Legal Briefs

The value of intellectual property to a company is increasing as quickly as the threats to it, according to the Global Fraud Report released by Kroll...

The value of intellectual property to a company is increasing as quickly as the threats to it, according to the Global Fraud Report released by Kroll earlier this month. Counterfeiting and piracy problems are not new, the report found, but they are increasingly important for brand-conscious companies.

This story first appeared in the January 28, 2008 issue of WWD.  Subscribe Today.

Kroll, a global-risk consulting firm, issues a yearly report on fraud issues. That report is followed up with a quarterly focus on a specific aspect of the problem. Intellectual property fraud issues are so widespread that it was chosen as the focus for the most recent report.

In the years that Kroll has assisted companies in fighting fraud, the company said the nature and sophistication of counterfeiting have changed drastically. Consequently, the report found, effective strategies to address the problem also have shifted.

“Twenty years ago, executives at the world’s leading luxury brands routinely justified inaction against counterfeiting and piracy because the problem was so pervasive. The thinking at the time was that any person who is going to buy a $100 luxury knockoff is never going to buy the real thing at $15,000. As a result, they rationalized that there was no need to take corrective or preventive measures,” said Steven Rucker, executive managing director at Kroll. “Today, the problem has only gotten worse. However, the most forward-thinking executives understand the indelible mark that counterfeiting leaves on the intrinsic value of the original.”

John Hardy Ltd. reached an agreement with Kathy Kamei in a copyright infringement lawsuit in California federal court, according to a statement from the company. The agreement stipulates that Kamei will no longer sell the allegedly infringing products. The agreement also included an undisclosed financial settlement. Kamei agreed to dismiss her own pending action for declaratory judgment of noninfringement against John Hardy Ltd. “This settlement is the latest in a series of successful actions by our company to protect against copyright infringement. We are taking every step necessary to protect our rights and will continue to pursue other infringers in the future,” said Damien Dernoncourt, president, John Hardy Ltd., in a statement.

A Manhattan federal judge granted Cartier a summary judgment in a lawsuit filed against: Ilan Ben-Menachem; David Ben-Menachem; King Replica; Davids Luxury; Replica Kingdom, also known as Swiss Kingdom; Branded Luxury, which does business as BS Gifts; Vertexo Inc.; Aviv Ben-Menachem; Chana Ben-Menachem; Travel Derech Tslecha, and Avilan Marketing LLC.

According to the opinion written by Judge Robert Sweet and filed on Jan. 3, the lawsuit was initially filed on May 23, 2006. The suit was filed against the defendants for allegedly manufacturing, importing and selling watches that infringe on 19 of Cartier’s trademarks, including A. Lang and Sohne, Cartier, Dunhill, Vacheron Constantin and Montblanc. The watches were allegedly sold through approximately 15 Web sites. In his opinion, Judge Sweet awarded Cartier statutory damages of $50,000 for each of the 19 trademarks that were counterfeited.