NEW YORK – Things move fast on the grubby half-mile strip of Canal Street on the edges of the city’s Chinatown, famous as a black market for counterfeit designer handbags, fake watches and pirated compact discs.
Customers come and go. Peddlers sell wares from racks and stalls that can be packed up and moved in a hurry. Just who is selling what changes daily.
With so many moving targets, companies and attorneys battling the city’s booming knockoff trade – some estimates put it at some $23 billion annually – are increasingly taking aim at the only people standing still: landlords.
Since spring, luxury bag maker Louis Vuitton Malletier – part of the LVMH Moet Hennessy Louis Vuitton conglomerate – has forced the owners of 18 Canal Street buildings to settle lawsuits claiming they had knowingly looked the other way while tenants hawked thousands of cheap fakes.
In the most recent round, the owners of seven buildings agreed in late January to open their doors to weekly inspections for two years to confirm that no knockoffs are on sale.
Warning signs will also be posted on the premises informing shoppers that counterfeiting is a crime.
Louis Vuitton’s building-by-building fight against landlords is a strategy being employed with renewed vigor by companies that have seen world markets flooded with replicas, often manufactured by child laborers and distributed by criminal cartels.
U.S. customs agents seized more than 8,000 counterfeit items worth about $93.2 million in the fiscal year that ended in September, but billions of dollars worth of fakes, ranging from auto parts, to sneakers, to pharmaceuticals, are believed to have slipped through.
The Recording Industry Association of America has launched lawsuits against flea market owners, arguing they turned a blind eye to tenants selling pirated compact discs. One property owner in Marysville, Calif., settled for $1 million.
On Dec. 19, handbag makers Gucci, Prada, Chanel, Burberry and Louis Vuitton won a surprising victory in a lawsuit filed in China against the owner of a Beijing mall that trafficked almost exclusively in counterfeits.
The judge ordered the building’s owner to pay damages and stop vendors from selling fakes – a rare outcome in a country that produces a majority of the world’s knockoffs.
Speaking Wednesday at a summit on counterfeiting sponsored by Hearst Corp.’s Harper’s Bazaar, Mayor Michael Bloomberg said the program has shut down 14 buildings to date and led to the confiscation of $48 million worth of goods.
“Trademark counterfeiting is big-time organized crime,” Bloomberg said to an audience of executives and media in town for the start of New York’s Fashion Week, when top designers unveil their fall lines.
He said the city’s long history of tolerating the knockoff business as a minor vice is a thing of the past.
“If we permit large-scale criminal enterprises to keep operating in the middle of Manhattan, what message will that send?” Bloomberg said.
Like Louis Vuitton, the city has brought its cases in civil courts, usually with the aim of forcing a settlement that will allow a building to reopen only if its owner posts a bond, fixes code violations and agrees to seek city approval for future tenants.
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