NEW YORK — Michael Kors LLC’s recent decision to crack down on New York City counterfeiters by suing their landlords was bold for a Manhattan-based fashion firm, but also uncommon for an industry facing this ongoing multibillion dollar problem.
Last week the designer’s law firm filed a 35-page complaint in U.S. District Court Southern District of New York against Mulberry Street Properties Corp. as well as four New York-based businesses for allegedly selling counterfeit Michael Kors goods. Trademark counterfeiting, trademark infringement and false advertising are among the charges cited in the complaint.
Kors’ strategy exercises a law passed by former New York City Mayor Michael Bloomberg in 2003 and designed to lower the boom on landlords who house counterfeiters but feign ignorance of their activities. The measure meant landlords would be held accountable if counterfeit manufacturing was done on their property. Anticounterfeiting activist Valerie Salembier said Tuesday, “I think Michael Kors is absolutely doing the right thing. I hope this sets a precedent, but unfortunately most luxury companies don’t want their brands mentioned when it comes to counterfeiting. They will do everything they possibly can to avoid that kind of publicity, so good for Michael Kors.”
One of Kors’ attorneys, Heather McDonald of Baker & Hostetler LLP, declined to comment Tuesday on behalf of the company, due to the pending litigation.
Executives at Mulberry Street Partners, as well as those at Chowdhury Traders LLC and Top Winstar Inc., could not be reached for comment Tuesday. Calls to Little Italy Gifts Inc. were unanswered.
However proactive Kors’ effort is, what really needs to happen to quell counterfeiting in the fashion industry is for companies and designers to speak directly to consumers about the problem and about signs of how to spot a fake, said Salembier, the Authentics Foundation’s chief executive officer. “They need to tell them what to look for and where to shop,” she said. “But none of these companies want the publicity that comes with anticounterfeiting. They will hire intellectual property law firms and global investigators. But when it comes to letting consumers know about the problem, they won’t go there.”
Salembier said, “Some luxury companies used to be influential about trying to stop counterfeiting and now they’re not. It’s as if they think everyone doesn’t already know that it’s a problem — oh really?”
Last year, Coach took a similar tactic in winning a $5.5 million settlement against the owner of Florida-based flea market Swap Shop — an 80-acre stretch with more than 2,000 vendors — which was selling fake Coach goods. Flea markets remain “one of the worst sources” of fashion-related counterfeit goods, Salembier said. “Today the problem is that as soon as you close one place down, another one opens somewhere else — especially online.”
That said, she praised Tory Burch LLC’s recent aggressive legal action, which resulted in a trademark infringement win. Earlier this month, U.S. District Judge Denise Cote ordered that Lin & J International Inc. pay Tory Burch LLC $38.9 million in damages and $2.3 million in attorneys’ fees in a trademark infringement suit. Burch’s team also was applauded by Salembier for urging others to take action. Following the decision, a Tory Burch spokeswoman said, “We hope this decision benefits the entire industry by sending a strong and clear warning to counterfeiters.”
While the most recent Kors case is pending a response from Mulberry Street Partners, Salembier said, “I hope everyone who is doing business in New York makes sure to go after the landlords if they think they’re housing some manufacturers making fake goods.”