Lawyers and Web Surfing

By Sean Gallagher  |  Posted 2003-12-11 Print this article Print

Other companies take a hybrid approach, using lawyers and counterfeit-hunting Web surfers. San Diego-based trading card company Upper Deck Company has long fought counterfeiting in its core sports memoribilia business, but it was a whole new game when it licensed the U.S. rights to the Yu-Gi-Oh! card game from Konami Broadcasting, the Japanese media conglomerate. As the worlds most popular trading card game, Yu-Gi-Oh! has been a prime target for counterfeiters. Ask any 10 year old and he can likely tell you the sorry details of counterfeit Yu-Gi-Oh! card heartbreak. Several children interviewed by Baseline were well-schooled in the art of culling counterfeits from the genuine article. (The bottom line: Counterfeits are darker and lack holographic foil stamps affixed by Upper Deck to most genuine cards as a counterfeiting deterrent. Theyre also thinner. )
Counterfeiters have even managed to get their products onto the shelves of some major retail chains. In October, Upper Deck filed suit against more than 50 companies and individuals for trafficking in counterfeit versions of its game cards—including the $2 billion California electronics retailer Frys Electronics.
Web sites such as eBay are also a natural outlet for fake wares. Upper Deck and Wright & LEstrange, the companys intellectual property law firm, both have staff dedicated to monitoring the Web and "aggressively going after" sellers of counterfeits, according to Craig Nicholas, a partner at Wright & LEstrange. Nicholas says that three people on staff at his firm and at least that many within Upper Deck hunt for counterfeit sites with search engines and eBay looking for sellers offering bogus products, checking images of cards posted with auctions and how much theyre being offered for. "We find at least one counterfeit dealer day," says Nicholas, who adds that many of his leads come from counterfeit-savvy kids. "A customer will buy a card, only to find out its counterfeit and complain to us." French fashion house Hermès International S.A. takes a similar approach to its counterfeiting problem here in the U. S.. Nicole Mann, a paralegal for the New York law firm Kirkland and Ellis, spends 20 hours a week shopping on eBay from home. Three times a day, she browses through the online auction site, looking for Hermes knockoffs. When she finds someone selling copies of Hermes Birkin or Kelly bags on eBay, Kirkland and Ellis contacts the auction site, and the seller is quickly shut down. The firm employs another paralegal who performs the same task with Yahoos auction sites. To be sure, Mann has been busy of late. After all demand for Hermes handbags is high—$5,000 for a bag that has a year-long waiting list. Last summer when the "Jelly Kelly," an Italian-made translucent rubber "knockoff" of a Hermes handbag, became the "it" accessory of the season. Steven Stolman, a resort clothier with shops in Manhattan and on Long Island, sold the bags for $145 each. And when this supply ran out, he offered an Hermes-like waiting list for customers awaiting the next shipment. Stolman claimed the stitch-for-stitch copies of Hermes Birkin were "an amusement." But Hermes was not amused. After press coverage drew Hermes attention to Stolman, Kirkland & Ellis filed suit against him, gaining a settlement for an undisclosed amount and no more Jelly Kelly sales. The crackdown, however, just invited more fakes. Baseline found Hermes look-a-likes displayed in boutique windows in Philadelphia last month. Hermes has another case pending against another alleged knock-off retailer, Cashmere Hamptons in East Hampton, NY. But no matter what technique is used to hunt down counterfeiters, shutting them down isnt easy. "Its like Whack-a-Mole," says Joseph Gioconda, a partner at Kirkland & Ellis, referring to the carnival game where players futilely attempt to beat down fake rodents as they pop up randomly from a table. "When you shut down one operator, another pops up." Next Page: What you should do to thwart counterfeiters.

Sean Gallagher is editor of Ziff Davis Internet's enterprise verticals group. Previously, Gallagher was technology editor for Baseline, before joining Ziff Davis, he was editorial director of Fawcette Technical Publications' enterprise developer publications group, and the Labs managing editor of CMP's InformationWeek. A former naval officer and former systems integrator, Gallagher lives and works in Baltimore, Maryland.

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