Written by Nanaki Dhesi
Will the black market be the end of luxury fashion? From red-bottom Christian Louboutin heels to a classic Gucci handbag, these fundamental identifying factors make luxury fashion ubiquitous and make people question the authenticity of these staples as they are all around us. It is not uncommon to question whether it is worth going to luxury boutiques and spending thousands of dollars on an item only to see it replicated online for under one hundred dollars. In the age of globalization and digitalization, commerce has transcended borders to create various opportunities for economic growth and innovation. With the rise of e-commerce, especially after the COVID-19 pandemic, the interconnected world presents a pressing issue. The counterfeit market and black-market goods are readily accessible. People are no longer scavenging around New York City’s streets trying to find a shady dealer who will provide them with a knock-off Louis Vuitton handbag. As you scroll through Instagram, TikTok, or Facebook, you see advertisements from websites selling “designer” goods for a fraction of the price, and people are consuming these products because, to the outside world, these consumers have the luxury look. So, what is the issue? Is allowing the public access to “luxury” goods not good?
Counterfeit goods are unauthorized replicas of genuine products, which often masquerade as the real thing. Most people consider counterfeiting a victimless crime; however, the implications are far-reaching, especially regarding intellectual property rights. The economic impact of the counterfeit market is massive, considering the market reaches billions of dollars annually.[1] Illicit revenue directly undercuts legitimate businesses that have higher operation and production costs. The quality of counterfeit products is almost always significantly inferior to that of the authentic product. Websites like DHGate and SHEIN do not make an effort to hide the blatant replication of luxury designer goods and will market their replicates as “designer looks.” These activities undermine legitimate businesses and infringe on the intellectual property rights of various brands.
Chrome Hearts, a luxury brand renowned for its edgy jewelry, clothing, and accessories, has a devoted following among celebrities and fashion enthusiasts. SHEIN is a fast-fashion e-commerce giant well-known for its trendy and affordable clothing and has a business model centered on delivering fashion very quickly. Recently, Chrome Hearts sued SHEIN for trademark infringement, claiming that SHEIN is offering for sale accessories that include markings that are identical with or substantially similar to Chrome Hearts’ trademarked Cemetery Cross Patch, the CH Plus, and its Dagger Design.[2] Chrome Heart claims that the infringement is likely to confuse consumers in terms of brand image and quality.[3] What are the implications of fast-fashion giants infringing on the trademark rights of luxury brands? For one, the luxury brand risks its reputation being mistaken or confused with fast-fashion knockoffs. If a company like SHEIN creates a replica for a fraction of the price, it suggests that the consumer would also pay for a fraction of the quality.
It is likely that to the naked eye, a person would not be able to distinguish between the cross design on the SHIEN t-shirt and the cross design on the Chrome Hearts t-shirt, and therefore, the infringer benefits from the brand reputation of the original brand, while confusing the average consumer. Secondly, websites like DHGate allow consumers to purchase products substantially similar to well-known luxury products and drive revenues away from luxury brands because consumers can purchase almost the same product for a fraction of the price. While some may argue that the counterfeit market helps promote a brand’s identity, the threat to a brand’s intellectual property is profound because why would luxury brands want to continue to put money into the production of new designs if they aren’t able to reap all the benefits from their creativity? If fast-fashion giants continue to rip off the designs of these more prominent brands, when will they stop? The rights of luxury brands need to be protected so that the black-market and counterfeit goods do not rip off smaller designers who put care and attention into their products.
[1] Alexandra Pastore, Entrupy’s Annual Report Sheds Light on the Evolving Counterfeit Market, WWD (September 19, 2023, 9:02 AM), https://wwd.com/business-news/business-features/entrupys-evolving-counterfeit-market-1235820271/.
[2] Dylan Kelly, Chrome Hearts Sues Shein for Trademark Infringement, Hypebeast (September 1, 2023) https://hypebeast.com/2023/9/chrome-hearts-shein-lawsuit-trademark-infringement-info.
[3] Id.
