Criminal prosecution of counterfeit jean distributors is an important win for brand owners, a lawyer explains.
Yesterday’s sentencing of Dean Leo Gibbs and Dawn Mary Lomas is understood to be the first criminal prosecution for clothing counterfeiting.
The pair pleaded guilty to a forgery charge relating to the sale of fake True Religion jeans online and in pop-up stores in Ponsonby, Queen St, Takapuna and Milford last year.
At the North Shore District Court yesterday, Gibbs and Lomas were sentenced to three months’ community detention, which involves curfew conditions, and 300 hours’ community service and supervision under the Probation Office for a year.
They were both ordered to pay $20,000 in reparation.
US-made True Religion jeans are distributed in New Zealand by Guru Denim. They sell for between $350 and $450 a pair.
It is estimated Gibbs and Lomas may have sold as many as 4000 pairs of the China-made True Religion rip-offs at $150 a pair.
Guru’s lawyer, Simpson Grierson partner Earl Gray, said on the assumption a quarter of those customers would have bought the genuine product, Guru could have lost as much as $250,000 from the counterfeit crime.
Poor quality of the counterfeits – reported to have required zip repairs – was damaging to the genuine brand, he said.
It was possible True Religion’s brand would not recover from the damage if thousands wearing the counterfeit product now regard True Religion to be a “pretty average jean brand”.
“That’s the big concern with counterfeits. People say they’re victimless, but they’re clearly not in terms of business…. A business is losing sales and their efforts to pitch [the brand] at the high end are really undermined by this sort of store.”
Mr Gray said it was a pleasing “breakthrough” to see the police bring a prosecution in a counterfeit case.
Gibbs and Lomas were prosecuted under the Crimes Act, which has a greater maximum penalty of 10 years’ imprisonment than if they were charged under the Copyright Act or Trade Mark Act.
“It was decided rather than try and sue for a large amount of money, it was good for the industry to try and get the problem of counterfeits raised in the general public’s mind,” Mr Gray said.
“It’s a very important prosecution for brand owners not just in the fashion industry but elsewhere.
“We’re not aware of any others and certainly this is the first significant case involving counterfeit clothing,” he said.