Crackdown on counterfeit perfumes and cosmetics: two face ten years for dealing fake Armani, Lacoste, other

As a government crackdown on counterfeit perfumes and cosmetics continues, two men pleaded guilty on August 5 to trafficking in fake perfumes, carrying counterfeit marks from Lacoste, Polo Black and Armani Code.  A shipment by the men earlier this year was seized by United States Customs and Border Protection upon arrival in the United States, and  found to contain more than 30,000 units of perfume bearing counterfeit marks and made to resemble fragrance products from those well-known brands.

The two men, Shaoxiong Zhou, 42, and Shaoxia Huang, 33, both of Shantou, Guangdong, China, face possible sentences of ten years in prison and a $2 million fine, according to a U.S. Department of Justice press release.

In a blatant, but perhaps indicative operation, the men had openly offered the counterfeit perfumes at a Las Vegas trade show back in August 2010.   It is an important point which perhaps has been missed by coverage of the bust, because it hints that anti-counterfeit measures that focus only on so-called “squatter” internet channels, while important, can miss the fact that the distribution mechanism for global counterfeit operations can be far-flung and many-sided.

It is not known how product authentication was carried out at the trade show, and how the companies worked with authorities.

The case is part of a global counteroffensive well underway, but without fanfare, in the area of fragrance and cosmetics counterfeiting.   In the U.S. this particular arrest is only the most recent and visible action in the Federal crackdown being conducted by the Assistant Special Agent in Charge, John F. Kennedy International Airport, of United States Immigration and Customs Enforcement’s (ICE), in cooperation with other agencies.  In Europe on July 20, as we reported last month, the EU Court of Justice ruled in favor of the cosmetics giant L’Oreal, in a suit against eBay, if eBay was found to have an active role in promotion of fake products.  The high Court of Justice ruling opens the door to suits all over the EU by L’Oreal against counterfeiters and those who enable them.

Along with many luxury items, cosmetics are enjoying a spike in sales this year.  Because margins in the industry are high, they form an enticing target for counterfeiters. And because packaging plays such an important role in the industry, counterfeiters can concentrate on copying package design, and hope that the poorer quality of the product will be discovered too late.

In the U.S., the government’s IP Task Force is coordinating the efforts; those involved or interested in anti-counterfeiting  would benefit from looking over the web site of the IP Task Force.