance that it will fall prey to trademark infringement.

It’s critical to note that sometimes a registered trademark is not enough for a brand to instantly prove infringement. While the following cases were eventually won by the brands, they still had to go through lengthy, expensive legal proceedings:

Louis Vuitton’s & Christian Louboutin’s trademark disputes

Louis Vuitton’s Damier signature check pattern, which was created in 1888, was challenged for being too generic. Counterfeiters and rival companies argued that the pattern is not distinctive enough, and therefore fell outside of trademark law. Christian Louboutin’s red-soled high heel had similar issues enforcing its trademark. It was argued in court that a color, such as red, cannot be trademarked. 

Rolex’s legal precedent

The luxury second-hand market, in which authentic or refurbished luxury goods are sold by third parties, is also a gray area with ongoing legal battles. The Fifth Circuit Court, which heard the case Rolex Watch USA, Inc. v. Meece made a landmark decision regarding what level of “materially different” elements within a product constitutes trademark infringement.

Robert Meece, a second-hand retailer who sold refurbished and modified Rolex watches, argued that the replacement of any part of a Rolex with a non-brand approved component would theoretically render the entire watch counterfeit. Therefore, Meece maintained that his practice of changing parts of the luxury watch with non-Rolex parts – a practice done by Rolex itself – should not be considered counterfeiting.

However, the Fifth Circuit ruled in favor of the luxury watch brand. The court ruled that the refurbished and modified Rolexes were so different from the original that they should legally be considered to be counterfeits. 

Combating trademark violations for your luxury brand

With online platforms and social media providing a perfect starting point and lower risk of getting caught for counterfeiters, online trademark infringement targeting luxury brands shows no sign of slowing down. As counterfeiters take advantage of any avenues available to them, from e-commerce marketplaces such as eBay, to Instagram, monitoring where your luxury brand’s fakes can be found is becoming even more challenging. It is vital for these brands to protect their business by monitoring online marketplaces and detecting and taking down counterfeits and trademark infringement

Luxury brands need a different approach

With a sterling reputation being on the line for luxury brands, it becomes increasingly important to remove counterfeits from every platform. The highest degree of monitoring needs to be a priority to enable these brands to remove as many fakes as possible. 

Since their reputation is of such importance, there are several steps these brands can take to protect their business:

• Transparency with customers – communicate the dangers of the counterfeits on the market. Consumers will not only appreciate the brand’s open communication, but be more aware of their future purchases.  
• Unique security – brands can create additional steps that will ensure consumers recognize which products are authentic. This can take the form of a security code, or even an additional small gift with purchase. 
• Distribution channels – having clear distribution channels between the brand and the end consumer, such that they can recognize from whom they are making the purchase.   

We handle trademark infringement for luxury brands

BrandShield has been working with many luxury brands from a range of industries for years. Our breadth of experience allows us the unique ability of understanding the challenges this industry  faces with trademark infringement, and their focus on maintaining their reputation. We offer an all-in-one platform that leverages the most effective concrete means to battle online trademark infringement. As part of our broad strategy for managing and reducing the risks of luxury trademark infringement, we monitor online marketplaces thoroughly and continuously, as well as social media. We utilize extensive web crawling, which can detect your luxury brand’s items even if they’re on obscure, less trafficked sites. 

Additionally, we work on clusters, taking down issues not just from individual sites, but ensuring that each counterfeit or trademark infringement issue is takedown across all marketplaces, social media networks and websites. Our enforcement managers are certified lawyers with IP background, who proactively hunt down the fraudsters and take them down.

To learn more about how BrandShield can protect your luxury brand from trademark infringements:

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