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September, 2017

Levi Strauss pursues China-based online counterfeiters

Original article: Law360

Levi Strauss is moving to curb the distribution and sale online of fake versions of its products by China-based counterfeiters. The company recently filed suit in an Illinois federal court, requesting that U.S. District Judge Elaine Bucklo enter an order that would effectively shut down the operations of the unnamed defendants by preventing them from doing business online. 


For that to succeed, a slew of parties would need to agree to disable and stop providing services to the defendants, including retail websites, search engines, third-party payment processors, adword providers, banks and credit cards. 


Levi Strauss also is seeking damages of $2 million per instance of trademark infringement or alternatively, that the defendants turn over the profits they made from fake Levi's products to the San Francisco-based company. 

Analysis:

China's online counterfeiters have growing global aspirations. In the complaint Levi Strauss filed, the company named four online marketplaces where the IP thieves are active: Alibaba, AliExpress, eBay and iOffer. Besides Alibaba's Taobao, these are all global e-commerce sites. 


Levi's also thinks it's an organized criminal operation. The complaint quoted by Law360 says that the defendants are "an interrelated group of counterfeiters working in active concert." 


TIPG reckons that's quite likely. A Google search for "Levi's AliExpress" turns up a website called "MyChinabargains.com" as the No. 7 search result. The site includes a guide to where to buy counterfeit denim online. In a June 2017 post entitled "Replica Levi's and Diesel jeans from Aliexpress," an anonymous author writes: "Replica Levis jeans and Diesel replicas are popular at Aliexpress. Recently they have become more difficult to find, but with a little patience it is still possible to find them. Another option is to buy them at DHGate which is a Chinese portal with many different vendors like Aliexpress."


Meanwhile, a search for "Replica Levi's" turns up myChinabargains.com as the No. 1 site. That's some effective search-engine optimization. 


Has Alibaba's PR team seen this website? In the eyes of the global market, this type of negative endorsement affirms many of our concerns about Alibaba's commitment to fighting counterfeiting. Even if Alibaba doesn't see itself as a conduit for IP infringement, the infringers themselves certainly do. 


Levi's shouldn't have too much difficulty obtaining the cooperation of the e-commerce ecosystem in shutting down the counterfeiters. Recouping financial losses caused by their infringement activities will be harder. Since the defendants are in China and their identities are unknown, Levi's won't be able to locate them easily. Indeed, the complaint notes that "Defendants go to great lengths to conceal their identities and often use multiple fictitious names and addresses to register and operate their network of defendant internet stores." 

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