Amazon and Italian luxury brand Maison Valentino filed a lawsuit against a retailer Thursday (June 18), alleging the company sold counterfeit goods as the trade in the so-called “gray market” continues to draw attention.
The suit was filed against Buffalo, N.Y.-based Kaitlyn Pan Group LLC and New York resident Hao Pan for allegedly counterfeiting Valentino’s Garavani Rockstud shoes and offering them for sale on its own website as well as on Amazon. The plaintiffs allege the sales are “in violation of Amazon’s policies and Valentino’s intellectual property rights.” Pan did not immediately respond to a request for comment made via its company website.
The suit alleges that Amazon shut down Kaitlyn Pan’s seller account in September 2019, but Pan continues to import, distribute, sell and offer infringing products through its website. Pan also allegedly attempted to apply for a U.S. trademark for the shoes, “flagrantly and willfully disregarding Valentino’s intellectual property.”
The lawsuit comes at a time when Valentino said it recently implemented a customs surveillance system and enforced its intellectual property rights in cooperation with U.S. customs authorities. It has seized more than 2,000 products over the past three years and has carried out anti-counterfeit activity on online platforms. That’s led to the removal of more than 7,000 listings on several marketplaces, more than 360 websites and over 1,000 social media accounts.
Amazon said in a statement that “this joint lawsuit builds on Amazon’s history of collaborating with brands to hold counterfeiters accountable. In line with Amazon’s past joint litigation, Valentino will receive any proceeds from this suit. Amazon strictly prohibits counterfeit products and, in 2019 alone, invested more than $500 million and had more than 8,000 employees protecting its store from fraud and abuse, including counterfeiting and IP infringing products.
“As a result of its efforts, 99.9% of all products viewed by customers on Amazon have not received a valid counterfeit complaint,” the company said. “Amazon also works closely with law enforcement agencies and reports all confirmed counterfeiters to U.S. and European authorities to help them build stronger criminal cases.”
A federal program aimed at identifying and stopping counterfeit sales has recently expanded to the pharmaceutical space. It’s run through Homeland Security’s National IP Rights Coordination Center. Director Steve Francis said two weeks ago that the pandemic has accelerated counterfeiting activity.
“The counterfeits [are] kind of flooding the markets,” he told Federal News Network. “It has a significant impact on the national security of the United States as it relates to counterfeit microelectronics that are going into DoD supply chains, or the economic-security impact that has with hundreds of billions of dollars of IP crimes that are committed.
“And lastly, [counterfeiting hurts] the health and safety of U.S. consumers … as it relates to counterfeit, fraudulent, substandard goods that are flooding the market — specifically now during the COVID-19 pandemic,” Francis said.
But a recent Harvard Business Review article claims that anti-counterfeit efforts haven’t been effective. “For every e-commerce platform like Alibaba that cracks down on fakes, a new one emerges that allows goods to be shipped directly from manufacturers,” HBR reported.
The publication noted that the total trade in fake goods is estimated at around $4.5 trillion, and fake luxury merchandise accounts for 60 percent to 70 percent of that amount. Digital plays a big role, accounting for as much as 40 percent of fake luxury-goods sales.
HBR called for luxury-goods brands to refocus on controlling their supply chains to fight the problem.
“Post-sale services such as alterations, maintenance and repair, as well as the booming trade in ‘pre-owned’ luxury items, are all promising areas for luxury goods companies to explore,” HBR wrote. “An early pioneer in this respect is Audemars Piguet, which in 2018 announced plans to launch a second-hand watch business. If executed properly, this kind of strategic move can help a luxury firm take control over its products throughout their lifecycles. It can also change the economics of buying a fake by offering consumers more affordable but still genuine options.”