Legal Fakes, Counterfeit Products and Superfakes

When it comes to legal fakes, counterfeit goods and superfakes, these are big issues in Intellectual Property Law. We’ll discuss them further below;

Legal Fake

While it sounds like an oxymoron, “Legal Fake” is a phenomenon predominantly seen in the fashion industry, occurring over the last few years. It’s when a third company precedes the original brand company in registering a trade mark, setting up sales in another country and operating as a business.

Companies who do this exploit the original brand and mislead consumers into believing they are buying from the original creators. They use legal pathways, often taking advantage of the differing international trade mark laws, advertising laws and consumer behaviours in their country that differ to the country the original brand operates from.

Legal Fakes are not counterfeit as their aim is to create a new business parallel to the business model they’re replicating. They aim to exploit brands that are well-known to a specific group of people.

In 2019, the case between Supreme New York and Supreme Italia is a good example of this. You can read about it here.

Counterfeit Goods

Australian luxury mega store Cosette was recently in hot water after A Current Affair along with The Sydney Morning Herald and The Age, combined efforts to report on a number of complaints made against the company accused of selling counterfeit products and super fakes.

When A Current Affair visited their store, they were closed and published a statement regarding the complaints received. At the time of airing, A Current Affair were aware of 25 customer complaints made to Fair Trading, prompting a visit from NSW Fair Trading. The number of complaints has since expanded to over 125, totalling $300,000 worth of goods.

Counterfeit goods are a serious issue for many brands. As a global industry worth $1.2+ trillion, it affects food, pharmaceutical products, consumer goods, designer fashion, dietary supplements and even luxury cars.

Check out A Current Affair’s story here.

Legally speaking, counterfeit goods are considered the most extreme form of illegality compared to “infringement” or a “knock off.” [Source: The Fashion Law 2018]. They undermine resources poured into starting a business, registering trade marks or designs and the investments required to build up and maintain a successful business.

So how can you spot fake designer goods over real ones? We’ll use handbags as an example as they’re one of the most common counterfeited goods. Depending on what you’re purchasing, do your research properly:

1. Purchase direct from a renowned store and be cautious if in China – China has one of the highest numbers of brick and mortar counterfeit stores.

2. Understand the price of a brand new designer handbag and a second hand one. If the price for a brand new product seems too good to be true, it probably is.

3. Ask about the seller’s returns policy.

4. Ask for certificates of authenticity accompanying the bag.

5. When inspecting a bag look for the following;

👜 Stitching (is it high quality?)

👜 Material

👜The logo (research the legitimate trade marked logo for the brand)

👜 A serial number and research these online

👜 The lining of the bag

👜 Colour variations across the bag and how the bag fares after a few weeks/months of use.

👜 Check the hardware across the bag – keyrings, zippers, etc.

Superfakes

Superfakes are counterfeit goods that can be harder to spot from the real thing due to higher quality production and tactics used to closely mimic the original. Sometimes experienced authenticators struggle to discern a Superfake from an authentic product and they often retail at a higher price point than other cheap knock offs.

Superfakes are an increasingly common issue, especially in the fashion industry. While knockoffs of designer clothing and accessories have been around for more than a century, they became much more popular in the 80s and 90s as trade marked logos of popular brands became a status symbol for consumers.

These days, younger generations have increased demand for Superfake products as a more affordable option to own designer goods. Unfortunately, purchasing Superfakes is not a “victimless crime.” The manufacturing of fakes is often linked to criminal networks and slave labour, and they can also be made from dangerous materials, including toxic chemicals.

“In 2020, the fashion industry lost more than $50 billion in potential sales because of counterfeit merchandise. Both designer brands and third-party marketplaces have invested millions in combating counterfeits, but the issue is so widespread that it’s impossible to stop them all.” – Business Insider, 2023. Check out their article here.

At Litton Legal, we are an Intellectual Property law firm and can assist with all IP law matters including infringement. Contact our friendly team here for further assistance.