Knock It Off!

Jewelry knockoffs have long annoyed jewelry designers and manufacturers and affected the business of retail jewelers. But today, the focus on knockoffs has intensified because of the rise of branding and the Internet as well as the vigorous prosecution of jewelers, other retailers, and suppliers by leading designers and big-name trademark owners.

The financial impact of knockoffs on the jewelry trade is hard to calculate. None of several government agencies, jewelry trade groups, or designer groups contacted by JCK could quantify the loss suffered by U.S. designers and manufacturers as a result of “copycats.” However, Tom Rossi, general manager of the Manufacturing Jewelers & Suppliers of America (MJSA), suggests it probably is “in the millions.” And of course, no jewelry designer gets royalties from knockoffs of their creations.

Growing or slowing? There is disagreement in the trade over whether the knockoff problem is getting worse. Even though consumer interest in jewelry look-alikes has grown, and there is more awareness of knockoffs, “the number of knockoffs proportionate to the market is about the same as 20 years ago,” says Whitney Boin, president of the International Jewelry Designers Guild (IJDG). The difference is that “today when someone mimics [original branded work], the impact [on designers, manufacturers, and the jewelry business] is greater because today’s market is bigger and the spread of advertising is wider,” notes Boin.

Interestingly, attorney Jeffrey M. Kaden, managing partner of Gottlieb, Rackman & Reisman—a New York law firm that is a leading litigator for jewelry designers against copycats—agrees, noting the annual number of such cases handled by his firm has “remained about the same” (about 20) for the past decade.

On the other hand, knockoffs “are definitely increasing,” declares Joel Joseph, executive director of the Made in the USA Foundation, which promotes legal protection of U.S. products, including jewelry. “American designers of all types are very creative, and the rest of the world is looking to us,” he says. “So, our best designs in crafts and jewelry are getting knocked off. Even the best companies here do it,” Joseph notes, by having foreign suppliers copy U.S. designs and use cheaper materials to bring down the price.

The 2001 report of the international Basel, Switzerland, watch and jewelry fair supports that, noting that “the worldwide problem of falsifications and imitations continues to be considerable, especially in the watches and jewelry sector.”

MJSA’s Rossi agrees: “This is one of the most critical issues facing jewelry manufacturers, and the problem is growing. Not a day goes by that one of our manufacturer members doesn’t contact us, concerned about a knockoff he has seen. The knockoffs from overseas, especially, are killing us, because they are beyond our control.”

Whatever the size of the copycat business, experts agree it is “pervasive,” as Boin puts it, and “a pretty significant problem”—in Kaden’s words—for the jewelry trade. “Jewelry designers and manufacturers we deal with tell us that for every knockoff they find, there are probably 10 they don’t [find],” says the attorney. William Herrbold, executive vice president of claims for Jewelers Mutual Insurance, puts it succinctly: “Copyright and trademark violation is a growing concern for jewelers, designers, and manufacturers.” The following reports tell why.

Designers & Knockoffs:

The Curse of SuccessBranding has spurred jewelry copycatting. As more designers and manufacturers establish distinctive niches for their work or get more public recognition for it, the likelihood that they’ll be imitated increases.”Consumers want to have ‘that look’—whatever the look of the moment is—and have it now,” one designer told JCK. “If they can’t get the original—or afford it—they’ll get a copy. And there are plenty willing to provide that.” That’s especially tough on young designers developing their own identity. Before they can become widely known, their work or style is copied and sold by someone else—sometimes several “someone elses.”

“As more designers become better known to consumers, we are seeing more knockoffs of their work,” says Susan Helmich, president of the American Jewelry Design Council (AJDC). “And as consumers become more aware of more styles, we see more manufacturing companies who want to mimic what’s popular.”

Web woes. The Internet also has aided jewelry knockoffs (and misuse of designers’ trademarks) on Web sites that openly promote them. The Defense Counsel Journal, a publication for defense attorneys, recently noted that “infringers are busy, even on the Internet, in taking advantage of companies’ trademarks …”

One site, for example, offers ” ‘knockoffs’ or look-alike designs of jewelry and handbags by your favorite designers, at a fraction of their cost.” Another says its knockoffs “allow consumers the opportunity of making fashion statements without paying the high price tags.” Its disclaimer coyly says, “Other than similarity in look, knockoffs are in no way affiliated with the original masterpieces and their respective designers.”

There are no figures on how many Web sites sell copycat jewelry; no federal or jewelry trade agency polices or even tracks such sites. The other side of the Internet problem is that U.S. designers and manufacturers who post their creations on their Web sites can quickly be ripped off. “The Internet has become the harbinger of new design, the means [for copycats] to search for them,” says Rossi. “Before, a designer would design a pin and keep it close to the vest until she displayed it at a jewelry show. Now, as soon as a jewelry piece is ready, it is posted on the designer’s Web page where anyone from here to Hong Kong can download it, take it apart, and produce copies!”

Control problems. Most knockoffs are made abroad (often in Asia or Mexico), say Rossi and Joseph, or components made there are assembled here. In the States, suppliers are “usually small distributors and manufacturers,” says Kaden. Retailers range from high-volume chains and fine stores to what Boin calls “B-string jewelry stores [that are] lesser known and/or haven’t done their homework well enough to know a copy from an original.”

Controlling jewelry knockoffs is difficult. First, no trade group tracks the problem. Second, it can be difficult to make a case for violation of copyright or trade dress [i.e., “the look”], because knockoff designers and retailers “try to see how close they can come to other people’s work without going over the line,” says Kaden.

There is also the high cost of legal action. Many small manufacturers and designers can’t afford to take a copycat to court, especially a major retailer or manufacturer able to handle a long legal battle. Even having one’s attorney send a cease-and-desist letter to an alleged violator (prior to suing) can cost up to $500. And a copycat can always counter-sue, challenging the innovation, uniqueness, or priority of the original design.

Finally, the courts themselves sometimes seem confused—or even indifferent—as to copyright and trade dress issues in jewelry. One federal court judge, for example, recently dismissed a suit involving diamond rings, noting that determining the originality and distinctiveness of jewelry designs has long been difficult for the courts.Fighting back. Still, the battle against knockoffs isn’t hopeless. “It can be stopped,” says Joseph. “It’s just that a lot of people haven’t fought back.”

But these days, more people are fighting back. “Jewelry is increasingly the object of intellectual property protection and the subject of litigation,” noted the New York Law Journal last December. A number of well-known firms—such as Montblanc, Oakley, Disney, and Nike—are aggressive in protecting their designs, names, and trademarks and pursuing unauthorized designers, manufacturers, and suppliers.

So, too, are some successful jewelry designers and manufacturers. One is Janel Russell, who in the past 15 years has legally challenged more than 160 companies selling variations of her copyrighted “Mother and Child” design (see sidebar). Another is David Yurman, well known for his legal fights to protect his copyrighted and trademarked jewelry and watch designs. In the past 18 months, Yurman has won infringement cases in federal court on behalf of his jewelry designs, forced at least two retailers (one brick-and-mortar, one online) to stop using his name to imply they were authorized Yurman jewelry dealers, and recently ended a lucrative contract with a major Texas retailer who was transshipping his jewelry (i.e., selling to unauthorized retailers).

“David sets a great precedent,” says Helmich. “He puts fear into the hearts of those who make knockoffs, because he follows through. That speaks loudly to them and others.”

Industry remedies. Within the U.S. jewelry trade, there are other defenses against copyright and trademark violations—even close look-alikes—of jewelry designs.

  • Mutual support. In recent years, designers have come together in mutual-interest groups such as the IJDG, the AJDC, and the Contemporary Jewelers Guild. These promote members’ work, enable them to encourage each other artistically, and spotlight new designers. “Once-isolated jewelry designers have become a community, talking with each other, making each other aware of knockoffs, providing inspiration for each other, and policing [the design trade],” says Boin.
    In fact, one reason for creation of the IJDG (which includes foreign and U.S. designers) was “to help retailers and consumers identify designers who are reputable and innovative, [with] original concepts.” Designers who join the IJDG first go through a panel review of their work to “determine if the style is theirs, not a copy of other people’s,” says Boin. The IJDG also arbitrates disputes over the originality of jewelry pieces and lines.

  • MJSA. The Manufacturing Jewelers & Suppliers of America is “working feverishly to see what can be done legislatively to protect the jewelry manufacturer and designer,” says MJSA’s Tom Rossi. “Our legal people are investigating what we can do to stem the tide of copying other people’s products.” One possibility is lobbying for more manpower for the U.S. Customs Service which would enable Customs to enforce existing laws against foreign knockoffs, such as a 1930s law requiring “origin tags” on imported jewelry.

  • Legal help. Designers without the resources to legally challenge a copycat have the option of doing so through the “Made in the USA” Foundation. (see ACP sidebar).

  • JVC. The Jewelers Vigilance Committee, while not in the business of policing copyright or trademark violations, provides useful information to define knockoffs. “Often, people see a design and assume it’s a knockoff, or people may be accused of doing a knockoff,” says JVC executive director Cecilia Gardner. “We point out what the law requires and educate people on how to protect their interests.”

  • Industry support. “The industry needs to create an atmosphere that supports innovation and well-designed pieces and says ‘We don’t want knockoffs,’ ” says Boin. Trade publications shouldn’t publish articles or ads showing knockoffs, he continues, and trade shows should be more aggressive in policing who exhibits in their shows. An example, he suggests, is the Basel, Switzerland, international watch and jewelry show. In 1985, it set up a panel of trade and legal advisors to handle allegations of design and product infringements. Decisions come within 24 hours of a complaint. In 16 years, the panel has handled more than 550 cases, though the annual number has declined (to 21 cases this year). That indicates, says the 2001 Basel report, that “[the fair] has succeeded consistently in reducing the number of imitations” at the show.

Jewelers and Knockoffs: Risky Business

Jewelers should be concerned about jewelry knockoffs—especially if they sell them. There has been “a drastic increase” in legal actions against retailers who sell knockoffs and in the insurance claims filed by jewelers over alleged trademark infringements, says William Herrbold, executive vice president of Jewelers Mutual Insurance. JMI alone has seen claims in this area rise to as many as 50 per year. “Our experience is that [the primary offenders] are smaller independent retailers,” he says.Regardless of retailers’ size or intent, selling knockoffs is risky and costly, because more companies are aggressively protecting their rights. Repercussions, says attorney Jeff Kaden, include “being forced to make payments to the legitimate [copyright and/or trademark] owner, loss of profits, and attorney’s fees.”

One example is Nike Inc., known for its athletic shoes and “swoosh” logo, which is actively seeking jewelers who sell unauthorized “Nike jewelry.” (There is no authorized fine jewelry using the Nike name or symbol.)

Nike’s campaign began in 2000 in Florida, where its representatives anonymously called 2,500 jewelry stores, manufacturers, and pawnshops to ask if they sold or made “Nike jewelry.” More than 200 did. The company’s lawyers contacted the offenders. Those who settled out of court had to pay sizable financial damages, stop selling the spurious jewelry, turn over what remained, identify the supplier, and sign an agreement not to infringe on Nike’s rights in the future.

This year, Nike has expanded its campaign to eight more states. But it isn’t the only company aggressively protecting its copyrights and trademarks. Disney also has brought claims in recent years against retailers selling knockoff jewelry, as have more jewelry designers and manufacturers.

What to do. Jewelers have reasons other than lawsuits to worry about—and support efforts to stop—jewelry knockoffs. One is reputation. “A jeweler can’t build consumer confidence if he sells second-string versions of fine jewelry,” says Boin. “Does he want to be seen in his community as a marketer of knockoffs, made with cheaper materials, or as a prestigious jeweler who sells original, innovative jewelry?”

In addition, says Kaden, letting sales of knockoffs go unchecked can damage even those jewelers who don’t sell them. “You build a reputation for selling unique things to your customers—and then someone down the street sells a look-alike at a third of the price,” he says. “That undercuts your business and is something you should want to prevent.”

What should jewelers do to protect themselves?

“Deal with suppliers and salespeople you know and trust,” says Tom Rossi of MJSA. “Stick with reputable jewelry reps you can go back to. Be extremely cautious about offers from unfamiliar suppliers or a line that looks too similar” to someone else’s.

“Be aware of what is happening in the marketplace,” urges JVC’s Cecilia Gardner. “Do some homework. A professional jeweler should know, for example, that Nike never licensed, authorized, or manufactured jewelry with its logo.

“Also, look for trademarks and quality stamps. They assure precious metal quality, but if they’re not there, it’s a sign someone is trying to take credit for a designer’s work.”

Protection. If a jeweler unwittingly buys or sells spurious jewelry, there are things he or she can do. “If you’re offered pieces that might be in violation of a copyright or trademark, go back to the supplier or manufacturer, and say you won’t sell them,” says Boin. “If a complete line of knockoffs is offered, refuse to deal with that supplier. If you go to a trade show and see booths with knockoffs, report that to the show [management].” Helmich adds, “We must keep our eyes open. We can’t rely on everyone else to do our homework.”

If you’re accused of selling questionable jewelry, you should immediately:

  • Contact your attorney.

  • Call your insurance agent to verify coverage. “Many commercial general liability policies cover advertising injury from trademark infringement,” says Herrbold, “if [the claim] arises out of advertising which wasn’t done willfully or intentionally” by the jeweler. Thus, if the jeweler knows jewelry he advertises does violate someone’s trademark, there probably is no coverage. However, coverage “is determined on a case-by-case basis,” Herrbold notes.

The best advice to jewelers for avoiding problems with knockoffs, say experts, is to rely on name-brand designers and suppliers.

“Offer customers only officially licensed products (to ensure authenticity, look for the name on the product or packaging), and reject unauthorized knockoffs,” says designer Janel Russell. “[Customers] want the genuine article and will reward your integrity.”

“It’s better to buy ‘the real thing’ from a small number of designers, whose name and craftsmanship you promote, and who will support you, and to let your customers know about them,” declares Helmich. “Stick with them, rather than switching around. That will build a reputation for you in your community as a source of fine designer jewelry.” And strike one more blow against knockoffs.