ugg-insides
1 February 2013Trademarks

Protecting a billion dollar brand

In 1978, Australian surfer Brian Smith arrived in southern California with a few dozen boots and a business idea.

The boots were flat-soled, sheepskin-lined and worn mostly by sheep farmers and surfers to keep their toes warm on cold winter mornings. They were popular in his homeland, but unknown across the US east coast.

Smith sold these boots in US surf shops under the brand name UGG Australia, and they attracted a niche but devoted following. In 1995, he sold the company to California footwear group Deckers Outdoor Corporation for $15 million and by 2003, the boots were a fashion phenomenon.

In 2011, UGG sales totalled $1.4 billion. By 2015, Deckers predicts, this will rise to $2 billion. The UGG product range now includes slippers, handbags and even knitted headphones, and has a loyal following in cities from London to Tokyo.

But like every big name brand, the brand’s iconic status and premium price tags make it an attractive target for counterfeiters. And the biggest threat it faces, says Deckers’ director of brand protection Leah Evert-Burks, is the rise of counterfeit websites.

The .com counterfeiters

“Online counterfeiting is something that has definitely grown in the last couple of years because for many consumers, the web is now their primary place to shop. Counterfeiters know this, and so a lot of brick and mortar counterfeiters have moved online—it’s low cost and easy to operate,” she says.

As Evert-Burks explains, moving online has enabled counterfeiters to create sophisticated and seemingly legitimate websites which attract customers from all over the world and in particular, the UK and Europe—two of the brand’s biggest markets.

“Counterfeiters have become adept at duping consumers. Many websites have UGG in the domain name and have a .com or .co.uk address. They include our stock photos and language from our website, they are easily found in Google searches and the listed prices are close to the recommended retail, because heavy discounts are a red flag to consumers,” she says.

When a counterfeit website is spotted, Deckers’ brand protection team—made up of in-house staff, regional brand protection managers around the world and external counsel at US law firm Greer Burns and Crain—files a complaint at a US district court.

The site is then taken down and re-assigned to Deckers, which redirects it to the UGG Australia website to let consumers know it was previously held by a counterfeiter.

“We used to just send cease and desist letters to the server hosting a site, and do the same when it moved to a new server, knocking them off as we went. But then we realised we could improve on that, and started pursuing legal action,” says Evert-Burks.

This new and aggressive approach has achieved impressive results: in 2011, the company took down more than 18,000 websites and seized more than 834,000 counterfeit products. Last year, it took down a further 17,000 and won a $686 million lawsuit filed in Illinois against 3,000 Chinese websites selling fake UGG products.

“We file complaints in the US because it’s easier and because we want to streamline the takedown process, but we’ve also been filing civil lawsuits and criminal prosecutions in China, as it’s our biggest counterfeiting market,” she adds.

Auction sites and spam mail

While counterfeit websites account for the majority of fake UGG product sales, legitimate Internet auction sites such as Craigslist, eBay and iOffer also have to be monitored on a daily basis. In 2012, Deckers removed more than 167,000 suspicious listings from the major sites alone.

“UGG AUSTRALIA’S OFFICIAL FACEBOOK PAGE HAS MORE THAN 1.9 MILLION FANS, AND IS OFTEN UPDATED WITH DETAILS OF SCAMS TO LOOK OUT FOR.”

“eBay has been working pretty closely on improving protection for brand owners through programmes such as VeRo [Verified Rights Owner, which allows rights holders to report potentially counterfeit items and suspect listings], but it’s still our responsibility to identify listings and have them taken down, and as the number of online marketplaces keeps growing, so does the number we have to monitor,” says Evert-Burks.

Another counterfeiting trend causing concern for Deckers is the recent increase in spam emails linked to counterfeit websites that promise consumers heavy discounts if they shop within a limited time period—usually just a few hours.

“This really took off over the holiday season last year, and we’ve been working hard to respond. Usually, we will take down the websites the email links to, but this can take anything from a few days to months and in that time, a lot of consumers have been tricked,” she says.

Preventive measures

To catch online counterfeiters, Deckers must move quickly. But to stop consumers being fooled, preventive measures are needed.

On its official website, UGG Australia provides details of domain names to avoid, plus a list of approved retailers and a dedicated contact email address for anyone who has spotted or is concerned about potentially counterfeit UGG products. The site also provides pictures and details of identifying marks such as holograms and security stickers found on genuine UGG products.

“This is an important part of our IP strategy,” says Evert-Burks. “We’ve been tracking the traffic on these web pages and in each month in the fourth quarter of 2012, they had 500,000 views.”

The contact email address for counterfeit queries has also proved popular—Evert-Burks says Deckers receives around 400 emails a month from concerned customers and even law enforcement officials.

“Most of the emails we receive contain details of counterfeit websites consumers have come across or been fooled by, but we also get reportings of physical sites selling counterfeit UGG products such as neighbourhood flea markets. Law enforcement agencies often contact us, too, asking us to help identify potentially counterfeit products sold by targets they’re pursuing criminal prosecutions against,” she adds.

And as well as regularly posting consumer advice on the brand’s website, Deckers maintains an active social media presence. UGG Australia’s official Facebook page has more than 1.9 million fans, and is often updated with details of scams to look out for, meaning the company can both send and receive counterfeit warnings instantly.

“We’ve had a great response from our social media fans. We see a lot of comments on and sharing of the information we give out, which shows consumers are really engaging with the issue and keen to let their friends know about the dangers that are out there,” says Evert-Burks.

“Often, if we receive a comment on Facebook asking if a website is legitimate, our Facebook fans have let that person know a site is counterfeit and directed them to our official site before we’ve even had a chance to respond,” she adds.

Offline efforts

Aside from taking down domain names and educating consumers, much of Deckers’ IP enforcement work involves cooperating with customs and border officials.

“We work with agencies around the world, putting out confidential materials that are only for law enforcement and give information on how to spot counterfeit goods. We also give officials face to face training on how to tell between fake and genuine products. The UK has been particularly responsive, and we have seen a lot of cooperation from Tradings Standards and Customs,” says Evert-Burks.

In China—the primary source for the manufacture of counterfeit UGG Products— Deckers also carries out regular factory and warehouse raids and brings civil litigation and criminal prosecutions against counterfeiters. “I go there a few times a year, to meet with officials and talk strategy,” Evert-Burks says.

As well as UGG and sports shoe brand Teva®, Deckers owns eco-friendly sandals brand Sanuk®, shoes and sandals brands Ahnu® and Tsubo®, and Mozo®, heat-resistant clog-style shoes worn by chefs.

As Evert-Burks explains, Deckers protects a number of its products through design and utility patents which, while less of a priority than counterfeiting, is still of great importance to a company built on quirkiness and that claims to cater to “everything but the ordinary”.

At the time of writing, Deckers has approximately 20 pending patent infringement suits and last year, it won a six-figure settlement from a UK retailer that had been selling products which infringed on a design patent for the UGG Bailey Button boot.

“We do seek action against those who infringe on our patents. We are restricted, of course, to what the design patent lends us, but if we see a style close enough to one of ours to cause confusion among consumers, we will take action against either the retailer or the manufacter,” she explains.

The future for UGG

Evert-Burks is realistic. She admits it would be difficult—if not impossible—to stamp out infringement altogether, but with a proactive approach to trademark enforcement and a worldwide anti-counterfeiting campaign, she is confident Deckers can substantially reduce the lucrative counterfeit UGG trade and in turn, protect its most valuable asset.

“If we put enough information in front of consumers we can, hopefully, stop them being duped,” she adds.

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