Briefing: March 3, 2023
Counterfeiting has grown from a $30B market in the 1980s to one that now exceeds $600B, according toRob Handfield, an Operations and Supply Chain Management professor at NCU’s Poole College of Management. “Trade data trends suggest that this number could soon rise to over $1.8T,” he notes, stating that the explosion of e-commerce – which announced for more than 30% of retail sales during the pandemic, up from 10% – has created “a picture-perfect market channel for counterfeits.” This spike in online sales “offers a perfect opportunity for counterfeiters to exploit consumers buying products from their desktop” and/or smartphones.
There is an undeniable element of ease when it comes to buying & selling counterfeits now. Well-meaning consumers can be easily duped into buying them online (including in the secondary market). At the same time, those in search of fakes can buy them online – including on sites like Amazon. This has almost certainly led to an increase in the market for goods that trade on others’ well-known marks.
But there’s more to it … Individuals’ willingness to openly tout counterfeits seems to be rising, which is likely helping to drive the market for counterfeit or otherwise infringing goods even further. This is due, at least in part, to the transformation of our understanding of the word “dupe” & its popularization (with the help of “dupe influencers”) as something different than before. This term has traditionally been used to refer to non-infringing lookalike products, largely in the cosmetics category. And while there are many “dupes” out there that still conform to this definition, in the TikTok era, the waters are muddied by the fact that the term is also commonly used as a synonym for counterfeit, the latter of which has a much worse connotation.
Case in Point: A Google search for “luxury dupe” returns results for clearly-counterfeit Louis Vuitton, Chanel, Gucci, Saint Laurent, and Hermès bags on DHgate, a direct replica of Bottega’s Jodie bag (complete with a photo of the bag on Bottega’s runway) via Etsy, and the like.
Another interesting reflection of the popularity of dupes and the use of this specific terminology can be seen in the rise of Google searches for “dupes” over the past 5 years (see below). At the same time, searches for “replicas,” “knockoffs,” “fakes,” etc. have either remained the same or steadily declined over that same time period.
THE BIGGER PICTURE: “Everyone loves to feel like they’re getting a good deal … Now deal hunting has been discovered by TikTok, where an audience made up overwhelmingly of teens and young adults has gathered to worship at the altar of the dupe,” the Atlantic’s Amanda Mull wrote last week, referring to the rise of the “dupe” and the at-times “fuzzy edges” of the line between dupes and down-right fakes.
As for what to expect, inflation, an uncertain economic landscape & the onset of the “de-influencing”trend means that “dupes” – whether legitimate or counterfeits by another name – are likely to continue tp capture the interest and cash of consumers. This enduring demand leaves the door open for brands to capitalize by making their own dupes – either directly or by way of collaborations, for instance – to the extent their positioning allows for it.
On the trademark front …
– We won’t get to see much of Nike’s opposition over a TM application for registration for “Just Dao It,” as the filing party has failed to respond, prompting the TTAB to issue a notice of default.
– Hugo Boss is the latest to land on the opposite end of adidas’ 3-stripe enforcement efforts, with the German sportswear giant initiating an opposition over a mark that “consists of a brown, white & black stripe design” for use on clothing, shoes, eyewear, retail store services, etc.
– 2022’s top trademark filer – L’Oreal – lodged fewer applications compared to 2021, dropping from 177 filings in 2021 to 160 in 2022, according to data from the WIPO. Among the fashion/luxury goods brands that were top filers: Tommy Hilfiger Licensing with 29 filings; Hermès Intl. (25), On Running’s On Clouds GmbH (20); Louis Vuitton (19); Chanel (18); H&M (18); Ferrari (14); Cartier (13); and Parfums Christian Dior SA (12).
In litigation news … Hermès v. Rothschild: Following a conference with the court on Feb. 24, Judge Rakoff granted Rothschild leave to file an opening brief on the issue of interviewing the jurors by 3/3. (Hermès will then have until 3/10 to respond.) Hermès is also granted leave to file a motion for a preliminary injunction by 3/3, at which point Rothschild will have until 3/10 to reply. The court granted the application to delay adjudication of the attorney’s fee issue “until an appeal has been completed or the possibility of an appeal extinguished is granted.”
And in a bit of deal-making news … LVMH-backed L Catterton Europe is taking “a controlling interest”in A.P.C., with founder Jean Touitou & Judith Touitou to continue to hold a significant minority. In furtherance of the partnership, L Catterton aims to “advance A.P.C.’s international presence.”
– Circ – which developed a “technology system that returns clothes back to the raw materials” – has raised $25M in a round led by Zalando w/ participation from Avery Dennison & Korean outdoor apparel/footwear manufacturer, Youngone.
– SESAMm has raised €35M in a Series B2. A leader in natural language processing, SESAMm enables companies to track relevant ESG data using generative AI.
– Hexa has raised $20.5M in a Series A round. The Tel-Aviv-based startup boasts a 3D asset visualization and management platform, and uses AI to create 3D digital twins.