The global trade of counterfeit garments, accessories, and footwear topped $450 billion dollars in 2017. One brand that was hit repeatedly thanks, in part, to its meteoric rise to buzzy street style fame: adidas. The German footwear giant – which has significantly extended its roster of partners beyond sports figures to fashion designers and music figures, and found endorsers in famous figures with which it does not maintains any formal affiliation (former Celine mastermind Phoebe Philo, who simply loves the Stan Smith shoe, comes to mind) – has been met with no shortage of counterfeits as a result.
Counterfeiting is taking a very real toll not just on adidas but on a whole slew of German companies, according to a survey released by VDMA, a German engineering trade association, on Tuesday. German brands faced losses of approximately $8.91 billion in connection with the manufacturing and sale of counterfeit or other infringing goods in 2017, alone, with more than 70 percent of the companies surveyed saying that they had been affected piracy and that China was the biggest culprit in terms of the manufacturing and exportation of fakes.
According to Reuters, “China was both the largest manufacturer and the largest market for counterfeit products, VDMA’s survey showed. Competitors from within Germany itself came second.” The majority of the counterfeits cited in VDMA’s report were purchased and distributed by way of the internet.
Beyond the immediate loss of revenue that arise from the widespread sale of counterfeits, Steffen Zimmermann, the head of VDMA’s Competence Center Industrial Security, says, “There are also consequences for the affected companies that are difficult to quantify, such as damage to their image and loss of competitive advantage.”
Adidas is doing its part to stomp out counterfeits in the market. Earlier this month, the sportswear giant, along with sister brand Reebok, filed a $106 million trademark lawsuit in federal court in Florida last week against 50-plus online sellers, who they allege “are promoting, selling, offering for sale and distributing substantial quantities [of footwear and other goods] bearing counterfeit [trademarks].”
The goods at issue, per adidas and Reebok, are “substantially different” in terms of quality “than those of [adidas and Reebok’s] respective, genuine goods” and are serving to “confuse” consumers both at the point of sale and after the fact.
Of particular interest in that case is the fact that adidas and Reebok specifically call foul on how “as part of their overall infringement and counterfeiting scheme, the defendants are all employing and benefitting from substantially similar, paid advertising and marketing strategies” on social media, where the advertisement of counterfeit luxury goods and sportswear products continues to be an issue.
In terms of trademark infringement, adidas has rather notoriously been on a litigation tear, taking brands, including Juicy Couture, Marc Jacobs, and Italian fashion brand Bally, just to name a few, to court for allegedly making infringing use of its famous 3-stripe trademark, a move that Forever 21 has called the work of an "aggressive bully," aimed at preventing any other "retailers and manufacturers of footwear and clothing from using three stripes in a manner that Adidas believes is likely to cause confusion.”
As for the ugly legal battle between adidas and Forever 21, that case is still underway in federal court in California.