NEW YORK — Jamie Foxx’s date for the Oscars, his 11-year-old daughter, Corrine, strolled the red carpet toting a Kathrine Baumann-designed decorative handbag inspired by Foxx’s movie, “Ray.’’
For Baumann, the thrill of seeing her work at such high-profile events has been tempered by the realization that knockoffs will invariably follow.
Stealing her design concepts and selling the fakes for a fraction of the cost of an original — $795 to $2,950 at retail and far higher for a one-off — wasn’t something Baumann once thought possible because of the intricacy and detail of her products. But during a Henri Bendel trunk show in New York in 2001, a customer told her Manhattan retailers were peddling forgeries of her work. “It was hard for me to believe that someone could actually make a copy,” she recalled.
Baumann walked through several Manhattan stores to see for herself. What she found convinced her she had to take steps to protect her business.
She saw only one choice as a small business owner without the funds to hire lawyers and investigators. Baumann took the unusual step of searching for fakes herself, even traveling to China to get to a manufacturer.
The more than 500 pages of evidence Baumann has compiled, often through use of hidden video cameras, has aided in the arrest and conviction of one Manhattan retailer on charges of copyright infringement, and convinced a lawyer to take her cases on contingency. She estimated that she has gotten as many as 75 percent of the fakes off the streets, and there are no signs she’ll let up.
“I knew no one would take my case on contingency without proof, so I needed to prove that my intellectual property rights were being violated,” Baumann said. “As a result, I ended up doing the detective work myself.”
Baumann’s plight exemplifies the extremes to which a small business owner may have to go to protect their intellectual property rights, and get the attention of government enforcement officials.
A tenacious Midwestern work ethic has carried Baumann, an Ohio native, through a long and varied career after being the first runner-up in the 1970 Miss American Pageant. Over the next 15 years, she worked as an actress, appearing in TV shows such as “M*A*S*H” and “The Dukes of Hazzard.”She opened her first office in Beverly Hills in 1988, designing custom rhinestone-studded jackets and chaps that became popular enough that they eventually were worn by entertainers including Cher and Madonna. In 1993, she started studding handbags with Swarovski crystals.
“I like versatility and I designed things for myself,” Baumann said. “I started with belts and then a few months later, started doing bags.”
The bags put Baumann’s designs in the limelight. Before the knockoffs proliferated, Baumann said she employed 48 people, produced 4,500 to 5,000 handbags and accessories a year and had estimated sales of $2.4 million. By 2001, when Baumann realized she had a problem, her bags had become a regular sight on the red carpet. She was eventually forced to lay people off and believes the knockoffs cost her millions in potential revenue.
Pirating designs has gotten even easier since Baumann started her business, with rapid improvements in technology that allow for the development of faster and cheaper manufacturing methods. According to the International Trade Commission and the International Chamber of Commerce, global piracy and counterfeiting increased to an estimated value of $456 billion in 2003 from about $60 billion in 1998.
A January telephone survey by the Gallup Organization of 1,304 adults chosen at random found that 13 percent of Americans had purchased counterfeit or imitation goods in the last year. When it came to brand-name clothing and jewelry, more than half of those who bought fakes said they were aware the items were phony.
The survey found that the number one reason consumers decided to buy fakes was that they were easily available. The second most popular factor was the belief that the imitation was of the same quality as the original, but at a better price.
“Americans believe groups who manufacture and sell counterfeit goods are motivated by many of the same reasons that consumers choose to buy them,” Chris Stewart, a global brand manager with Gallup, said in a Gallup Poll News Service commentary.
Baumann wants to change attitudes toward fakes, but protecting her business is the priority. Conducting her own inquiries means taking time away from the day-to-day operations of her business and potentially putting her own safety at risk, something she doesn’t feel was a matter of choice. “We would have had no business left had I not chosen to interrupt it,” Baumann said. “It made sense to do it rather than entertain the thought of closing.”On business trips to New York, Baumann spent free time canvassing stores to identify fakes. “I sometimes stayed a few days after a show to do my research,” she recalled. “My investigation took over a year-and-a-half and I’m still doing it on pending cases.”
Baumann started gathering evidence by mapping out the 20 locations she found to be selling her designs. As Baumann spoke with store managers and made purchases — with some store owners presenting Baumann’s own product guide for her to choose from — a picture of how the stores were connected developed.
In some cases, several family members jointly owned and ran multiple stores. Checking the labels of shipping boxes that had been left in the open helped identify a common supplier. From time to time, Baumann also was able to hire a private investigator. Using that information, Baumann created a flow chart illustrating the connections between stores and a supplier.
A hidden video camera proved to be one of her most effective weapons. “I got very good at panning and using my own body as a tripod so it wouldn’t jiggle,” she said. With the help of her graphic designer, Baumann edited video of the products in the different stores and compiled freeze-frame images of the fakes. “We’d circle things in the images, then pull it out and put it next to a real one,” she said. “We had pages of comparisons.”
During one undercover operation, Baumann asked a retailer if he had attended a recent accessories show in Milan. The owner said he had and, when baited by Baumann, said that while there he had met Judith Leiber and “the Clinton girl,” Monica Lewinsky.
“I asked him if he had met Kathrine Baumann at the show. He said yes, that she was beautiful and that she wanted everyone to buy her purses. I told him, ‘Somehow, I knew she’d be like that.’”
The evidence Baumann accumulated was enough to convince lawyers to take her cases on contingency. Last year, Baumann’s lawyers filed almost a dozen separate lawsuits against stores and their owners for selling knockoffs of her designs. Four of those lawsuits were filed on Feb. 13, 2004, in Manhattan federal court, naming 26 companies and individuals. Unspecified monetary settlements have been reached and permanent injunctions imposed in five of the cases. One injunction listed 74 specific Baumann designs that could no longer be sold by a retailer. New complaints are to be filed.Baumann’s determination was infectious enough for friends such as Shawn King, wife of CNN’s Larry King and Baumann’s friend of more than 15 years, to agree to go undercover with her. King’s reasons for joining Baumann in her knockoff hunt at the Los Angeles Gift Show extended beyond friendship.
“I probably have at least 15 of her bags,” King said. “It was ticking me off. I view them as an investment. She does make only so many of a bag so they are collectors’ items.”
King said the number of knockoffs found in just a few hours was “astonishing.”
Agents from the U.S. Customs Service got involved in late 2002 after Baumann was one of the only small business owners to speak at an intellectual property rights meeting in Washington.
“Her information was presented in a very organized and professional manner,” said Jane Hekel, a senior special agent with Immigration and Customs Enforcement, the investigative arm of the Department of Homeland Security responsible for going after the people, money and materials behind organized crime. “It definitely accelerated the process,” said Hekel, who worked on a case that was initiated as a result of Baumann’s evidence.
An affidavit submitted by Hekel as part of the government’s complaint in a case filed in December 2002 said Baumann delivered her evidence to Customs in August 2002. By November, Hekel was posing as a New York buyer for a fictional Houston wholesale company at one of the stores Baumann had identified. Hekel placed an initial order for four handbags with Ali Zaidi, who told Hekel he owned six Manhattan stores. Several weeks later, Hekel and her agents placed an order for 119 additional bags with Zaidi. On Dec. 17, Hekel entered the Eebele Paris store on West 57th Street in Manhattan to pick up the order, then arrested Zaidi. Customs agents confiscated almost $1 million worth of fake merchandise, Hekel said.
Zaidi’s lawyer, John Thoedorellis, declined to comment.
Hekel said in an affidavit that, while Zaidi was in custody, he admitted the bags were Baumann copies and that customers bought them because they were cheaper. Zaidi said he did not understand why Baumann’s bags were so expensive. He was so baffled that he had taken a trip to Saks to compare her bags with the ones he was selling.Zaidi pleaded guilty to criminal copyright infringement in Manhattan federal court on March 12, 2003, was sentenced to two years of probation and ordered to pay Baumann $6,700 in restitution. Zaidi could have faced up to three years in prison. “Baumann assisted from the beginning to the end of the investigation,” Hekel said.
The government’s case proved what Baumann had discovered herself: Despite that tags indicated the bags were made in Italy, they were actually coming from China. Understanding her enemy meant finding suppliers, which required a risky trip to China.
“I had to go,” Baumann said. “I had to know where this was coming from and what kind of people were doing it.”
Wendy Benge-Knight, Baumann’s friend and neighbor, a recent graduate of Duke law school, agreed to postpone taking the California bar to go with her.
“It was about two in the morning and we were just talking about her situation,” Benge-Knight said. “She had basically just had enough.…We had no choice — she doesn’t have the capital or time to sue; her company would have died. She felt she had to go and I couldn’t let her go alone.”
In November 2003, only four days after their discussion, the two were on a plane to find the Chinese manufacturer whose name Baumann stumbled upon after a shipping company’s lawyer called her to find out why the government had seized one of their shipments at the port.
The results of the trip were better than anticipated. “We bought her own stuff that they had copied, we got photos, we got some more names of suppliers,” Benge-Knight said. “We left with more connections and product. We obtained a lot of evidence.” Baumann is hoping to use this evidence to convince Chinese officials to raid suppliers.
Baumann is out to educate the public on how knockoffs and counterfeiters harm small businesses. She is working on launching Just Say No to Counterfeits, a coalition of manufacturers committed to stopping counterfeiting and knockoffs.
“You have to personalize this,” Baumann said. “The problem large corporations have is people look at them as a faceless entity that does not feel. We need people to understand this affects people’s lives.”
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