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LVMH Wins U.S. Trade Agency Order to Block Counterfeits

LVMH Moet Hennessy Louis Vuitton SA, expanding its fight against counterfeiters beyond courts, won a U.S. trade ruling that will help it keep knockoff Louis Vuitton handbags, luggage and accessories from entering the U.S.

The French luxury goods maker filed the complaint last year, accusing a Chinese couple of setting up shell companies to sell counterfeit and knockoff handbags in the U.S. Notice of the International Trade Commission’s order was posted yesterday on the agency’s website.

Louis Vuitton’s use of an ITC complaint to protect a brand valued at $25.9 billion by Millward Brown Optimor’s 2012 BrandZ study may be emulated by other luxury goods makers, said Michelle Marsh of Kenyon & Kenyon in New York, who specializes in fashion-related trademark issues.

“I can see it being very helpful for industries struggling with counterfeiters, like the blue jeans industry,” Marsh said in an interview. “There is the hope that you have somewhat of a deterrent by being aggressive. This is definitely going to open another avenue that has not been used perhaps enough.”

The ITC, which investigates claims of unfair trade practices including violations of intellectual-property rights, more often handles patent-infringement cases.

Paris-based Louis Vuitton, named the world’s most valuable luxury brand for the seventh year, has sued companies that run websites and already works with customs officials and other law enforcement to seize counterfeit goods.

The order, which will go into effect in 60 days unless President Barack Obama overrules it on public policy grounds, directs Customs and Border Protection to turn away any products that are made in a way that is similar or copies the Louis Vuitton trademarks.

“A general exclusion order gets more attention and makes the enforcement a higher priority,” Robert Zelnick, who specializes in trademark law at McDermott Will & Emery in Washington, said in an interview before today’s order. “There’s a much higher attention level played to items that are subject to an exclusion order.”

Company founder Louis Vuitton started in 1854 to make custom-made luggage. The trademarked toile monogram, of a diagonal pattern of initials and geometric shapes on a chestnut background, dates to the 1890s and was created by Louis Vuitton’s son, Georges, to distinguish the company’s goods from rival products.

Counterfeiting Ring

The case was originally filed at the ITC targeting companies set up by a couple whom Louis Vuitton claimed ran a counterfeiting ring using numerous shell companies. The couple and some of their companies reached settlement agreements, while other companies selling the counterfeits failed to respond to the complaint.

Louis Vuitton argued that it was entitled to a broad exclusion order that would cover any products infringing its trademarks because it was impossible to identify every company. The staff at the ITC, which acts as a third party in investigations in the public’s interest, supported the request.

“These infringements and counterfeits have been located at kiosks, stores, swap meets, flea markets, trade shows and other similar locations,” Louis Vuitton said in its request.

Customs officials seized $178.9 million worth of counterfeit goods last year, and products from China accounted for 62 percent of the seizures. Had the products been legitimate, they would have been worth $1.1 billion.

Once customs receives the order, all ports in the U.S. will be notified with information that will help officials know what to look for, such as how the shipments may enter the U.S. and how to distinguish between the real and fake goods, said Therese Randazzo, director of IPR policy and programs division of Customs and Border Protection.

Companies that are turned away at the border can file a protest, and can even seek a ruling ahead of time to get clearance to enter the U.S., she said.

The case is In the Matter of Certain Handbags, Luggage, Accessories, and Packaging Thereof, 337-754, U.S. International Trade Commission (Washington).

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