The home page of the "replica watch store" Web site.

The Internet is a transient place, and crafty counterfeiters are using it to their advantage by setting up virtual street markets that bounce from one Web address to another as they peddle "replica" and counterfeit luxury goods as well as items that...

NEW YORK — The Internet is a transient place, and crafty counterfeiters are using it to their advantage by setting up virtual street markets that bounce from one Web address to another as they peddle “replica” and counterfeit luxury goods as well as items that infringe on trademarks.

Dubbed by legal sources and luxury goods makers as “hit-and-run” or “whack-a-mole” sites, these online outlets are difficult for luxury goods makers to prosecute because they are tough to track.

For example, one of the sites, which calls itself a “replica watch store,” routes visitors through a Geocities site for a split second before landing them on another site that has a constantly changing Web address. The second half of the site’s address switched on each visit to the site, shifting from “funexpresslane.com” to “partytimeforbestmates.com” to “easybusinesssuit.com” on subsequent visits by WWD. On several visits, the site would change within minutes.

Brands offered on the site include Rolex, Cartier, Bulgari, Frank Muller, Harry Winston, Chopard, Patek Philippe, Vacheron Constantin, Breguet, Audemars Piguet, Zenith, Chronoswiss and a number of others. Lawyers who have represented some of the brands mentioned on the site in trademark and counterfeit litigation were unfamiliar with this specific site, but said it resembled others they had seen, and could likely be run by a party they had encountered previously under a different iteration. Manufacturers did not return requests for comment on this story.

The tactic of rapidly changing a Web site’s address evolved as manufacturers and law enforcement officials improved their skills at tracking down counterfeiters online, said one source familiar with these sites who asked to remain anonymous. The result is Web sites he and his colleagues refer to as “whack-a-mole,” an analogy based on a video arcade game in which players try to hit an animal head that pops up and rapidly disappears before popping out of a different hole. And as soon as investigators close in on one of these whack-a-mole sites, it moves to another Web address. Most of these sites operate outside the U.S., the source said, which further complicates the issue.

“Selling [counterfeits] on the Internet has been somewhat uncharted territory up to now because of the difficulty in identifying vendors. That’s why all the attempts at legislation that are out there require people to be findable,” said Steve Gursky, partner, Dreier LLP. Gursky refers to sites that change their online addresses as “hit-and-run” sites. This particular strategy is relatively new, he said.

This story first appeared in the October 31, 2005 issue of WWD. Subscribe Today.

These Web sites can be bold in their defiance of trademark and copyright laws. The replica watch site mentioned above included a statement in its About Us section advocating against the purchase of genuine watches. The following paragraph is taken verbatim from their Web site:

“For whatever reason, many people purchase watches that cost thousands of dollars and render the wearer liable to get their hand chopped off while walking home from a posh cocktail party,” the site stated. “For everyone else, a replica watch is inexpensive and sometimes give the impression that you are wearing the genuine Rolex while you are catering the posh cocktail party.”

While most sources familiar with online counterfeiting issues said they couldn’t begin to put a dollar estimate on the size of the problem because of the difficulty in tracking it, all agreed it is substantial.

“The Internet is a big deal,” Gursky said. “All of the companies that are actively counterfeited have some program that goes after this.”

Tracking down where a site operates from is the trick to prosecuting online sales of counterfeit or trademark-infringing products, sources said. What allows companies to go after the sites is that they all must do business from a physical address that can ship goods out and receive payment.

“It’s like playing cat and mouse to figure out who they are and where to serve them with a lawsuit. It feels more frustrating because in Chinatown or the Garment Center, even though you may feel like you’re making little progress, at least you’re seeing some tangible results and word is getting out on the street,” said Jane Shay Wald, partner, Irell and Manella LLP, and the chair of its trademark practice group, as well as immediate past president of the LA Copyright Society.

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