Louis Vuitton landed a $23 million judgment over Chinese fakes; Alexander Wang was awarded $90 million in a counterfeiting case, and Gucci won a $9 million judgment against a group of counterfeit sellers. The frequency of these rulings provides insight into the state of brands’ fight against fakes, and this week proved no different. Meanwhile, the FTC is said to be ramping up for a battle of its own — against brands and influencers — although few seem to care.
The Fight Against Fakes Is Unending
Just as Louis Vuitton secured a nearly $23 million victory in a trademark case against a slew of Chinese counterfeiters in the U.S. District Court for the Southern District of Florida, Burberry filed a similar suit in U.S. District Court for the Northern District of Illinois. These cases are a dime a dozen nowadays, particularly for big brands such as Louis Vuitton, Gucci, Chanel, etc.
While the plaintiff fashion brands rarely ever see any meaningful amount of money in connection with these eye-popping judgment amounts — most of the defendants never show up in court, cannot be located and even with governmental measures in place to access PayPal monies, counterfeiters have begun to outsmart such tactics — brands continue to routinely file suit.
As noted by Vuitton in its most recent lawsuit, “The recent explosion of counterfeiting over the Internet has created an environment that requires Louis Vuitton to file a large number of lawsuits, often, it later turns out, against the same individuals and groups, in order to protect both consumers and itself from the ill effects of confusion and the erosion of the goodwill connected to the Louis Vuitton brand.”
Nor do brands stop there. Many of these counterfeiting suits are filed in conjunction with other measures — or while other measures are being pursued — such as the Uniform Domain Name Dispute-Resolution Policy or the even more expedited Uniform Rapid Suspension System proceedings, which work to remove infringing domains, namely those that include brands’ names. Miu Miu, Prada, Balmain, Jimmy Choo, Salvatore Ferragamo and Hugo Boss, among others, have all looked to such measures to fight the use of their trademarks within domain names.
Still yet, a number of brands have taken to filing suit against individual sellers on the web’s most popular e-commerce platforms, such as Amazon, Alibaba, eBay and the like, although the outcomes are almost very similar. Brands walk away having “shut down” accounts but have little by way of damages to show for their efforts.
The frequency with which these counterfeit suits are filed and UDRP matters are initiated provides a fascinating — albeit less than pretty — picture as to the availability of counterfeit goods online and the tactics that brands — as trademark holders — must utilize in order to maintain some semblance of control over their Internet presence.
No One Is Afraid of the FTC
This spring, the Federal Trade Commission made headlines industrywide after it sent letters to over 90 celebrities, brands and influencers, including Adidas, Chanel, Yves Saint Laurent, uber-influencer Chiara Ferragni, Jennifer Lopez, Victoria Beckham and the highly followed young actresses behind the smash television show “Pretty Little Liars,” among others.
In sending the letters, the FTC said it aimed to both educate the individuals and brands about federal truth-in-advertising regulations in light of the existence of what appeared to be undisclosed commercial posts on their Instagram accounts and to send a gentle warning, of sorts, that it is, in fact, paying attention to disclosure practices, particularly on Instagram. The letters marked a landmark bout of activity, since before those letters, the FTC had never reached out directly to endorsers; in the past, the agency had focused exclusively on punishing — or better yet, warning — the advertising brands.
Yet, with what appears to be a firm promise from the FTC that it will be taking an increased level of activity toward influencers and celebrities — and with more formal action to come, at least in theory — no one appears to be terribly afraid. To be exact, in the four months since the FTC sent out its letters, little has changed. Most celebrities and influencers — 93 percent, according to recent reports — continue to neglect to include proper disclosures in connection with paid-for or otherwise sponsored posts.
For those who are not sticklers for federal law or are in the business of measuring compliance with such laws on a reward-versus-risk basis, then it is not necessarily difficult to see why those who received letters — and those who did not receive mail from the FTC — are not jumping at the chance to comply with the commission’s guidelines in order to avoid the risk of looming FTC action.
This is because the FTC’s past actions haven’t set a precedent to fear.
To date, the agency has been rather lax when it comes to social media and influencers, in general. Granted, the development of digital media advertising tactics, particularly in connection with influencers, is still pretty new, but the FTC has had plenty of opportunities to make a statement about influencers.
While the FTC did come down on Lord & Taylor a few years ago for its undisclosed “Design Lab” ad campaign — with an investigation, formal proceeding and settlement — there was not a monetary penalty in play and the 50 influencers that Lord & Taylor tapped (and paid) to promote the “Design Lab” line were not named as parties in the FTC’s action. Many of those same individuals continue to post sponsored materials on Instagram sans any proper disclosures — i.e., clear and conspicuously placed language, such as #Ad or #Sponsored. That sheds light on what appears to be a larger sense of little fear and lack of urgency that the FTC has instilled in those running afoul of its disclosure guidelines.
Julie Zerbo is the founder of The Fashion Law.