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Wednesday, April 04, 2012

Who Are You Wearing? Part 1: The Stakes

It's a pleasure to be making my first appearance on PrawfsBlawg, where I have long turned for thoughtful commentary on weighty issues such as the ACA, religious liberty, workplace discrimination, the politics of judicial review, and the crisis in legal education.  I hope to do my own part to uphold this tradition by talking about luxury handbags.

My own scholarship focuses on intellectual property, and mainly trademark law.  These days, most of the highest-profile trademark disputes involve luxury goods: the red-soled Louboutin, the Louis Vuitton monogram, or Tiffany's blue box.  We might dismiss the legal wrangling over such baubles as frivolous, but there are, quite literally, billions of dollars at stake: the premier luxury conglomerate LVMH reported revenues of over 23 billion euros last year, 22% of which came from the United States.  And that's just for sales of genuine products; Congress has found that trademark counterfeiting saps our national economy of $200 billion annually, losing us "millions of dollars in tax revenue and tens of thousands of jobs" (though there are many who cast doubt on this claim, notably including the GAO).  So perhaps it's not surprising that so many lawyers (and their clients) are ready to make a federal case out of a fake purse.

The question I've been investigating recently is whether we ought to allow such a federal case to be made.  I think we can all intuitively appreciate the desire to police the stream of commerce for knock-off pharmaceuticals, baby formula, or brake pads--there's a public safety issue at stake.  But what is the public interest in knock-off watches and open-toe pumps?  This turns out to be a complicated question, and I'll be fleshing out my own view in the coming days.  But before I give my take, I'm curious what the Prawfs readership thinks.  Feel free to give your views in the comments.

Posted by Jeremy Sheff on April 4, 2012 at 11:01 AM in Intellectual Property | Permalink

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It's kind of a fraught question (although I imagine you're leaning towards "no"). The numbers provided are (likely) flawed in a way similar to the faulty calculations provided by the RIAA and MPAA with respect to music piracy -- sure, the numbers bear out if you assume that each counterfeit bag means a lost sale (at full price) for the markholder. But the average consumer of a counterfeit luxury good knows exactly what (s)he's getting, and (s)he's not looking for an original at full price.

This doesn't mean that there's no harm to the markholder though, but rather it means that the luxury goods industry's method of calculation isn't believable. The real question would seem to be whether and to what extent the luxury goods industry can adequately measure the loss attributable to "high-class" purchasers (i.e., those willing to pay full-price) dumping the product because they perceive the product as having lost prestige by virtue of "low-class" purchasers walking around with the product. Disentangling all the variables to get at a solid calculation would seem to be a nightmare, at the very least.

Posted by: Tim Greene | Apr 4, 2012 11:11:41 PM

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