You're listening to Bloomberg Law. I'm June Grasso in New York with Greg's store in Washington, d C. It's a top French luxury brand known for craftsmanship, design, limited supply and long waiting lists, and it protects that brand. June ms the dawn of a new fragrance. That's why the luxury giant Ramez is suing a small chain of Melbourne
boutiques for selling what it claims our knockoff bracelets. The bracelet in question is a leather bracelet with the distinctive ermez h clasp Ermez claims that it made three attempts to contact the owner of the boutiques called E M Style, to order her to stop selling the bracelets, but got no response. Our guests are Terence Ross, a partner at Captain Yuchen Rosenman, and Susan Scoffiti, director of the Fashion
Law Institute at Fordham University School of Law. They're joining us now in the Spectrum Enterprise Phone Line Spectrum Enterprise Nationwide Fiber based Network and I T Infrastructure Solutions Terry. You can go online and look up replica ORMs bracelets and get them for thirty five dollars or so. So why is Ermez pursuing this against this small chain of
Australian boutiques. Well, in this case, June, the boutiques seem to be particularly aggressive in pushing this out as counterfeit RMS product and resistant repeated requests to cease and desist from Hermez um and at some point enough becomes enough. Um. These fashion retailers, who depend so much upon the value of their trademark simply cannot ignore this sort of blatant counterfeiting. Susan.
What's the legal standard that Hermes would have to meet if this case we're to go forward and in court, is it that the consumer has to be confused about the origin of the products or something else? Well, it is the case as as alleges that these copies are in fact substantially identical, then we're not even so concerned about consumer confusion, right, But if they were merely showed a resemblance of some sort then we might ask that question.
But overall, you're right, the general trademark standard is one of likelihood of consumer confusion um, And the Australian Trademark Office of course would have taken this into account in considering this trademark, Terry, do the boutiques have any defense here? Can they say this really isn't the same, the h looks a little bit different, or the leather is different. It's hard to see a viable defense that the boutiques
might have. UH. I note in particular that UM, the investigators who went in on behalf firm as UM to follow up on the complainants they had received. UM spoke Tom on an undercover basis, spoke to one of the retail clerks who was very proud and expressed that these were counterfeits. UM. And I think in that sort of circumstance, it's very hard UM to claim that you were within some sort of legal right. Um, that consumers weren't really confused.
They were purposely counterfeiting these herms products, and counterfeiting as in Australia is against the law just as it is here in the United States, without regard to consumer confusion. So, Terry, even though they say this is a copy, this isn't the real thing, it's still considered a counterfeit when the person knows they're not buying in their miss bracelet. In
traditional trademark law, there was a requirement of consumer confusion. UM. Most Western nations, including the United States, have enacted anti counterfeiting laws that set aside that requirement and simply say, if you are free riding off of the um name brand of another famous mark. Her As is clearly a famous mark under any definition, then you have committed an independent civil wrong which can be stopped by the court. Susan,
why should that be? Why? I mean, you have a willing buyer, willing seller, Uh, you know, buying a product. I you know, I'm buying something. I know it's not you know of the quality of of her Mes or or some other name brand. Uh you know, why shouldn't
we let this kind of say? I'll go through. I think the greatest concern here for m AS here is a dilution of their brand, because the more replicas are out there, especially if they are indeed substantially identical to the originals, at least in an appearance perhaps from a distance, or if you don't actually touch the leather, which is
probably fleather in this case. But the concern is that if there are enough replicas out there at the consumer who would have bought em AS will simply pass it up and not bother to buy the real thing, so there's that kind of market revolution. There's even a possibility of market substitution why by the MS when you can get the replicas so much cheaper, So those two things
are really primary in the mind of MS. I think the other thing to remember is um you describe the chain as a small chain, and the Australian Crust described it as a tiny chain. But there are only four MS boutiques in all of Australia, So in that sense it may be that staring consumers would have more access to these particular boutiques than they would do the real thing, So there's that kind of concern about perception of the
brand overall. Terry d According to the to the MS attorneys, there was no response from the boutique owner and the case will be heard on March tenth unless it's resolved earlier by the parties. Is it likely that the owner is just going to keep dragging her feet until the case until the case time comes or is a settlement likely?
What we typically see in these counterfeit goods cases is attempt by the defendant the counterfeiter to drag the matter out, drag the matter out try to UM obtain the best possible settlement from the trademark owner from the brand UH and in the hopes that the cost of the enforcement of the trademark is so high that the brand owner is willing UH to settle for relatively inexpensive payment UM
as well as secession of selling the goods. The most frequent thing you see is that the counterfeiter wants the right to sell off its stock of counterfeit goods before it stops UM engaging in the counterfeit practices, which has always amazed to me. And yet if they drag things on long enough, they often get the brand to agree to something like that, Susan. According to news reports UH at the store, there are other UH what appear to me knock off the whole whole number of other brands.
Is Hermes being especially aggressive impressing this suit, whereas the other companies apparently haven't filed suit again against this boutique. Yet, I think every brand really has to pick and choose their battles. It's not possible to simply ignore counterfeiting where it occurs, lest your trademark actually become generic and you lose it. So every brand out there that wants to keep its trademarks, has to do a certain amount of
anti counterfeiting enforcement. But that doesn't mean that every brand will pick the same chain or the same vendor every time. It's just a matter of doing enough enforcements to make to a g to attack those particular vendors that are that you feel are actually harming your market or of which you might make an example. Um, and at the same time to maintain the integrity of your brand. Jerry,
just a little time left. But has there been a lot more enforcement actions on for trademarks and for retail goods since the Internet has burgeoned as far as shopping is concerned. Oh my yes, June. Um. You look at Gucci in particular, which has filed several lawsuits over the last couple of years, suing hundreds of Internet sites in a single lawsuit to get them to stop selling what
purports to be Gucci products. So yes, the Internet has seen an uptick and the enforcement level by luxury brand retailers. Thank you both so much. It's always a pleasure to have you both on Bloomberg Law. That's Terence Ross, a partner at Captain Uten Rosenman, and Susan scoffiti, the director of the Fashion Law Institute at Fordham University School of Law, which is the first fashion law institute in the country.