The Curse of Von Dutch: A Brand to Die For

A few weeks ago I saw a suggestion come across my Hulu welcome screen entitled “The Curse of Von Dutch: A Brand to Die For”. My first impression was that I knew all about the brand, especially the many details of how it was counterfeited into oblivion. Either way, I knew I wanted to watch it to see if my account was correct or if there was more to the story.

Turns out, as comprehensive as I thought my perspective might have been, there were some things I missed, or was not privy to. I worked for their lawyers during the peak enforcement process and I knew things were a little off. And this documentary helps bring that to light.

Bobby Vaughn and Mike Cassel were two surfer dudes who appropriated the IP of a counterculture icon named Kenny Howard a.k.a. Von Dutch (1929-1992). Howard’s philosophy about Intellectual Property was that no one owned anything and that all creativity was meant for the world to share. So, in 1999, Vaughn and Cassel spun off the Von Dutch brand from another fashion line they had that was not doing well.

Before Bobby and Mike knew it, the Von Dutch brand took off. Celebrities were all over it, wearing their apparel on every television channel available. Along with the success of the brand came organized criminals they had previously tapped for startup funds. This made life difficult because there were established cartel captains that demanded cuts from the sales.

But the two surfer dudes, as savvy creatives as they were, could not manage the explosive success of this brand. It was then that they welcomed investors and a CEO from Europe. All of a sudden, French fashion designer Christian Audigier was the face of the brand. Christian blew the brand up to levels no one dreamed. But, as the genuine product sales grew, the counterfeit sales grew exponentially.

“Here’s the problem. When you are already a logo-driven brand where your logo is your main seller its easy to slap a logo on a piece of thing and sell it and call it Von Dutch. We were the second most counterfeited brand in the world next to Louis Vuitton.” ~ European Investor Tonny Sorensen.

This was where my team and I came in. In the early 2000’s, counterfeiting fashion brands on the Internet was at its peak. Yes, the flea markets and street vendors were also going bananas, but Internet sales were new, and I was the guy that handled these types of cases.

What was discovered was that the folks behind this brand never laid a proper foundation for enforcement. They didn’t spend the few cents per item required to tag the genuine goods properly so that they could be differentiated from the fake. By the time they brought in the proper attorneys and investigators, the problem was out of control there was very little that could be done.

“In the height of our business, we were doing probably around the $300 to $400 million mark. The counterfeits were north of a billion for sure.”~ Niels Juul, Von Dutch investor

I’ve met both of the original creatives Bobby and Mike during my years living in Venice Beach and find their stories fascinating. I don’t blame them for the counterfeiting problem (bringing in the cartels is another story). But, when the European investors came in and hired high-priced attorneys corners were cut while people were too busy making money.

The lesson to learn here is that, before your brand takes off, make sure you have already laid the foundation for a good enforcement plan. We can help you with that. Contact us at MI:33 and we will be glad to get things going for you.

Even Some Prisoners are Chinese Knockoffs

Throughout the years in the anti-counterfeiting business there have been a few times where we, and our clients, have lauded our victories when a raid was accomplished on a factory making Chinese knockoffs. Once, I remember, back in 2006 our client’s attorney actually saw thirteen people in handcuffs. Chinese nationals, in China. In cuffs for making fakes. Not bad for a case that started with some handbags sold by a Purse Queen in Missouri! Every time I tell that story, I finish it with the punchline that “I’m sure the cuffs came right off when my client boarded the plane.” I’m not faulting China and that really isn’t my point here. But the disconnect between cultures is. There is obviously a totally different meaning of ‘authenticity’ when you cross oceans. You may recall the incident during the opening ceremony of the 2008 Beijing Summer Olympic Games when the seven year-old vocalist who was commissioned to sing ‘Ode to the Motherland’ was replaced by a prettier lip synching faker. A recent Slate article reports on a whole new kind of counterfeiting: fake prisoners. No kidding, guys. People who are facing jail time in China can hire a less-fortunate guy to confess, or just replace him in the can. This brings me to a whole new thought on the counterfeit enforcement business. While diplomacy with China is important in the fight against counterfeit goods, raiding their factories and jailing their owners is probably not effective.

The most important facet of my solution is to curtail the demand in the United States and other countries with a massive consumer base. The way to do that is to enforce against all sellers of this product in those countries. Contrary to the spirit voice in Field of Dreams, wise businessmen will tell you that supply does not dictate demand. Stop promising your client you’re gonna get the “big factory” and focus on stopping the mid-level distributors here. I promise your performance numbers will increase and, most important, you will help restore value and dignity to the client’s brand. I know from great experience that many people who became huge sellers of counterfeit goods here in the United States would have stopped if they had just worn a pair of handcuffs early on. One night in jail works wonders on the soul. Enforcing the smaller crimes is part of the plan that makes many of our inner cities safer. Curtailing vandalism in your neighborhood leads to less violence down the line. In tough economic times it is easy to cut costs and focus on the biggest problems. The problem with the latter is that no big problem started that way. My suggestion to my readers is to simply place most of your efforts on the cities and countries with the highest retail sales of genuine product. I’m not talking about the people selling fakes at swap meets or in the bad neighborhoods. I’m speaking of the mid-level distributors who are getting their product directly from China and supplying those folks.

Now I’m going to finish my coffee.

Anatomy of an Idiot or: The Case of the Counterfeit Judge

As I regularly search for shows on my TiVo using keywords that relate to my interests and work, I ran across a rerun of ‘Swift Justice with Nancy Grace‘ that originally aired on 2/28/11 entitled “An online rip-off; pit bull puppies”. This was caught in my filter because the word ‘knockoff’ was in the show’s description. In this episode, the first case was of a woman who had purchased a pair of Coach boots from a website buymerchant.com. Upon receipt of the boots, the Plaintiff stated that she believed they were counterfeit and was entitled to a refund of $174 USD. Whether the goods in this case were actually counterfeit is actually not even relevant to what I’m about to share. What followed was some of the most irresponsible judiciary-slash-journalistic behavior I have ever seen.

Grace first examines the boots saying, “If these are fake, I’ll buy ’em! I’m all about fakes!” She then hollers backstage, “Hey, bring me out my my ‘Frauda’!” She giggled and looked back at the camera explaining, “My fake Prada. I love it.” As she brings the conversation back to the case on hand, she turns to the Plaintiff and uttered in a snarky drawl, “So… you don’t like fakes?”

After picking up my jaw from the atop my Birkenstock I witness Grace call in her ‘expert’ to authenticate the boots. This guy’s qualifications were that he was a former employee at a Coach store. Wait, it gets better. As he makes his unconvincing case, Grace barks again and looks offstage, “Hey, bring me back my fake!” Then she asks her expert to authenticate her ‘Frauda’. He explains to her that it is counterfeit and that a real handbag of this type is of higher quality and would retail for about $1,500 USD. Then Grace starts howling like a preacher with a bellyache with, “Fifteen… hundred… dollars?!?!?! Do you know how long I’ve had this thing? Five years. That’s a good quality bag!” Just as I did, you are probably asking if this idiot actually admitted to purchasing illegal goods, defend it and then promote the behavior from her bench on national television. Yes. She did. You can witness an excerpt of the event for yourself by clicking this link here: http://www.swiftjustice.com/case_files/2011-02-28

While much of the civilized world is trying to discourage this type of contraband activity, we have a nitwit like this adjudicating cases with her own television show, and doling out legal advice on CNN. While Nancy Grace is hosting ‘Swift Justice’, what she really needs is a swift kick in the rear end.

Wrap It Up. I’ll Take It.

Since I last posted, I have been to three conferences in two countries, hosted two events and conducted five hours of public speaking. During this time, I’ve been in coffee shops and hotel rooms doing the marketing, bookkeeping, client meetings and other tasks required of a small businessman. I am by no means a small man, but an entrepreneur thus the small business reference. Here is a recap of my latest adventures:

On May 12th I was a featured speaker at the Trilateral Security Conference in Calgary, AB. I gave my talk entitled “IP Cybercrime: Knockoffs & The Web”. While attending I was able to try Alberta beef for the first time and, being from Texas I never thought I’d say this but, it was amazing. I want more. The city is beautiful and reminded me much of Fort Worth. Large working class neighborhoods, evidence of more than a century of architecture and a very quaint upscale downtown club district.

My eight-day Boston trip included the company of a woman many of you know as “Wifey” of Facebook fame. She and I flew in Tuesday and had dinner at Ristorante Limoncello with fellow Online Guy Nils Montan and his lovely wife Teresa. Being in Boston’s North End I went straight for the linguini with clams and was far from disappointed. The International AntiCounterfeiting Coalition kicked off on Wednesday May 19th at 9am with a half-day presentation of my IP Cybercrime Boot Camp. I was pleased with the turnout and thank the IACC for the opportunity to present. Kudos to IACC President Bob Barcheisi for putting on yet another great conference. The venue was the Hyatt Regency Boston on Ave de Lafayette which was great with the exception of below-par room services due to a strike which could not be avoided on our end. The program was rich with topics, the committee meetings were productive and I believe attendance was an all-time high.

Over the weekend, Wifey and I took time to sleep in a bit, have a couple romantic dinners and take the very entertaining Ghosts and Gravestones tour of Boston after dark on Sunday. Dinners at Bouchee Brasserie on Newbury and Kingfish Hall in Quincy Market were quite enjoyable.

By the beginning if the International Trademark Association Spring Meeting on Sunday my voice was completely shot. As most of you know, talking is my favorite activity so this was not going stop me. I vocally limped my way through the next four days while gorging on honey and lemon between meetings and events. The first event to mention is the well-publicized IP Tweetup hosted by “The Online Guys” myself & Nils Montan. Our RSVP list from Twitter, Facebook and LinkedIn totaled more than ninety and I suspect actual turnout was much higher. This is beyond what would be expected for a pre-dinner happy hour. Our sponsor Knowem brought three representatives to give a presentation and Q&A throughout. It was so successful that we have already announced there will be a followup event next year in San Francisco.

Like many INTA attendees, I fill my days with meetings so I do regret to say I have no report on the daily sessions themselves. Back to the nightlife. Tuesday night I attended the reception hosted by law firm Duane Morris at the classy Isabella Stewart Gardner Museum. I have been to this firm’s events before and can say they know how to choose a nice venue to escape the madness of the legal world. Speaking of venues one cannot mention this conference without raving about the Finnegan party at the House of Blues. There were bands playing all night for what I estimate to have been over a thousand in attendance. I think I even saw a few people swinging on chandeliers. I was able to bump into dozens of friends and also made some new ones.

By the final day, I met many friends, made several new client relationships, closed a few business deals and became Mayor of my hotel on Foursquare. Back home for a few days awaiting my next mission.

Now I’m going to finish my coffee.

The Whole World Vs. Competition

Corporate policy enforcement is often paradoxical. The two faces of humanity clash in the office. One is to compete for first place while the other appears to try to help others. As someone who is commissioned to protect specific brands from being tarnished, I find myself in a position to tangentially help brands with whom I do not work. I choose to do so out of goodwill. I find that the practice of selflessness is something that brings me happiness.

The competition method is to make it so difficult for criminals to counterfeit your brand that they counterfeit others brands instead. This is not terrible, but also not constructive outside the shareholder meetings. In other words, the end result is more money. Nothing else. That may be enough for some, but others see there is a bigger picture.

I was at a policy roundtable the other day and, when I expressed this concept, another participant disagreed. His brilliant example was neighborhood watch. He told me that the purpose of neighborhood watch is to cause the burglars to go to your neighbor’s house instead of yours. I had to turn around to see if I was on candid camera. Really, dude? How much was your bill from law school? Was there an ethics class or two? Do they have a refund policy? Remind me not to move to his neighborhood. Neighborhood watch was set up to help neighbors protect each other. This actually is a great example of the ‘Whole World’ approach.

I believe brands need to work more with each other as a policy. Organizations like the International AntiCounterfeiting Coalition are set up to assist brands in helping one another. This great organization, in fact, is celebrating their 30th Anniversary this year.

The question I pose is this: Is it morally wrong to exclaim the dangers of counterfeiting professing the Whole World message while practicing the Competition method?

I say it is. Helping your neighbor is its own reward.

Now, I’m going to finish my coffee.

IP Investigator Caught Selling Fake Rolexes!

I was exploring websites of other investigators the other day and located one whose site was offering fake Rolex watches for $49. Yes, that’s right. It is not likely that his intention was to break the law, but that he is missing basic knowledge of how web advertising works. When I first designed my own blog a few years back, the idea of adding a revenue stream to cheapen the credibility of my site with Google ads was a thought that crossed my mind. Then it kept walking. Google ads are placed on a site based on the keyword content. Therefore any site that is part of the Google ad program that discusses counterfeit goods will have advertisements for counterfeit goods placed on it. It is not rocket science. I am just surprised to see someone in my line of work doing this. I am not naming the investigator, as my purpose is to bring awareness to the danger of using Google ads on any site fighting the sale of fakes. Likewise, his knowledge of the online space is probably not worth the paper on which his business card is printed. Don’t be this guy.

Now I’m going to finish my coffee.

An Idiot’s Guide to Voting Smart

So I was at a political event in Downtown Dallas tonight and talked with a number of friends and acquaintances. I also met a few new people namely some folks from the defense arena. Not my favorite people but the man I support for D.A. invited me, oh, and there was free barbecue.

Among the new acquaintances with whom I had interesting conversation was a Judge. I explained to her what I did for a living: I help companies stop people from selling counterfeit products. She responded by telling me that she had just returned from China and brought back a whole mess of counterfeit luxury items. She immediately flogged into a “I know it supports terrorism, but they (vendors) are just businessmen” quibble. I said, “You know its immoral to buy counterfeit products, right?” She said it isn’t immoral because it’s not illegal to buy them, only to sell them. And I’m thinking, “Right. Am I on Candid Camera?”

I cocked my usual one-eyebrowed grin and gave her my best “are-you-really-this-much-of-a-dingbat?” look and excused myself to the bar. Those of you who know me personally know I am not one to feign respect. I shudder at the thought of the ignorance of some folks.

I told you that story in order to tell you this one…

This is one reason I have become politically active in the Dallas area, particularly Collin County, which is the most affluent county in the United States and a hub for worldwide corporations. I am supporting judges’ candidacies whom I know to be educated on IPR issues. One local candidate who impressed me, and I am supporting, is Dallas IP litigation attorney Wendy McMillon. I know many of our organizations focus on lobbying DC and State Capitals (which is great), but do not forget that these local posts are the bricks and mortar of our society. Fighting ignorance of IP theft starts at home. Read up on your candidates, meet them, interview them, and vote for the smart ones. Do it.

Now I’m going to finish my coffee.

Tools, Not Fools

We in the anti-counterfeiting industry know how hard it is to find a good search tool to suit our needs. I speak with clients, colleagues and others with the same result. One company pays an exorbitant amount of money for an online tool that suits a need or two. Another company does the same with another just-as-costly product. Truthfully, these companies’ search tools were developed for other markets and ‘tweaked’ to be sold to ours. A primary (and not completely unrelated) market would be channel control of genuine hard goods, minimum advertised price monitoring, and such.

That’s all neat. But why are we the square peg, the red-headed stepchild? Is it because brand owners’ legal departments are given budgets that are dwarfed by those of their counterparts in marketing, etc.? If that is the case, industry-wide budget constraints can be the answer to that question. I have a different answer.

It could be that NONE of these search companies have actually authored a tool that can effectively filter suspected counterfeit goods. Channel control and minimum advertised price filtering is a fairly simple process if you know how to write code. Those tools are comprised of algorithms and form, yes. A.I.? No. Though all claim so. I dare say it is a falsity.

I have been given webinars by a number of these companies and found that none of my most basic questions were answered to my satisfaction. Whenever one asks about how the A.I. works, the salesman responds something like, “There is always a human element involved.” Yeah. More than they care to say. Patented technology? I say schmatented technology!

Each of these companies’ interfaces show your infringements in a list with a nice pretty bow. But it was plugged into a back end by a person. Yes. No computer did that. A human was paid to Google for goods and copy and paste results into a database that looks magical. It is no more magical than when I pull a quarter from my nephew’s ear.

I know daring to use the “F” word may appear rude at first. But I have been working within this community for much of my life. I run into people regularly who think that using smoke and mirrors to sell a product is OK. It is the purest form of cognitive dissonance. A number of these companies are very, very good at channel/price control and even name/mark use. As far as anti-counterfeiting is concerned, some will soon take the advice of Seth Godin and recognize it is a cul-de-sac and a few will survive ‘The Dip’.

Law firms with whom I work manage a room of college kids trolling the ‘net. I have seen this. It is true. Many of these firms have tailored very effective procedures for this. I, Rob Holmes, have been trolling the Internet for counterfeits since 1995, and lay claim to be the world’s leading expert in this field. I too practice this same method. Internet genius Jason Calacanis’ latest startup Mahalo.com is just that, but for the masses. The immense success of Mahalo as a human-powered Google filter is confirmation that a man using a computer beats a computer… every… single… time. I can say with no equivocation that, frankly, there is no search tool better than a few well-trained employees, Google and a good supervisor.

I give a seminar called “Trademark Search 2.0” which explains much of this theory in a fashion that is diplomatic and very educational. If you wish to book me in person, please email me at rob@ipcybercirme.com.