The Big Couture Rip Off

''When counterfeiting was artisanal, it didn't bother us much,'' says Adrian de Flers, head of the Comite Colbert, a French couturier and perfumer trade group. ''Now it's become industrial, and we're frankly very worried.'' They have reason to be. In the last five years, a wide variety of bogus fashion items bearing couturier labels have been flooding world markets at an alarming rate, thwarting police and customs officials and embarrassing governments.

Until recently, French designers have avoided public discussion of the problem, fearing irreparable damage to their carefully nurtured image of exclusivity and luxury. But an increasing awareness of the burgeoning counterfeit trade, which now circles the globe from Asia to the Americas, and the accompanying revenue losses have brought the matter into the open. So sophisticated, so industrialized and so widespread has the operation become that illegal profits reached an industrywide high of $450 million last year. ''The progress of counterfeiting has equaled our yearly growth for the last five years,'' acknowledges Marc Vincent, director of Yves Saint Laurent's European operations, ''a rate of about 20 percent. (on annual revenues of about $37 million.)

Years ago, the elusive image of elegance personified by the French haute couture was attainable only by the very rich. All that the keepers of the famous fashion names had to worry about then was the smattering of imitators who wangled their way into the premiere showings to surreptitiously sketch or memorize the best designs and then adapt them for production under their own, far less prestigious, labels.

Until 1959, the great fashion houses were essentially ateliers whose skilled artisans meticulously crafted small quantities of costly designer goods for an elite clientele. Although several designers, notably Jacques Fath, had earlier experimented in a small way with licensing their names in return for royalties, it wasn't until Pierre Cardin lent his name to the mass-production of a wide range of items that the French fashion scene became more of an industry and less of an art. The commercial success of the Cardin venture persuaded other couturiers to cash in on the status value of their names.

Soon designers' names, initials and signature patterns sprouted forth on scarves, sweaters, handbags, belts, wallets, even automobiles. With the aid of ambitious publicity campaigns, French couturiers built multinational empires, which currently earn them a total of $3 billion annually.

Now the boom has begun to boomerang. By stimulating mass-consumer appetites, the designers indavertently spawned a highly lucrative and imitative industry. ''The success of a name is now a guarantee of being counterfeited,'' declares Cartier's spokesman in Milan.

A basic concern is voiced by Jean-Claude Gombault, a Christian Dior executive, who points out that ''counterfeiting touches the heart of our principles of design and quality. We're selling creation and luxury. A customer buys something she thinks is by Dior. It falls apart. She never comes back.''

Whenever and wherever counterfeit copies surface, they seriously damage the couturiers' image. Some cases in point: Emperor Hirohito recently posed for an official portrait in a pinstripe suit accented by a Hermes tie. Discreet inquiries revealed that the tie had been purchased at a leading Tokyo department store which is not the official Hermes outlet in Japan. The tie was a counterfeit copy with a fake label. A mink-clad Parisienne took her ''Cartier'' watch to a neighborhood jeweler for repairs. As all Cartier watches are guaranteed for life, hers was routinely sent to the firm's headquarters for attention. When the watchworks were exposed, the timepiece was found to be a fake. The firm confiscated the watch. The incident was not an isolated one. Cartier says it gets two to three watches a week this way. Last month, a shopper inspected a ''Vuitton'' bag in Florence's outdoor straw market. When she told the Italian stall vendor that the bag was a fake, he said, ''That's right, but here's a real one,'' and handed her a more expensive counterfeit, so like the real thing it even had the same kind of French zipper. In Mexico, there are 13 ''Cartier'' boutiques, stocked with fake watches but real Cartier lighters (brought in from Panama). Over a 10-year period, the courts have ruled in Cartier's favor in 23 separate cases involving the boutiques, but the stores continue to operate - and to flourish. In an effort to drive the impostors out of business, Cartier recently opened its own boutique in Mexico City, widely advertising it as the only authorized outlet. Unruffled by these goings-on, the owner of the fake boutiques, Fernando Pelletier, has adopted the French firm's repair policy, but he specifies that only watches purchased in his shops - i.e., the fakes - will be accepted.

The lust for labels varies from country to country. In societies where conformity is greatest, the public is more susceptible to the barrage of advertising and publicity surrounding famous couturier names. ''The Japanese are very keen on image and so are Americans, in some (sections of the sections of the country),'' observes Vincent Carratu, a private investigator retained by a number of designers to uncover frauds. ''The Italians, Swiss, French and Germans care about fashion. In Britain there isn't as much of a market.'' ''A Game: What Is Real, What Is Fake?'' read the headline over a recent article in Elle, an influential French fashion publication. Featured were photographs of seven products, from Vuitton suitcases to Courreges aviator sunglasses and Hermes bags. In some cases, the fakes were obvious, cheap and shoddily constructed. Others bore a striking resemblance to the real thing, a not uncommon phenomenon.

Some fakes are so cheaply made -plastic linings, poorly sewn handles, blurred labels - that even a passing familiarity with the genuine item makes the difference evident. But many ''Dior'' scarves from Italy are actually made from heavier silks. A spokesman for the house of Christian Dior, which claims the dubious distinction of being the most ripped-off couturier name, admits that its own people often cannot tell the difference. He tells of one of their executives having to peer through a magnifying glass to count the number of threads in a faked signature fabric.

Cartier freely admits that some counterfeit copies of its watches are of high quality, with the cases made of solid gold, the mechanisms finely tuned. According to Vincent Carratu, the fraud investigator, Cartier's people often have to take the watches apart before they can tell the difference. One fake ''Cartier'' Tank watch (so named to honor World War I tank officers) sold for only $100 less than the average retail price of $2,600, for the man's model. As a rule, counterfeits sell for roughly half the price of the genuine object, although for a well-made fake the difference might be less. An extremely low price might be a tip-off, but not always, since duty-free shops and some discount outlets regularly underprice.

Counterfeiting ranges from out-and-out reproduction of the total product and its label to the copying of just a signature or initials to simply slapping designers' names on items with which they have never had any association -not long ago, the Dior name appeared on bottles of French wine.

Quality fabrics used in the better counterfeits often come from the same source that supplies the couturiers. But in Lecco, Italy, a whole industry has grown up around the forging of designer fabrics. The makers of bogus signature cloth, of course, operate clandestinely.

Virtually every fashion house has its repertory of improbable tales. In Hong Kong, where scarves with Hermes signatures but not Hermes designs have flooded the market, a Hermes representative traced the source to a back alley where a workman industriously wielded a replica of the famous ''Hermes Paris'' stamp. Chanel not only has had to put up with very authentic-looking copies of its white perfume boxes, complete with the distinctive back-to-back C's associated with the house, it must also suffer the indignity of having its name deliberately misspelled as ''Canel.'' Counterfeiters often change name spellings by a letter or two, counting on the similar look of the lettering to carry an association with the real thing. ''In countries where the Latin alphabet is not used, how would they know the difference?'' asks Alain Thrierr, who heads the Union des Fabricants, a trade association that strives to protect the trademarks of its 1,200 members from the major perfume and couture houses. (Mr. Thrierr's office is situated next to a curiosity called the Musee de la Contrefa,con, where real and fake are displayed side by side and are often indistinguishable. Operated by the trade organization, the counterfeit museum is open to the public.) Not even those most intimately involved understood the extent of the counterfeit trade until two Italian factories were raided last summer. The dimensions of those operations shocked Parisian designers.

The man responsible for the raids was Vincent Carratu, who has specialized in trademark protection ever since he left Scotland Yard's Fraud Squad 18 years ago. While in Milan on a case, he was alerted to large stocks of designer handbags for sale. ''I made contact with the distributor, posing as a buyer,'' he reports. After winning the distributor's confidence, Mr. Carratu wangled a visit to the manufacturer, under the pretext of wanting to assure himself that the operation was big enough to assure a continuity of supply.

He was led to a building in the northern industrial section of Milan that contained 3.9 million square feet of warehouse and manufacturing space. ''The warehouse had ... long tables (and shelves) overflowing with articles all bearing the initials or designs of Dior, Vuitton, Gucci, Cartier, Saint Laurent,'' Mr. Carratu recalls.

One of the largest couturier counterfeiting companies in the world, the firm of Ferrari Chi Pierinedmer manufactured and sold almost a million items (some of them subcontracted elsewhere in Italy) each year for a profit of about $24 million. The owner, Gianfranco Chih, had ''a large country house, luxuriously furnished, a city apartment, a restaurant, a Range Rover (jeep), with telephone, an expensive motorcycle and a girlfriend with jewels on every finger,'' Mr. Carratu reports.

At the time of Mr. Carratu's preraid visit, the company was preparing to invest $2.5 million in new machines and a computerized distribution system. Business was booming. ''The phone rang nonstop - orders from all over the world,'' Mr. Carratu says. ''The factory was very open. They weren't worried - they paid for police protection,'' he explains.

After gathering sufficient evidence, Mr. Carratu called Mr. Thrierr of the Union des Fabricants, who rushed to Milan to begin the delicate legal maneuvers involved in such cases. To avoid leaks, police were brought in from a neighboring town for the raid, which resembled a scene from a 1930's gangster movie. ''It was a commandotype operation with 30 men and 11 vehicles,'' Mr. Carratu says, with undisguised pride. Gianfranco Chih was clapped in prison, the illegal operation was shut down by the police and the goods impounded. (The factory has since reopened, manufacturing legitimate items.) It took five days to complete the inventory and eight semitrailers to haul away the evidence: 8,483 handbags, 44 suitcases, 10,500 belt buckles, 362 wallets, two miles of initialed fabric, seven molds and dyes for reproducing trademarks. The goods were valued by the police at $1.5 million.

According to records found on the premises, the fakes were destined for the United States (notably Miami), South Africa, Nigeria, Zambia, several countries in the Middle East and a number of European markets. The majority of ''Vuittons'' had been ordered by a Parisian jobber. Orders for bogus Guccis, Cartiers, Diors and Valentinos came each month from the Netherlands, West Germany and France. The firm was also busily exploring the Belgian market.

Just a week before the Chih raid, a large factory manufacturing fake ''Cartier'' leather goods was uncovered in Florence. ''We had been trying to get this man for many years,'' says Capt. Carlo Salafia of the Guardia di Finanza, whose agents, the Italian equivalent of United States Treasury men, have greater powers than the police to enter and seize. ''Actually, he was operating a legal factory,'' Captain Salafia says. ''Finally, we discovered that by night this same factory made fakes.'' (Moonlighting is not uncommon among the counterfeiters, many of whom have backgrounds in legitimate manufacturing businesses.)

For two months, a team of investigators had tracked down the production source, starting with the vendors in the nearby straw market. ''The seller is liable under the law,'' Captain Salafia explains, ''but we never bother about the small fry. They (just) lead us to the supplier.''

''In a delivery truck there were 3,500 pieces of luggage,'' Captain Salafia reports, ticking off the list of confiscated items. ''In the factory, we found 4,616 metal corner trims, also a 'Cartier' trademark ... 1,000 'Yves Saint Laurent' belt buckles, 355 (finished) 'Gucci' handbags (and) 830 in progress, and 3,535 metal 'Celine' insignia.''

Col. Elio Pizzuti, Captain Salafia's superior, explains that many Vuitton items were found as well, but that his department does not seize fake Vuittons, because ''It's not a nationally registered trademark.'' The house of Louis Vuitton, however, says that its trademark has been deposited in Italy since 1896 and cites the 1978 dismissal by an Italian court of a petitioner's charge that the LVand-floral print on brown cloth was a pattern not a trademark. This year, Vuitton plans to bring out a new line without initials, but is keeping the new distinguishing marking a closely guarded secret for the time being.

Italy, because it is acknowledged by designers to produce the best fake accessories, is a sore spot to the big fashion houses. ''There's a great demand, lots of tourists and the savoir-faire in making leather goods,'' explains Patrick Brunot, Vuitton's Paris attorney. Mr. Brunot, who recently oversaw the dissolution of 17 outlets of fake merchandise in Venice, groans as he says, ''It's an endless task.'' There is, he suggests, complicity by some police officers, ''so sometimes when we demand seizure, the stocks disappear.'' In January, however, police in Lecco did seize 15 miles of cloth printed with the Vuitton design.

Besides Italy, primary manufacturing centers for fraudulent copies are Taiwan, South Korea and Hong Kong, where artisans are plentiful, because of high levels of unemployment; also Japan, Brazil and Mexico. Perfumes account for a large portion of the bogus trade. ''Our biggest case in Europe was a perfume factory conterfeiting French perfumes,'' recalls Mr. Carratu. ''They projected a profit of $4.8 million in one year.'' In Taiwan a few years ago, the police who raided counterfeiters making fake ''Chanel'' perfume apologized to the French firm, because, as a result of more pressing business, they had been able to shut down only 42 of the illegal factories.

Distribution is international and goods pass easily through customs, so long as the accompanying papers are in order. ''We have no jurisdiction to stop merchandise with the proper legal documents from entering France,'' declares Francois Gaussens, a high-ranking French customs official who heads the department of legal affairs.''All the countries of the European Economic Community have similar laws, as do most other nations,'' he points out.

Fakes made in Asia slip easily into Australia and the Middle East. ''A Hong Kong distributor travels to the Middle East with a suitcase full of labels and initials that he slaps on whatever sells best in that country,'' says Francoise Benhamou of the Chambre Syndicale de la Couture Parisienne, the couturiers' association. ''In Seoul, there was an entire street of boutiques named for couturiers. No sooner did we get them closed down than others sprang up.''

The Federation Horlogere Suisse, the Swiss watchmakers' association, estimates that some 10 million fake Swiss watches are made each year, accounting for illegal profits of $600 million. The biggest counterfeiting racket in Swiss history, unearthed a few months ago, involved an outfit making fake ''Cartier'' Santos watches, an industrial-looking design that features exposed working parts. ''In eight months,'' Cartier's attorney relates glumly, ''they made a profit of $8 million.''

There is some evidence and more claims that the bogus couturier trade has attracted organized crime. ''Cartier counterfeiting is definitely linked to the international underworld,'' says a spokesman for the firm. ''Among the men we catch are petty crooks with long records. Often traffic in fakes goes along with drug-dealing, counterfeit money and stolen goods.'' On the evidence of arrest records, French and Italian police also suspect Mafia involvement in bogus watches. In an attempt to thwart further expansion and to dissolve existing illicit operations, many designers have sought legal recourse. Depending on the law of the country involved, counterfeiting may be either a felony or a misdemeanor, but in practice it is usually treated as a misdemeansor. If convicted, the counterfeiter is given either a light sentence or, more commonly, a token fine. But because the legal process can be very drawn out, the counterfeiter can usually continue to operate until the case comes to trial.

Alain Thrierr, who is juggling 900 lawsuits on behalf of the Union des Fabricants' members, says that many designers now spend up to 1 percent of their revenues on the battle against fakes.

When Cartier estimated that 40,000 fake high-quality ''Tank'' watches had been sold during 1976, it decided to take a legal stand. This year the firm will spend $1.5 million, twice as much as last year, mostly on lawsuits, but also for the registering of its designs and trademarks. The firm's attorney, who has about 250 lawsuits pending, estimates that fakes account for losses running to $7 million a year.

Christian Dior, with annual sales of $365 million, spent $406,000 protecting its 813 registered trademarks in 1980. It currently has 250 lawsuits under way.

Louis Vuitton, whose 1980 sales totalled $21 million, has spent $750,000 since 1978 fighting counterfeits. John Maynard of the New York firm of Reboul, MacMurray, Hewitt, Maynard & Kristol, says he has filed about 350 Vuitton lawsuits in the United States, ''from the Virgin Islands to Guam.''

Coco Chanel once said that the fact she was copied meant she was famous. The house she founded can now boast of the longest-running lawsuit, 14 years of litigation in the Far East.

In France, where the laws are strict, ''a sole resemblance to a registered design justifies legal action,'' states Jean-Claude Gombault of Dior. ''But in the Common Market, we're poorly protected. We have more problems with Italy than Japan.''

''Japan, once a notorious copier, has become a victim now that its own brands are recognized,'' notes Francoise Benhamou of the Chambre Syndicale.

To monitor operations in the Orient, the French Foreign Trade Ministry has agreed to assist the Union des Fabricants in setting up offices in Tokyo and Seoul. Despite this promise of assistance, the French Government's commitment to combating couturier counterfeiting is not nearly so great as many of the victimized designers would like. ''It's easier to support heavy industry in the policies of foreign trade,'' admits Bertrand Schneiter the ministry's assistant deputy director of foreign economic relations. ''Deluxe products don't need help,'' he maintains, ''and they don't have much competition. I'm against helping, although we try to sensitize our people abroad to the problem.''

Some designers are also critical of the efforts of foreign governments. When Pierre Cardin returned from a trip to Seoul in 1978 he created a stir in the press by attacking the South Korean Government. ''I saw my name and initials on the most shoddy products, from T-shirts to sneakers, and on things having nothing to do with the name Cardin,'' he charged. ''(It is) scandalous that a government should allow this.''

Bertrand Schneiter and Alain Thrierr believe that an international law with stiff seizure rights - such as the counterfeit code being considered under the General Agreement on Tariffs and Trade - would ultimately discourage counterfeiters. This belief presupposes universal vigilance and honesty from customs inspectors and the resources and manpower to police frontiers, which may not be realistic.

The outlook for preventing misuse of trademarks is gloomy in many countries. Entrepreneurs will often register a name belonging to a foreign firm that has itself not yet registered in that country. To protect themselves, firms are thus forced to register each of their designs and trademarks, even in countries where they have no intention of ever marketing their products, or risk someone else's doing so in their names.

Now that it has decided to operate in Brazil, Saint Laurent has instituted proceedings against a national of that country who registered its name in 1962 and has been making T-shirts, skirts and bathing suits under that label ever since. ''I'm not sure we'll win,'' Marc Vincent says bitterly. ''We'll surely end by paying them off (to buy the name back).''

New products are often publicized before they are even manufactured or distributed. ''Publicity flashes around the world simultaneously, but most products are launched progressively, say first in France, then in the United States,'' Mr. Thrierr notes, ''Thus, there's a gap between hearing about a product and getting it. Which stimulates interest while giving counterfeiters an edge right away.'' Fighting back is the couturiers' strategy for the future. In addition to raiding illegal factories and pursuing their claims in the courts, several French designers have taken their fight to the public. Cartier advertisements in Italian publications aim at teaching consumers how to tell a real Cartier watch from a fake by depicting a Santos watch with arrows pointing to all its distinctive design features.

Speaking of ways to fight back, Jean-Louis Dumas-Hermes, board chairman of Hermes, says, ''First, you must create like mad. The more you create, the more you fatigue copiers. Then, you must be honest in manufacturing, because it's hard to copy quality. Our real defense is to be hard to copy.''

Unlike Hermes, however, most designers no longer control manufacturing, which is done by licensees. ''From 1960 to 1970, we all sold too many licenses,'' Marc Vincent, of Saint Laurent, admits. ''We must restore credibility to our products by making them ourselves.'' Accordingly, Saint Laurent has begun to move from licensing to direct participation in the manufacturing of its products. The firm has recently bought the controlling share in Mendes, which already produces its ready-to-wear Rive Gauche line.

Although the French designers are furious at the loss in revenues and the diminution of their luxury image, on a certain level many of them accept counterfeiting as a consequence of success. Deep down, some of them even have a certain pride in being good enough to be ripped off. Echoing Coco Chanel, Marc Vincent concludes that ''counterfeiting is the barometer of success. If we had no fake Yves Saint Laurents, I'd be frightfully worried.''

* This article was written by Susan Heller Anderson, a writer based in France and published by the New York Times in March 1981.