In these uncertain times where individuals and businesses are facing enormous hardships and being forced to navigate a “new normal”, relating to or resulting from the global coronavirus pandemic, everyone is looking to curtail costs. In evaluating potential cost reduction strategies, it is imperative that businesses understand that the costs associated with the protection and enforcement of their intellectual property rights are vital to the continued survival and growth of their businesses, not mere add-ons.
Counterfeiters taking advantage of genuine product line COVID delays
Despite these challenging times, infringers and counterfeiters are continuing to operate. In fact, infringers and counterfeiters now have the opportunity to capitalise on the fact that the development, shipment, manufacturing and/or distribution of product lines has been delayed for many brand owners. By way of example, fake Dior x Air Force 1s have already been produced and sold, even though the scheduled release of the authentic Dior x. Air Force 1s has been delayed due to COVID-19, and as such, authentic products are not yet available for sale as, for example, mentioned in this article: Warning: Fake Dior x Air Jordan 1s Are Popping Up, Complex
Although even before the coronavirus pandemic, infringers and counterfeiters were sometimes able to beat brands’ releases of their own authentic products, this problem creates a unique set of obstacles now, when much of the globe is under stay-at-home orders, and other areas, including some manufacturing hubs where counterfeiting is prevalent, such as China, have begun to reopen. In addition, these challenges are being faced when most brands are only able to interface with, and sell to, consumers online, and at a time when all luxury brands are facing enormous losses (projected by Vogue Business to be billions of dollars in lost profits for 2020 due to the COVID-19 outbreak) (Coronavirus could cause a 40 billion decline in luxury sales in 2020.
Brands focus on e-commerce
Even as parts of the world cautiously allow some retail locations to re-open, the sweeping brick-and-mortar store closures through Q1 and into Q2, have forced brands and retailers to shift their focus entirely to e-commerce. With brands unable to sell any products in physical locations, the inventory of SKUs online has increased significantly (Off The Rack: Fashion’s Top Retail Brands Respond to COVID-19, Retail TouchPoints). The increased availability of official images of more products offers bad actors more opportunities to use luxury product images to attract consumers to listings for counterfeit products. Moreover, third-party retailers have offered deep site-wide discounts and free shipping that has extended to oft excluded luxury goods, which industry experts believe could likely continue well after economies begin to re-open due to consumer sentiment on spending and leftover inventory (The New Normal: A Discount Mindset Will Deepen its Grip on Consumers, Business of Fashion.) At a time when consumers are looking for a deal, the shrinking price gap between authentic products and counterfeits may make it more difficult for consumers to distinguish the real from the fake.
Combatting the swiftness with which infringers and counterfeiters operate, and the challenges posed by a predominantly online retail world, will pose enormous difficulties, and more importantly, avoidable losses, if brands do not think ahead, and protect and register their intellectual property rights in order to cost-effectively enforce against such infringers and counterfeiters at the outset. While brands may not currently have robust budgets, there are a plethora of creative, cost-effective intellectual property strategies available, including those that are cost-neutral (i.e., those that do not require brands to expend money or incur costs associated with enforcement). For example, we at Epstein Drangel have had great success in bringing lawsuits against hundreds of online sellers, selling via large online platforms—notorious sources of counterfeit goods, such as Alibaba, Wish, AliExpress, and Amazon.com—that have resulted in enormous intangible and tangible benefits for our clients and their respective brands.
Multi-seller litigation, however, is not the only option, as there are a full range of other cost-conscious, intellectual property services, such as those relating to the registration, maintenance, and enforcement of intellectual property rights, including litigation and anti-counterfeiting. Now is not the time to neglect intellectual property rights, but instead, to forge effective partnerships in order to fully realise and reap the benefits of such rights. Brands—no matter the size—need to navigate these uncharted waters.
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