NEW YORK — A lawsuit in federal court here has revealed the seizure of tens of thousands of pieces of branded apparel that were allegedly counterfeit. The case also shows how persistent counterfeiting operations can be no matter how often they are shut down.
A Manhattan federal court judge lifted the seal this week on a lawsuit filed on behalf of Timberland and Nautica Apparel, although the investigation showed that dozens of brands were said to be copied, including Polo Ralph Lauren, Gap, Banana Republic, J. Crew, American Eagle, Abercrombie & Fitch and Guess.
Timberland and Nautica filed a joint complaint in the Southern District of New York on Feb. 2, accusing Trendy USA Inc., a company operating in the heart of the city’s Garment District, and its owner, Christine Yuen, of being “known counterfeiters.’ Several members of Trendy’s staff were also named as defendants, as well as a warehouse operation in Piscataway, N.J., where the counterfeit goods were allegedly stored. The complaint alleged violations on seven counts, including trademark and counterfeiting infringement and false designation of origin.
Timberland and Nautica filed a joint complaint in the Southern District of New York on Feb. 2, accusing Trendy USA Inc., a company operating in the heart of the city’s Garment District, and its owner, Christine Yuen, of being “known counterfeiters.” Several members of Trendy’s staff were also named as defendants, as well as a warehouse operation in Piscataway, N.J., where the counterfeit goods were allegedly stored. The complaint alleged violations on seven counts, including trademark and counterfeiting infringement and false designation of origin.
A message left at Trendy USA’s office was not returned. Vano Haroutunian, a partner with Ballon, Stoll, Bader and Nadler, who is representing Yuen, said he couldn’t make any specific comments about the case because it is new. “We want to let the discovery process take its course,” said Haroutunian.
According to court filings, private investigators first encountered Trendy at an off-price show in Las Vegas in February 2006. Over the course of several months, the investigators were able to purchase Timberland and Nautica products from Trendy and discovered the goods were being stored with Lucky Moving Inc., a warehouse company in Piscataway. Nautica and Timberland examined samples of the purchased items and found them to be counterfeit.
Related Articles
You May Also Like
A call to Lucky Moving’s legal representative was not returned on Wednesday.
The incident drives home the ease with which counterfeiters are able to continue doing business even after they’ve been identified and prosecuted, importing thousands of goods and violating the trademarks of dozens of the apparel industry’s most recognized labels. And counterfeiters today no longer copy only luxury brands, as indicated by the case; their production spans the price spectrum of retail and wholesale apparel labels.
According to the court filings, Trendy was owned by Yuen and operating out of an office formally occupied by a company called TC Fashions. It was only a year ago the same law firm representing Timberland and Nautica had filed suit against Yuen and TC Fashions on behalf of The North Face and Polo Ralph Lauren Corp., also levying allegations of counterfeiting. That case resulted in a raid of another New Jersey warehouse in 2006 that turned up hundreds of thousands of apparel products with labels such as Abercrombie & Fitch, Adidas, Aéropostale, Bisou Bisou, Calvin Klein, Christian Dior, Gap, Gucci, J. Crew, Lacoste, Nautica and Nike.
Roxanne Elings, an intellectual property lawyer with Greenberg Traurig who has headed up both cases, said last March that she believed Yuen’s operations were generating up to $8 million a year.
Investigators in the current case involving Nautica and Timberland found Yuen incorporated Trendy USA only two weeks after The North Face and Polo filed suit against Yuen and TC Fashions.
A Trendy employee who had also worked at TC Fashions even referenced the March 2006 case when speaking with an investigator at an off-price show in New York last October. According to the investigator’s filing, the employee told the investigator that The North Face’s pursuit of TC Fashions had cost him more than $500,000 in legal fees and confiscated goods and that it had “nearly ruined us.”
“It appears that [Yuen] went right on manufacturing counterfeit goods and selling them, but she has changed her business model in an obvious attempt to avoid detection,” Elings told WWD on Wednesday.
Elings contends Yuen changed the company’s name to Trendy, eventually moved the office, switched warehouses, began importing smaller shipments of goods and developed a code for referring to brands. For instance, TIAM was used as an abbreviation for Timberland, NACE for Nautica and AFRICA for Abercrombie.
“She also appeared to be counterfeiting a pregnancy line of clothing called Mother’s Work,” said Elings.
The court filings and a subsequent warehouse raid showed that the change in tactics enabled Trendy to continue to conduct a thriving business. E-mails from Trendy employees to undercover investigators indicate that in December the warehouse held thousands of allegedly fake items in stock, including 600 Banana Republic bootleg jeans, American Eagle tank tops and 720 men’s T-shirts, J. Crew skirts, Gap stretch capris, Calvin Klein underwear, Buffalo men’s jeans, and SouthPole hooded sweatshirts. Other brands on sample price lists that were seized include Guess, Express and GStar.
“We seized about 22,000 pieces of counterfeit Nautica, Timberland, Polo and The North Face apparel from Trendy’s warehouse, plus took additional pieces from the offices in Manhattan,” said Elings. “Documents indicate that during 2006, Trendy imported at least 8,000 counterfeit Nautica goods and at least 7,000 pieces of Timberland goods and 35,000 Polo goods.”
Elings also noted the Lucky Moving warehouse was primarily a furniture warehouse.
“The only apparel they appeared to have at the time of the raid was the apparel for the defendants,” said Elings.
All named defendants in the case have agreed to a preliminary injunction and four bank accounts have been restrained. In the earlier case brought by The North Face and Polo, $1.1 million of Yuen’s funds have been frozen. A settlement agreement for that amount had been offered and verbally agreed to, but Elings said Yuen never signed the documents. Elings will now seek summary judgement in the case and will file for contempt based on Trendy continuing to use the Polo label.
“It’s likely we wouldn’t have recognized Christine’s new business for what it really was, so [Timberland] and Nautica really owe the success in this action to [The North Face and Polo’s] efforts in last year’s case,” said Barbara Kaplan, senior counsel at VF Corp., which owns the Nautica and North Face brands.
Yuen’s name has come up in other recent cases regarding allegations of trademark infringement. In September, Yuen and Great Value Inc., another company operating out of the same address as TC Fashions and Trendy USA, agreed to a permanent injunction and a consent judgment with Diesel. Great Value and Yuen were ordered to cease any use of Diesel trademarks and agreed to pay $120,000.
Elings said it’s not the first time she’s seen a defendant as brazen as Yuen.
“She continues and continues because it’s profitable,” she said. “We have to be equally persistent.”