Getting real about fake designer goods
By Alex Barbieri • Bankrate.com

Counterfeit merchandise is nothing new. If something gets hot, and expensive, cheaper copycat versions are likely to follow.

But these days, the desire for designer handbags, shoes and jewelry -- and the demand for their counterfeit counterparts -- has reached new heights. Is there any harm in saving money by buying a knock-off wallet or watch? The companies and organizations fighting it think so. They say buyers are unwittingly underwriting organized crime, not to mention compromising the sanctity of intellectual property.

Still, imitations are selling, and at a fraction of the cost of the originals. Can consumers be blamed for this mass flocking to fakes? One woman, who wished to remain anonymous, justified the purchase of knockoff designer items by saying, "Who can afford $2,000 for a Rolex watch, or $500 for a Louis Vuitton purse? If the companies didn't charge so much, people wouldn't have to buy fakes."

Her stylish friend added, "People want to be like their favorite celebrities. Carrying a Louis purse or wearing a Tiffany necklace is a status symbol ... as long as no one else knows it isn't real."

Luxury apparel companies argue that the sale of illegal product has driven up the price for legitimate consumers. Counterfeit replicas also are usually lower in quality than the originals, and are likely to break, rip or fade long before the original does.

Anti-counterfeiting advocates say buying fakes is not a victimless crime. Barbara Kolsun, general council for Kate Spade Inc., a leader in designer handbags and accessories, is head of their anti-counterfeiting program.

"It goes way beyond knockoff bags and watches," she says. "People buy counterfeit pharmaceutical drugs, such as Viagra, Lipitor and birth control pills. There is everything from counterfeit baby food to airplane parts. These products are not regulated. People have become sick and have been killed as a result of using these products."

Timothy Trainer, president of the International Anti-Counterfeiting Coalition Inc., points out another negative aspect: "Many of the people involved in the sale of counterfeit merchandise have also been linked to other illegal activities, including cocaine trafficking, prostitution and violation of child labor laws," Trainer says.

The designer industry, in conjunction with federal and state law enforcement and anti-counterfeiting organizations, is cracking down on the sale and purchase of illegal merchandise. Trainer says that law enforcement's approach to fighting counterfeiters is similar to a drug dealing situation. "You have to go after the counterfeit infrastructure. You can arrest one dealer off the street, but the key is to shut it down at the manufacturing level."

It's a fake world we live in
They've got their work cut out for them. A recent Internet search for "fake designer handbags" turned up almost 5,000 Web sites.

"The counterfeiting industry comprises 5 percent to 7 percent of global trade, generating half-a-trillion dollars globally," Trainer says. "One can't help but think there is a significant amount of organized crime going on, beyond the mom-and-pop level, simply by sheer volume."

Just hit the downtown area of any major city. Wherever there are street vendors, you're likely to find knockoffs.

On a recent walk along Canal Street in Chinatown, New York City, an awesome amount of counterfeit products was on display. Four blocks overflowing with fake designer purses, hats, scarves, watches, rings and necklaces. The labels were a who's who of fashion's most in-demand brands: Kate Spade, Prada, Fendi, Gucci, Dooney & Bourke, Coach, Louis Vuitton and Burberry. Need jewelry? How about Rolex, Movado, Tag Heuer, Tiffany or David Yurman. And for the teeny TRL crowd, racks of rip-off Von Dutch T-shirts and baseball caps.

The vendors were organized and technologically prepared. Merchants communicated on walkie-talkie phones, calling in orders for product to some hidden stock room. They also alert each other of suspicious customers or police in the area. The system worked. When police raided, the tip-off arrived before the cops. Gates slammed shut, doors locked and merchandise flew off tables within seconds. Sorry, closed for the day. See you later somewhere else.

Purse-party phenomenon
Merchants and manufacturers aren't the only ones risking fines and jail time. Many otherwise law-abiding people have begun selling counterfeits out of car trunks or at home purse parties (think Tupperware, but with knockoff handbags). While it is unlikely a person would get arrested for purchasing an individual fake bag or watch, legal vulnerability increases if a person is found selling -- or even with the intent to sell -- counterfeit products. At that point, a person is considered a distributor, and is subject to state and federal criminal penalties, including fines and prison terms.

Kolsun works with federal and state law enforcement agencies.

"Together, we approach mall kiosks, flea markets and street vendors to ensure they are selling legitimate product," Kolsun says. "We also work with eBay's Vero program, which closes down auction sites that are selling illegal product."

Asked if people are going to jail for selling knockoff bags, Kolsun says, "Absolutely. Every week."

The international, multibillion dollar counterfeit industry has a negative impact on our economy, Kolsun says, "Counterfeiters are not paying taxes or trademark fees. It should be disturbing to people that when they buy a fake bag, they're supporting a foreign underground economy and criminals with an all-cash lifestyle."

How close is too close?
Some companies manufacture bags that are "inspired by" and closely resemble a famous brand's pattern. For example, Louis Vuitton, maker of some of fashion's most recognizable designs, has a white leather bag with multicolor LV's all over it. There is a less-expensive look-alike on the market with a similar design. Instead of L's and V's, the bag is covered with X's and O's.

Copyright infringement? Could be. Even if a bag does not have a famous designer's label on it, if it can be mistaken for something it isn't, it is copyright infringement, Kolsun says.

"With so much manufacturing done outside of the United States, intellectual property really is the brick and mortar of our society. If we do not protect and understand this, we're in big trouble."

Adds Trainer of IACC, "What I want to impress on people is that when they purchase counterfeit goods, they are funding and underwriting a large illegal, non-tax paying money-making endeavor -- and a lot of horrible illegal activity."

For more information about laws related to trademark and copyright infringement, visit the International A