1 00:00:00,080 --> 00:00:02,840 Speaker 1: You're listening to Bloomberg Law. I'm June Grasso in New 2 00:00:02,920 --> 00:00:06,360 Speaker 1: York with Greg's store in Washington, d C. It's a 3 00:00:06,440 --> 00:00:10,680 Speaker 1: top French luxury brand known for craftsmanship, design, limited supply 4 00:00:10,840 --> 00:00:16,160 Speaker 1: and long waiting lists, and it protects that brand. June 5 00:00:16,360 --> 00:00:19,759 Speaker 1: ms the dawn of a new fragrance. That's why the 6 00:00:19,840 --> 00:00:23,440 Speaker 1: luxury giant Ramez is suing a small chain of Melbourne 7 00:00:23,440 --> 00:00:27,400 Speaker 1: boutiques for selling what it claims our knockoff bracelets. The 8 00:00:27,480 --> 00:00:30,520 Speaker 1: bracelet in question is a leather bracelet with the distinctive 9 00:00:30,640 --> 00:00:34,800 Speaker 1: ermez h clasp Ermez claims that it made three attempts 10 00:00:34,840 --> 00:00:37,800 Speaker 1: to contact the owner of the boutiques called E M Style, 11 00:00:37,920 --> 00:00:40,520 Speaker 1: to order her to stop selling the bracelets, but got 12 00:00:40,520 --> 00:00:44,120 Speaker 1: no response. Our guests are Terence Ross, a partner at 13 00:00:44,159 --> 00:00:47,680 Speaker 1: Captain Yuchen Rosenman, and Susan Scoffiti, director of the Fashion 14 00:00:47,720 --> 00:00:51,320 Speaker 1: Law Institute at Fordham University School of Law. They're joining 15 00:00:51,360 --> 00:00:55,160 Speaker 1: us now in the Spectrum Enterprise Phone Line Spectrum Enterprise 16 00:00:55,240 --> 00:01:00,560 Speaker 1: Nationwide Fiber based Network and I T Infrastructure Solutions Terry. 17 00:01:00,760 --> 00:01:04,960 Speaker 1: You can go online and look up replica ORMs bracelets 18 00:01:05,080 --> 00:01:08,280 Speaker 1: and get them for thirty five dollars or so. So 19 00:01:08,360 --> 00:01:12,640 Speaker 1: why is Ermez pursuing this against this small chain of 20 00:01:12,720 --> 00:01:18,720 Speaker 1: Australian boutiques. Well, in this case, June, the boutiques seem 21 00:01:18,800 --> 00:01:23,559 Speaker 1: to be particularly aggressive in pushing this out as counterfeit 22 00:01:24,000 --> 00:01:30,240 Speaker 1: RMS product and resistant repeated requests to cease and desist 23 00:01:30,319 --> 00:01:36,000 Speaker 1: from Hermez um and at some point enough becomes enough. Um. 24 00:01:36,160 --> 00:01:40,399 Speaker 1: These fashion retailers, who depend so much upon the value 25 00:01:40,400 --> 00:01:47,400 Speaker 1: of their trademark simply cannot ignore this sort of blatant counterfeiting. Susan. 26 00:01:47,560 --> 00:01:50,520 Speaker 1: What's the legal standard that Hermes would have to meet 27 00:01:50,520 --> 00:01:52,560 Speaker 1: if this case we're to go forward and in court, 28 00:01:53,000 --> 00:01:55,800 Speaker 1: is it that the consumer has to be confused about 29 00:01:55,880 --> 00:02:00,400 Speaker 1: the origin of the products or something else? Well, it 30 00:02:00,520 --> 00:02:04,040 Speaker 1: is the case as as alleges that these copies are 31 00:02:04,040 --> 00:02:08,120 Speaker 1: in fact substantially identical, then we're not even so concerned 32 00:02:08,120 --> 00:02:12,880 Speaker 1: about consumer confusion, right, But if they were merely showed 33 00:02:12,880 --> 00:02:16,160 Speaker 1: a resemblance of some sort then we might ask that question. 34 00:02:16,800 --> 00:02:20,400 Speaker 1: But overall, you're right, the general trademark standard is one 35 00:02:20,480 --> 00:02:24,120 Speaker 1: of likelihood of consumer confusion um, And the Australian Trademark 36 00:02:24,160 --> 00:02:27,000 Speaker 1: Office of course would have taken this into account in 37 00:02:27,080 --> 00:02:32,240 Speaker 1: considering this trademark, Terry, do the boutiques have any defense here? 38 00:02:32,760 --> 00:02:36,320 Speaker 1: Can they say this really isn't the same, the h 39 00:02:36,480 --> 00:02:39,400 Speaker 1: looks a little bit different, or the leather is different. 40 00:02:40,720 --> 00:02:45,119 Speaker 1: It's hard to see a viable defense that the boutiques 41 00:02:45,200 --> 00:02:50,360 Speaker 1: might have. UH. I note in particular that UM, the 42 00:02:50,440 --> 00:02:54,079 Speaker 1: investigators who went in on behalf firm as UM to 43 00:02:54,560 --> 00:02:57,359 Speaker 1: follow up on the complainants they had received. UM spoke 44 00:02:57,480 --> 00:03:00,280 Speaker 1: Tom on an undercover basis, spoke to one of the 45 00:03:00,320 --> 00:03:04,359 Speaker 1: retail clerks who was very proud and expressed that these 46 00:03:04,400 --> 00:03:08,919 Speaker 1: were counterfeits. UM. And I think in that sort of circumstance, 47 00:03:09,080 --> 00:03:13,000 Speaker 1: it's very hard UM to claim that you were within 48 00:03:13,120 --> 00:03:17,760 Speaker 1: some sort of legal right. Um, that consumers weren't really confused. 49 00:03:17,760 --> 00:03:22,600 Speaker 1: They were purposely counterfeiting these herms products, and counterfeiting as 50 00:03:22,639 --> 00:03:25,480 Speaker 1: in Australia is against the law just as it is 51 00:03:25,480 --> 00:03:29,320 Speaker 1: here in the United States, without regard to consumer confusion. So, Terry, 52 00:03:29,440 --> 00:03:32,680 Speaker 1: even though they say this is a copy, this isn't 53 00:03:32,720 --> 00:03:36,840 Speaker 1: the real thing, it's still considered a counterfeit when the 54 00:03:36,840 --> 00:03:40,800 Speaker 1: person knows they're not buying in their miss bracelet. In 55 00:03:41,040 --> 00:03:47,080 Speaker 1: traditional trademark law, there was a requirement of consumer confusion. UM. 56 00:03:47,240 --> 00:03:51,800 Speaker 1: Most Western nations, including the United States, have enacted anti 57 00:03:51,880 --> 00:03:56,080 Speaker 1: counterfeiting laws that set aside that requirement and simply say, 58 00:03:56,120 --> 00:04:00,280 Speaker 1: if you are free riding off of the um name 59 00:04:00,320 --> 00:04:04,240 Speaker 1: brand of another famous mark. Her As is clearly a 60 00:04:04,320 --> 00:04:08,480 Speaker 1: famous mark under any definition, then you have committed an 61 00:04:08,520 --> 00:04:13,760 Speaker 1: independent civil wrong which can be stopped by the court. Susan, 62 00:04:13,760 --> 00:04:15,640 Speaker 1: why should that be? Why? I mean, you have a 63 00:04:15,720 --> 00:04:19,600 Speaker 1: willing buyer, willing seller, Uh, you know, buying a product. 64 00:04:19,640 --> 00:04:21,360 Speaker 1: I you know, I'm buying something. I know it's not 65 00:04:21,600 --> 00:04:23,839 Speaker 1: you know of the quality of of her Mes or 66 00:04:23,960 --> 00:04:27,479 Speaker 1: or some other name brand. Uh you know, why shouldn't 67 00:04:27,480 --> 00:04:29,760 Speaker 1: we let this kind of say? I'll go through. I 68 00:04:29,800 --> 00:04:32,200 Speaker 1: think the greatest concern here for m AS here is 69 00:04:32,200 --> 00:04:36,040 Speaker 1: a dilution of their brand, because the more replicas are 70 00:04:36,080 --> 00:04:39,279 Speaker 1: out there, especially if they are indeed substantially identical to 71 00:04:39,360 --> 00:04:43,960 Speaker 1: the originals, at least in an appearance perhaps from a distance, 72 00:04:44,600 --> 00:04:46,680 Speaker 1: or if you don't actually touch the leather, which is 73 00:04:46,680 --> 00:04:51,120 Speaker 1: probably fleather in this case. But the concern is that 74 00:04:51,400 --> 00:04:54,400 Speaker 1: if there are enough replicas out there at the consumer 75 00:04:54,440 --> 00:04:57,080 Speaker 1: who would have bought em AS will simply pass it 76 00:04:57,200 --> 00:05:00,400 Speaker 1: up and not bother to buy the real thing, so 77 00:05:00,520 --> 00:05:03,640 Speaker 1: there's that kind of market revolution. There's even a possibility 78 00:05:03,640 --> 00:05:07,520 Speaker 1: of market substitution why by the MS when you can 79 00:05:07,560 --> 00:05:10,359 Speaker 1: get the replicas so much cheaper, So those two things 80 00:05:10,440 --> 00:05:14,160 Speaker 1: are really primary in the mind of MS. I think 81 00:05:14,200 --> 00:05:16,880 Speaker 1: the other thing to remember is um you describe the 82 00:05:17,480 --> 00:05:20,600 Speaker 1: chain as a small chain, and the Australian Crust described 83 00:05:20,600 --> 00:05:23,039 Speaker 1: it as a tiny chain. But there are only four 84 00:05:23,320 --> 00:05:26,799 Speaker 1: MS boutiques in all of Australia, So in that sense 85 00:05:26,960 --> 00:05:30,680 Speaker 1: it may be that staring consumers would have more access 86 00:05:30,800 --> 00:05:33,880 Speaker 1: to these particular boutiques than they would do the real thing, 87 00:05:34,040 --> 00:05:37,440 Speaker 1: So there's that kind of concern about perception of the 88 00:05:37,520 --> 00:05:44,600 Speaker 1: brand overall. Terry d According to the to the MS attorneys, 89 00:05:44,800 --> 00:05:47,960 Speaker 1: there was no response from the boutique owner and the 90 00:05:48,000 --> 00:05:50,719 Speaker 1: case will be heard on March tenth unless it's resolved 91 00:05:50,760 --> 00:05:54,080 Speaker 1: earlier by the parties. Is it likely that the owner 92 00:05:54,160 --> 00:05:57,080 Speaker 1: is just going to keep dragging her feet until the 93 00:05:57,120 --> 00:06:01,200 Speaker 1: case until the case time comes or is a settlement likely? 94 00:06:02,760 --> 00:06:06,719 Speaker 1: What we typically see in these counterfeit goods cases is 95 00:06:07,120 --> 00:06:10,280 Speaker 1: attempt by the defendant the counterfeiter to drag the matter out, 96 00:06:10,360 --> 00:06:13,560 Speaker 1: drag the matter out try to UM obtain the best 97 00:06:13,560 --> 00:06:17,880 Speaker 1: possible settlement from the trademark owner from the brand UH 98 00:06:17,920 --> 00:06:22,080 Speaker 1: and in the hopes that the cost of the enforcement 99 00:06:22,279 --> 00:06:26,880 Speaker 1: of the trademark is so high that the brand owner 100 00:06:27,080 --> 00:06:32,159 Speaker 1: is willing UH to settle for relatively inexpensive payment UM 101 00:06:32,360 --> 00:06:35,640 Speaker 1: as well as secession of selling the goods. The most 102 00:06:35,680 --> 00:06:39,400 Speaker 1: frequent thing you see is that the counterfeiter wants the 103 00:06:39,480 --> 00:06:43,360 Speaker 1: right to sell off its stock of counterfeit goods before 104 00:06:43,400 --> 00:06:47,200 Speaker 1: it stops UM engaging in the counterfeit practices, which has 105 00:06:47,240 --> 00:06:49,920 Speaker 1: always amazed to me. And yet if they drag things 106 00:06:49,960 --> 00:06:53,240 Speaker 1: on long enough, they often get the brand to agree 107 00:06:53,279 --> 00:06:57,200 Speaker 1: to something like that, Susan. According to news reports UH 108 00:06:57,440 --> 00:07:01,320 Speaker 1: at the store, there are other UH what appear to 109 00:07:01,320 --> 00:07:03,400 Speaker 1: me knock off the whole whole number of other brands. 110 00:07:04,080 --> 00:07:08,760 Speaker 1: Is Hermes being especially aggressive impressing this suit, whereas the 111 00:07:08,760 --> 00:07:14,000 Speaker 1: other companies apparently haven't filed suit again against this boutique. Yet, 112 00:07:15,200 --> 00:07:17,720 Speaker 1: I think every brand really has to pick and choose 113 00:07:17,760 --> 00:07:21,800 Speaker 1: their battles. It's not possible to simply ignore counterfeiting where 114 00:07:21,800 --> 00:07:25,040 Speaker 1: it occurs, lest your trademark actually become generic and you 115 00:07:25,160 --> 00:07:27,680 Speaker 1: lose it. So every brand out there that wants to 116 00:07:27,760 --> 00:07:30,840 Speaker 1: keep its trademarks, has to do a certain amount of 117 00:07:30,920 --> 00:07:34,320 Speaker 1: anti counterfeiting enforcement. But that doesn't mean that every brand 118 00:07:34,360 --> 00:07:38,119 Speaker 1: will pick the same chain or the same vendor every time. 119 00:07:38,600 --> 00:07:42,640 Speaker 1: It's just a matter of doing enough enforcements to make 120 00:07:42,880 --> 00:07:47,440 Speaker 1: to a g to attack those particular vendors that are 121 00:07:47,560 --> 00:07:50,080 Speaker 1: that you feel are actually harming your market or of 122 00:07:50,120 --> 00:07:52,720 Speaker 1: which you might make an example. Um, and at the 123 00:07:52,760 --> 00:07:56,880 Speaker 1: same time to maintain the integrity of your brand. Jerry, 124 00:07:56,920 --> 00:08:00,040 Speaker 1: just a little time left. But has there been a 125 00:08:00,080 --> 00:08:04,600 Speaker 1: lot more enforcement actions on for trademarks and for retail 126 00:08:04,680 --> 00:08:09,080 Speaker 1: goods since the Internet has burgeoned as far as shopping 127 00:08:09,160 --> 00:08:12,520 Speaker 1: is concerned. Oh my yes, June. Um. You look at 128 00:08:12,520 --> 00:08:15,920 Speaker 1: Gucci in particular, which has filed several lawsuits over the 129 00:08:16,000 --> 00:08:20,320 Speaker 1: last couple of years, suing hundreds of Internet sites in 130 00:08:20,360 --> 00:08:23,360 Speaker 1: a single lawsuit to get them to stop selling what 131 00:08:23,360 --> 00:08:27,160 Speaker 1: purports to be Gucci products. So yes, the Internet has 132 00:08:27,200 --> 00:08:34,600 Speaker 1: seen an uptick and the enforcement level by luxury brand retailers. 133 00:08:35,040 --> 00:08:36,959 Speaker 1: Thank you both so much. It's always a pleasure to 134 00:08:37,000 --> 00:08:39,760 Speaker 1: have you both on Bloomberg Law. That's Terence Ross, a 135 00:08:39,840 --> 00:08:43,720 Speaker 1: partner at Captain Uten Rosenman, and Susan scoffiti, the director 136 00:08:43,720 --> 00:08:47,480 Speaker 1: of the Fashion Law Institute at Fordham University School of Law, 137 00:08:47,520 --> 00:08:50,360 Speaker 1: which is the first fashion law institute in the country.