WEBVTT - Hermes Sues Small Australian Shop Over Bracelet (Audio) 0:00:00.080 --> 0:00:02.840 You're listening to Bloomberg Law. I'm June Grasso in New 0:00:02.920 --> 0:00:06.360 York with Greg's store in Washington, d C. It's a 0:00:06.440 --> 0:00:10.680 top French luxury brand known for craftsmanship, design, limited supply 0:00:10.840 --> 0:00:16.160 and long waiting lists, and it protects that brand. June 0:00:16.360 --> 0:00:19.759 ms the dawn of a new fragrance. That's why the 0:00:19.840 --> 0:00:23.440 luxury giant Ramez is suing a small chain of Melbourne 0:00:23.440 --> 0:00:27.400 boutiques for selling what it claims our knockoff bracelets. The 0:00:27.480 --> 0:00:30.520 bracelet in question is a leather bracelet with the distinctive 0:00:30.640 --> 0:00:34.800 ermez h clasp Ermez claims that it made three attempts 0:00:34.840 --> 0:00:37.800 to contact the owner of the boutiques called E M Style, 0:00:37.920 --> 0:00:40.520 to order her to stop selling the bracelets, but got 0:00:40.520 --> 0:00:44.120 no response. Our guests are Terence Ross, a partner at 0:00:44.159 --> 0:00:47.680 Captain Yuchen Rosenman, and Susan Scoffiti, director of the Fashion 0:00:47.720 --> 0:00:51.320 Law Institute at Fordham University School of Law. They're joining 0:00:51.360 --> 0:00:55.160 us now in the Spectrum Enterprise Phone Line Spectrum Enterprise 0:00:55.240 --> 0:01:00.560 Nationwide Fiber based Network and I T Infrastructure Solutions Terry. 0:01:00.760 --> 0:01:04.960 You can go online and look up replica ORMs bracelets 0:01:05.080 --> 0:01:08.280 and get them for thirty five dollars or so. So 0:01:08.360 --> 0:01:12.640 why is Ermez pursuing this against this small chain of 0:01:12.720 --> 0:01:18.720 Australian boutiques. Well, in this case, June, the boutiques seem 0:01:18.800 --> 0:01:23.559 to be particularly aggressive in pushing this out as counterfeit 0:01:24.000 --> 0:01:30.240 RMS product and resistant repeated requests to cease and desist 0:01:30.319 --> 0:01:36.000 from Hermez um and at some point enough becomes enough. Um. 0:01:36.160 --> 0:01:40.399 These fashion retailers, who depend so much upon the value 0:01:40.400 --> 0:01:47.400 of their trademark simply cannot ignore this sort of blatant counterfeiting. Susan. 0:01:47.560 --> 0:01:50.520 What's the legal standard that Hermes would have to meet 0:01:50.520 --> 0:01:52.560 if this case we're to go forward and in court, 0:01:53.000 --> 0:01:55.800 is it that the consumer has to be confused about 0:01:55.880 --> 0:02:00.400 the origin of the products or something else? Well, it 0:02:00.520 --> 0:02:04.040 is the case as as alleges that these copies are 0:02:04.040 --> 0:02:08.120 in fact substantially identical, then we're not even so concerned 0:02:08.120 --> 0:02:12.880 about consumer confusion, right, But if they were merely showed 0:02:12.880 --> 0:02:16.160 a resemblance of some sort then we might ask that question. 0:02:16.800 --> 0:02:20.400 But overall, you're right, the general trademark standard is one 0:02:20.480 --> 0:02:24.120 of likelihood of consumer confusion um, And the Australian Trademark 0:02:24.160 --> 0:02:27.000 Office of course would have taken this into account in 0:02:27.080 --> 0:02:32.240 considering this trademark, Terry, do the boutiques have any defense here? 0:02:32.760 --> 0:02:36.320 Can they say this really isn't the same, the h 0:02:36.480 --> 0:02:39.400 looks a little bit different, or the leather is different. 0:02:40.720 --> 0:02:45.119 It's hard to see a viable defense that the boutiques 0:02:45.200 --> 0:02:50.360 might have. UH. I note in particular that UM, the 0:02:50.440 --> 0:02:54.079 investigators who went in on behalf firm as UM to 0:02:54.560 --> 0:02:57.359 follow up on the complainants they had received. UM spoke 0:02:57.480 --> 0:03:00.280 Tom on an undercover basis, spoke to one of the 0:03:00.320 --> 0:03:04.359 retail clerks who was very proud and expressed that these 0:03:04.400 --> 0:03:08.919 were counterfeits. UM. And I think in that sort of circumstance, 0:03:09.080 --> 0:03:13.000 it's very hard UM to claim that you were within 0:03:13.120 --> 0:03:17.760 some sort of legal right. Um, that consumers weren't really confused. 0:03:17.760 --> 0:03:22.600 They were purposely counterfeiting these herms products, and counterfeiting as 0:03:22.639 --> 0:03:25.480 in Australia is against the law just as it is 0:03:25.480 --> 0:03:29.320 here in the United States, without regard to consumer confusion. So, Terry, 0:03:29.440 --> 0:03:32.680 even though they say this is a copy, this isn't 0:03:32.720 --> 0:03:36.840 the real thing, it's still considered a counterfeit when the 0:03:36.840 --> 0:03:40.800 person knows they're not buying in their miss bracelet. In 0:03:41.040 --> 0:03:47.080 traditional trademark law, there was a requirement of consumer confusion. UM. 0:03:47.240 --> 0:03:51.800 Most Western nations, including the United States, have enacted anti 0:03:51.880 --> 0:03:56.080 counterfeiting laws that set aside that requirement and simply say, 0:03:56.120 --> 0:04:00.280 if you are free riding off of the um name 0:04:00.320 --> 0:04:04.240 brand of another famous mark. Her As is clearly a 0:04:04.320 --> 0:04:08.480 famous mark under any definition, then you have committed an 0:04:08.520 --> 0:04:13.760 independent civil wrong which can be stopped by the court. Susan, 0:04:13.760 --> 0:04:15.640 why should that be? Why? I mean, you have a 0:04:15.720 --> 0:04:19.600 willing buyer, willing seller, Uh, you know, buying a product. 0:04:19.640 --> 0:04:21.360 I you know, I'm buying something. I know it's not 0:04:21.600 --> 0:04:23.839 you know of the quality of of her Mes or 0:04:23.960 --> 0:04:27.479 or some other name brand. Uh you know, why shouldn't 0:04:27.480 --> 0:04:29.760 we let this kind of say? I'll go through. I 0:04:29.800 --> 0:04:32.200 think the greatest concern here for m AS here is 0:04:32.200 --> 0:04:36.040 a dilution of their brand, because the more replicas are 0:04:36.080 --> 0:04:39.279 out there, especially if they are indeed substantially identical to 0:04:39.360 --> 0:04:43.960 the originals, at least in an appearance perhaps from a distance, 0:04:44.600 --> 0:04:46.680 or if you don't actually touch the leather, which is 0:04:46.680 --> 0:04:51.120 probably fleather in this case. But the concern is that 0:04:51.400 --> 0:04:54.400 if there are enough replicas out there at the consumer 0:04:54.440 --> 0:04:57.080 who would have bought em AS will simply pass it 0:04:57.200 --> 0:05:00.400 up and not bother to buy the real thing, so 0:05:00.520 --> 0:05:03.640 there's that kind of market revolution. There's even a possibility 0:05:03.640 --> 0:05:07.520 of market substitution why by the MS when you can 0:05:07.560 --> 0:05:10.359 get the replicas so much cheaper, So those two things 0:05:10.440 --> 0:05:14.160 are really primary in the mind of MS. I think 0:05:14.200 --> 0:05:16.880 the other thing to remember is um you describe the 0:05:17.480 --> 0:05:20.600 chain as a small chain, and the Australian Crust described 0:05:20.600 --> 0:05:23.039 it as a tiny chain. But there are only four 0:05:23.320 --> 0:05:26.799 MS boutiques in all of Australia, So in that sense 0:05:26.960 --> 0:05:30.680 it may be that staring consumers would have more access 0:05:30.800 --> 0:05:33.880 to these particular boutiques than they would do the real thing, 0:05:34.040 --> 0:05:37.440 So there's that kind of concern about perception of the 0:05:37.520 --> 0:05:44.600 brand overall. Terry d According to the to the MS attorneys, 0:05:44.800 --> 0:05:47.960 there was no response from the boutique owner and the 0:05:48.000 --> 0:05:50.719 case will be heard on March tenth unless it's resolved 0:05:50.760 --> 0:05:54.080 earlier by the parties. Is it likely that the owner 0:05:54.160 --> 0:05:57.080 is just going to keep dragging her feet until the 0:05:57.120 --> 0:06:01.200 case until the case time comes or is a settlement likely? 0:06:02.760 --> 0:06:06.719 What we typically see in these counterfeit goods cases is 0:06:07.120 --> 0:06:10.280 attempt by the defendant the counterfeiter to drag the matter out, 0:06:10.360 --> 0:06:13.560 drag the matter out try to UM obtain the best 0:06:13.560 --> 0:06:17.880 possible settlement from the trademark owner from the brand UH 0:06:17.920 --> 0:06:22.080 and in the hopes that the cost of the enforcement 0:06:22.279 --> 0:06:26.880 of the trademark is so high that the brand owner 0:06:27.080 --> 0:06:32.159 is willing UH to settle for relatively inexpensive payment UM 0:06:32.360 --> 0:06:35.640 as well as secession of selling the goods. The most 0:06:35.680 --> 0:06:39.400 frequent thing you see is that the counterfeiter wants the 0:06:39.480 --> 0:06:43.360 right to sell off its stock of counterfeit goods before 0:06:43.400 --> 0:06:47.200 it stops UM engaging in the counterfeit practices, which has 0:06:47.240 --> 0:06:49.920 always amazed to me. And yet if they drag things 0:06:49.960 --> 0:06:53.240 on long enough, they often get the brand to agree 0:06:53.279 --> 0:06:57.200 to something like that, Susan. According to news reports UH 0:06:57.440 --> 0:07:01.320 at the store, there are other UH what appear to 0:07:01.320 --> 0:07:03.400 me knock off the whole whole number of other brands. 0:07:04.080 --> 0:07:08.760 Is Hermes being especially aggressive impressing this suit, whereas the 0:07:08.760 --> 0:07:14.000 other companies apparently haven't filed suit again against this boutique. Yet, 0:07:15.200 --> 0:07:17.720 I think every brand really has to pick and choose 0:07:17.760 --> 0:07:21.800 their battles. It's not possible to simply ignore counterfeiting where 0:07:21.800 --> 0:07:25.040 it occurs, lest your trademark actually become generic and you 0:07:25.160 --> 0:07:27.680 lose it. So every brand out there that wants to 0:07:27.760 --> 0:07:30.840 keep its trademarks, has to do a certain amount of 0:07:30.920 --> 0:07:34.320 anti counterfeiting enforcement. But that doesn't mean that every brand 0:07:34.360 --> 0:07:38.119 will pick the same chain or the same vendor every time. 0:07:38.600 --> 0:07:42.640 It's just a matter of doing enough enforcements to make 0:07:42.880 --> 0:07:47.440 to a g to attack those particular vendors that are 0:07:47.560 --> 0:07:50.080 that you feel are actually harming your market or of 0:07:50.120 --> 0:07:52.720 which you might make an example. Um, and at the 0:07:52.760 --> 0:07:56.880 same time to maintain the integrity of your brand. Jerry, 0:07:56.920 --> 0:08:00.040 just a little time left. But has there been a 0:08:00.080 --> 0:08:04.600 lot more enforcement actions on for trademarks and for retail 0:08:04.680 --> 0:08:09.080 goods since the Internet has burgeoned as far as shopping 0:08:09.160 --> 0:08:12.520 is concerned. Oh my yes, June. Um. You look at 0:08:12.520 --> 0:08:15.920 Gucci in particular, which has filed several lawsuits over the 0:08:16.000 --> 0:08:20.320 last couple of years, suing hundreds of Internet sites in 0:08:20.360 --> 0:08:23.360 a single lawsuit to get them to stop selling what 0:08:23.360 --> 0:08:27.160 purports to be Gucci products. So yes, the Internet has 0:08:27.200 --> 0:08:34.600 seen an uptick and the enforcement level by luxury brand retailers. 0:08:35.040 --> 0:08:36.959 Thank you both so much. It's always a pleasure to 0:08:37.000 --> 0:08:39.760 have you both on Bloomberg Law. That's Terence Ross, a 0:08:39.840 --> 0:08:43.720 partner at Captain Uten Rosenman, and Susan scoffiti, the director 0:08:43.720 --> 0:08:47.480 of the Fashion Law Institute at Fordham University School of Law, 0:08:47.520 --> 0:08:50.360 which is the first fashion law institute in the country.