Fendi has settled a counterfeiting lawsuit against the former Filene’s Basement operation for $2.5 million, although other related lawsuits against different parties are still in progress.

This story first appeared in the June 22, 2010 issue of WWD. Subscribe Today.

According to Michael Burke, Fendi’s chief executive officer, many of the lawsuits, such as one against Burlington Coat Factory Warehouse, originate from the alleged illegal activities of Ashley Reed Trading Inc. and its owners, Scott and James Ressler.

The lawsuits against Ashley Reed and the Resslers were filed both in the U.S. and in Italy, according to Burke.

“It is trickier to go after the importer than after the final retailer. The importer has no assets here, as it mostly operates offshore,” Burke said.

He added the investigation surrounding the alleged Ashley Reed counterfeiting operation took time to track. “Our impression is that a great majority [of it] was manufactured in China, shipped to Italy and transshipped to the U.S. with fake invoices using fake business cards,” Burke said.

In the Burlington case, Fendi was awarded a $4.7 million contempt judgment in February. According to a court document, Burlington and co-defendant Cohoes Fashions Inc. had violated a 1987 injunction that prohibits Burlington from purchasing or selling any Fendi-branded product without prior permission. Fendi is still awaiting a decision on damages on its counterfeiting claims.

As for the Filene’s Basement case, which also included as co-defendant Retail Ventures Inc., its parent when the lawsuit was filed in 2006, Fendi expects to receive its $2.5 million by the end of the month, which will be paid from Filene’s bankruptcy estate. In addition, both parties are barred from selling Fendi product without Fendi’s written permission. Filene’s was sold to Syms Corp. following bankruptcy. The sole nameplate left under RVI’s umbrella is DSW Inc.

Executives at RVI and Burlington could not be reached for comment by press time Monday.

Gerard Dunne, attorney for Ashley Reed and the Resslers in the lawsuit filed in Manhattan federal court, said, “The court found six bags that were counterfeit over thousands sold over the years. The goods are gray-market goods — legitimate goods sold outside of the U.S. and shipped here. Most of our goods are from duty free shops and Fendi outlets in Italy. We don’t believe they were counterfeit.”

According to Fendi’s Burke, the amount of money spent annually to monitor counterfeiting activity is in the “seven digits.”

“We have people in Brussels, Washington, Beijing at the LVMH level, and Fendi itself has staff in Hong Kong, Rome, New York, Paris and Tokyo providing additional monitoring,” he said. “Add all that up and we’re talking 30 to 40 people, which doesn’t include prosecution, which [comes under] a separate budget.”

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