NEW YORK — Premium denim brands that have experienced overnight success in recent years have found they share something in common with brands like Lee, Levi’s and Wrangler: an international counterfeiting problem.
Aided by advances in technology, denim counterfeiters have proliferated as rapidly as premium denim lines in recent years.
Ted Houston, chief operating officer of Rock & Republic, said as the company has grown, counterfeiting has grown “exponentially.” On a monthly basis, the company is getting more than 100 Customs seizures worldwide and removes more than 20,000 online auctions of fakes.
Companies such as VF Corp., which owns the Lee and Wrangler brands, and Levi Strauss have had years to establish and develop their own anticounterfeiting departments. For those brands, the fight has shifted from America to the developing countries where they are trying to build a greater market share.
Thomas Onda, chief counsel for worldwide brand protection at Levi Strauss, heads a global network of more than 40 attorneys, investigators and brand representatives. The cost for such a system reaches “well into the seven figures,” said Onda.
Today, counterfeit Levi’s are being produced in the Asia Pacific region, as well as in places such as Colombia, Costa Rica, Italy, Portugal and Spain.
Onda has seen the level of sophistication among counterfeiters increase, making it more difficult to identify counterfeit product. For example, Onda said the company is finding both authentic and counterfeit Levi’s elements such as buttons, patches and rivets, which are then affixed to constructed denim pants.
“To get through Customs, sometimes [the counterfeiters] will ship the unmarked, unbranded denim pants,” he said. “They’ll get to a certain country, and then they’ll apply the sundries to the fabric.” The company recently seized 2.5 million labels, tabs and buttons in South Africa.
Levi’s focuses its anticounterfeiting efforts on the areas that can do the most damage, shying away from pursuing every street and flea-market vendor around the world. Onda has come up with a formula that helps determine whether the company will pursue action in a certain area.
“We look at three factors: The risk that counterfeiting presents to the business, the value that country has to our business … and the ability to obtain remedies,” said Onda. “In some countries, no matter how much money you spend, you’re not going to get effective remedies.”
Counterfeit Wrangler jeans have been a problem for VF in Brazil, according to Barbara Kaplan, senior counsel for the company. “Wrangler might be the most popular foreign brand in Brazil,” Kaplan said.
Most counterfeits are still coming from China, but Kaplan has also found more local production in places such as Bolivia and Paraguay. Kaplan also said Lee and Wrangler are positioned as premium brands in Europe, with those counterfeits coming out of China, Turkey and Russia. Kaplan has also noticed counterfeiters hoping to avoid the suspicion of Customs by routing products through other countries. The company recently seized more than 4,000 jeans in Kenya.
Like Onda at Levi’s, Kaplan must weigh the likelihood of success in obtaining remedies from foreign governments, which requires a full understanding of the political and social situation of a particular country. “You have to keep in mind what the context is of the situation,” said Kaplan.
According to the company, 117 raids were carried out in China in 2005, or some 2.25 raids a week, yielding an estimated seizure of 256,000 Lee products. This was up from the estimated 234,000 Lee products seized in 2004. Another 44,000 Lee products were seized in the Philippines in 2005, and in 2004, nine raids in Russia turned up more than 102,000 counterfeit Wrangler products.