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Intellectual Property

06 Sep 2012

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unTRUE RELIGION – Major Counterfeit Jeans Operation Shut Down

Last year Guru Denim Inc., owner of the international premium denim brand TRUE RELIGION, identified counterfeit problems in New Zealand. Hundreds, possibly thousands, of counterfeit TRUE RELIGION jeans were being sold through “pop-up” shops in a number of Auckland suburbs and online through a daily deal website. Guru Denim was concerned that the poor quality of the counterfeit products would damage its high end reputation, along with customer loyalty to the premium TRUE RELIGION fashion brand.

Guru Denim instructed Simpson Grierson to advise them on this matter. The actions of the importers/distributors of the counterfeit products amounted to trade mark infringement, copyright infringement, the tort of passing off and various breaches of the Fair Trading Act 1986. Under the Copyright Act 1994, the Trade Marks Act 2002 and the Crimes Act 1961, it is also a criminal offence to knowingly import counterfeit goods for the purposes of trade, or to offer such goods up for sale.

Counterfeit operations like these do substantial damage to the brand owner, both in terms of lost sales and damage to the goodwill and reputation fashion brand owners carefully build. Those who bought or saw the counterfeit jeans will also have had their impression of the TRUE RELIGION brand sullied - one clothing repairer reported replacing around 100 zips on the jeans. They also deprive "NZ Inc" of tax revenue, and damage our reputation for ethical trading.

While the importers/distributors were not charged under the Copyright Act or the Trade Marks Act, our investigations led to the police prosecuting two individuals, Dean Gibbs and Dawn Lomas, under section 257 of the Crimes Act, for use of a forged document. The individuals pleaded guilty and were sentenced on 5 September 2012 to Community Detention for three months, 300 hours Community Service and Supervision for one year. In addition, they have each been ordered to pay reparation of $20,000.

We believe that this is the first significant case involving counterfeit clothing to lead to criminal prosecution in New Zealand. This is a significant outcome, and demonstrates that the police take counterfeits operations seriously and the Courts will hold offenders accountable for the damaging impact of their actions on brand owners.

The New Zealand Customs Service (Customs) has reported "a substantial growth" in importation of counterfeit goods over the last few years. In addition to regular marketplace checks for counterfeits, we often recommend that brand owners take the preventative measure of filing trade mark and copyright notices with Customs. These notices give Customs the power to investigate and detain goods which they suspect are counterfeit or pirated goods. Detained goods can then be, and in our experience are usually, forfeited by the importer. If the importer refuses to forfeit the goods, the brand owner can issue proceedings, which acts to continue the detention.Simpson Grierson acts for Guru Denim in New Zealand. For further information on this matter, or on filing Customs notices, please contact Earl Gray, Tracey Walker, Richard Watts or Claire Foggo.