Louis Vuitton’s Counterfeiting Woes

While imitation can be the sincerest form of flattery in many circumstances, it becomes a nightmare for many companies. The more popular a brand is, the likelihood it will face counterfeiters at some point. Globally, counterfeiting amounted to $1.2 trillion in 2017. According to the Global Brand Counterfeiting Report, global online counterfeiting created losses of $323 billion in 2017, with luxury brands experiencing $30.3 billion of losses in online sales. As these numbers indicate, counterfeited brands create a huge and expensive problem for the actual brands.

Not only do counterfeited products affect the economy, they may also affect consumer health and safety, especially when it comes to counterfeited drugs. In fact, one million people die annually from fake drugs and consumers spend $200 billion annually on these drugs. Other industries where counterfeiting is a serious threat to health and safety include automotive and aviation industries. Fake car parts cause 1.5 million injuries and 36,000 deaths annually.

One of the most counterfeited luxury brands is Louis Vuitton. As a result, it makes headlines frequently in its quest to assert its rights. The company spends more than $17 million annually to combat counterfeiters. Unfortunately, it is likely the company will always fight counterfeiters as counterfeiters continue to market and make products so closely designed like the original it is hard to distinguish between the real product and the fake product. Further, the Internet makes it easier to hide counterfeited products. In fact, on Instagram Louis Vuitton is one of the top targeted brands at 8.51%. This is only one online avenue. Recently, Louis Vuitton sued hundreds of websites over counterfeiting issues.

As indicated, the time and money Louis Vuitton has to expend in order to combat counterfeiters is tremendous. However, the alternative could prove detrimental. If Louis Vuitton were not pursuing counterfeiters, it would lose significant profits and could taint its reputation as knockoffs typically do not have the same quality. Therefore, the company must continue to assert its rights in order to protect its reputation, its revenue, and its future.

Patent Pools May Create Potential Antitrust Issues

Patent pools are on the rise. They are groups of two or more patent holders that publicly agree to share (or cross-license) patent rights. Patent pools are ideal for technology that contains a lot of overlap among various innovations in order to function properly. For instance, smartphones have a lot of overlap among innovations created by telecommunications technology giants. Companies such as Samsung, Microsoft, Apple, LG, and others sometimes form patent pools to share innovations and reduce the risk of lawsuits. This is fairly common in the telecommunications industry. In fact, a study conducted by Toulouse School of Economics indicates that cross-licensing accounts for half of all licensing agreements in the industry.

Sharing patents provides many benefits among companies within the same industry. Some of these benefits include reducing licensing fees, combining innovations to provide state-of-the-art products, providing faster development, and saving on costs, to name a few. However, while patent pools provide many benefits, they also create challenges. For instance, concern exists that patent pools may create collusive opportunities that hinder new companies from entering a particular market. These pools are also subject to regulatory scrutiny to ensure they do not create unfair competition or thwart innovation.

The challenges presented by patent pools can introduce complicated scenarios that may cause issues greater than what the pools were formed to avoid. Therefore, antitrust laws exist to promote honesty and fair circumstances for competition. However, every licensing agreement is different. Therefore, addressing specific provisions can make it difficult to provide antitrust rules that apply to all situations. Intellectual property by its very nature is unique, making it difficult to instill laws that are general and broad enough to encompass a tremendous amount of scenarios.

As the number of patent pools continues to rise, the need for antitrust laws promoting fair competition also rises. However, this area of law is not fully developed, enabling potential unfair situations presented by patent pools in the meantime. It will be interesting to see how patent pools can be regulated so that fair competition ensues. Unfortunately, given the complicated nature of intellectual property and individual licensing agreements, it may take some time to come up with solutions.