Luxury goods, notably high-margin items like bags and shoes, could be impacted if COVID-19 lockdowns increase in China. What is a global luxury brand to do? Image credit: Shutterstock
Scroll through TikTok, Instagram, Facebook or X, and you’ve probably seen the viral videos: a salesperson claiming to be from a factory in China that manufactures luxury goods for top-tier Western brands.
According to their general narrative, these items are manufactured in China, then shipped off to Europe or the U.S. for “finishing touches” — namely hot stamping the logo, which magically transforms them into thousand-dollar products. Thus, why would you spend thousands when you can get the same thing for a fraction of the cost, directly?
Sounds a little too good to be true: so, is it?
TikTok’s luxury “dupe” issue
Amid ongoing U.S.-China trade tensions, this type of messaging resonates, especially when paired with videos showing seemingly high-end production lines and goods.
While it’s true that many manufacturers rely on factories in China, and that manufacturing in China has increasingly improved over the years, these TikTok “dupes” are rarely what they claim to be. Instead, they’re often simply counterfeit products that violate intellectual property (IP) laws.
Brands often times own the following IP to protect their products.
The power of IP
First, trademarks and trade dress serve as source identifiers. Trademarks protect brand names, such as Chanel, as well as logos, including the Nike “swoosh.” Trade dress protects certain aspects to the look and feel of a product, such as the shape or layout of a bag, a particular color scheme – think the Tiffany’s box – a well-known print like the Burberry plaid pattern or even particular features of a product, such as the bezel of an Audemars Piguet Royal Oak.
Second, copyrights are different from trademarks, and protect original works of authorship, namely literary, musical and artistic works. In fashion, copyrights often times protect prints, patterns, artworks or images that may appear on goods.
Patents, thirdly, protect inventions and designs. While you cannot obtain a patent on the cut of a shirt, you can get patents on certain elements, such as the shape of a collar, or the design or layout of a bag.
Thus, brands oftentimes own and can establish these rights and therefore can assert them against infringers. While unwitting buyers are unlikely to face prosecution, resellers and importers of counterfeit goods face serious legal exposure.
Brand owners can assert infringement of their IP rights and pursue monetary damages and lost profits, injunctive relief – court orders banning the sale or import of infringing products – and potentially seizure or destruction of these goods.
That being said, are all “factory direct” claims untrue? Not always.
Are TikTok “originals” legit?
Some legitimate original equipment manufacturer (OEM) relationships do exist: these OEM factories produce products, parts of products, packaging, etc., for brand owners. However, these arrangements are complex and rarely involve the resale of the same exact branded items without authorization.
In fact, many manufacturers have agreements with their factories to prevent them from doing this. Lastly, trademark owners have the right and duty to police the use of their trademark.
Therefore, if products bearing their trademarks or trade dress are not manufactured, sold or even handled or transported to their standards, they can assert their rights and seek to stop these items from being sold.
While the TikTok trend of “factory direct luxury goods” may be viral, that does not make it legal or okay. Most of the TikTok sellers promoting “real but unbranded” versions are not being forthcoming, and what they are selling are essentially counterfeits and tantamount to infringement.
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