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. Last Updated: 07/27/2016

High-Fashion Fakes Flood Into Russia

If you are planning to buy a nice Berghaus raincoat for this spring, beware. Thousands of Chinese-made imitations of the Dutch company's products have invaded the shelves of Moscow department stores and markets, and their infiltration is on the rise.


"These bad quality imitations are seriously damaging our image," said Natalia Biskonova, assistant commercial manager for Berghaus. "Although we change our models every season, they follow us and produce the same new clothes."


Berghaus is just one of an increasing number of foreign apparel firms complaining about an alarming increase in fakes being sold on the Russian market. Yet Berghaus and others say they have little choice but to press on if they want to keep doing business here.


According to Soyuz Patent, a Russian label registration agency, complaints about sales of imitation brands have been increasing by more than 20 percent a year.


"The only thing we can do is stop the distribution" of imitations, said Denis Boevodin, who handles trademark registration and verification for Soyuz Patent. The agency's personnel visit stores where imitations are sold and tell managers they will not be arrested if they identify the source of the fake products, a tactic that "usually leads us to the main suppliers."


But after that, options are limited.


"We can't control the production since it is mainly done beyond Russia's borders, in Southeast Asia or China," Boevodin said.


Companies were unwilling to estimate how much money they lost in sales, and pinning down the size of a black market is difficult. But the American Chamber of Commerce in Russia has estimated total losses from piracy in Russia -- including intellectual property -- at $1.3 billion.


Lawyers say the main obstacle to stopping the spread of fake products is Russian law-enforcement authorities themselves.


"The courts don't have the necessary experience to solve these matters," says Yevgeny Arievich, vice president of the Intellectual Property Agency, a private Russian firm dealing with patent and trademark issues.


Boevodin said it takes three months for the State Anti-Monopoly Committee to respond to a complaint and six months to get a court decision." By that time, the companies selling imitations have already changed their name, and then we have to start all over again," Biskonova of Berghaus said. "It's a never-ending problem."


Moreover, violators of trademark law face light punishments. Convicted individuals must pay a 15 million ruble fine or spend six months in prison. The difficulties of legal recourse has led some foreign companies to take matters into their own hands.


Reebok, the American sportswear company, hires its own security officers to monitor the market and track down false products. They have succeeded in finding some distributors, but many remain elusive.


"We think there are as many imitated Reebok products as real ones sold throughout Russia," said chief Reebok watchdog Sergei Lepatnikov, adding that some styles of suits discontinued two years ago in America are easy to find now in Russia because imitations are being churned out in Bangladesh.


Russia has also seen a huge inflow of Chinese-made Levi Strauss jeans, one of the most commonly faked products. In that instance, a consumer-protection society took action to force department stores to pay back all customers who realized they did not buy the real thing, Arievich said.


Lawyers say the best solution is improved coordination among the courts, police and the custom officials who could prevent imitation products from entering Russia in the first place.


"It is time to take collective action," said Arkady Kochetkov, a lawyer for Reebok. "Individually, it's impossible to succeed."