No Safe Harbor

DC and Osiris offer fair warning to counterfeiters and gray marketers.

The current popularity of skateboard footwear combined with top brands’ strict control of distribution has apparently proven too tempting a mixture for some distributors and overseas manufacturers. In separate instances, both DC Shoe Co. and Osiris have halted the production and distribution of counterfeit footwear, and sought damages from the responsible parties.

Strict quality control and managed distribution has helped DC grow to become a top-selling skateboard-shoe brand. When the company began seeing counterfeit DC footwear in unauthorized retail outlets around the U.S., it launched an investigation and ultimately filed suit against Jaysport International, Jaysport Owner Jay Joffe, and retail chain Cal Stores.

In the lawsuit, DC alleged that Jaysport International and Joffe knowingly purchased 7,200 pairs of counterfeit DC shoes from a Korean manufacturer and sold them to various retailers, including Cal Stores. DC further alleged that Cal Stores knew the product was counterfeit, but sold it in their Southern California stores anyway. DC therefore sought damages for trademark infringement, trademark counterfeiting, copyright infringement, violations of the Lanham Act, and unfair competition. The defendants deny any wrongdoing, but have settled out of court and paid DC undisclosed settlements.

The company also recently dissolved a contract with one of its dealers, Universal Sports Trading in Brownsville, Texas, and cancelled over 220,000 dollars in future orders. DC took action after obtaining what it claims is conclusive evidence that products it sold to Universal had been resold to unauthorized stores in Japan and Southern California. DC is in the process of attempting to collect 50,000 dollars in liquidated damages from Universal, pursuant to a non-diversion agreement between the parties.

Osiris President Tony Magnusson traveled to Germany in October where he testified to uphold injunctions against an importer and a retail shoe chain that Osiris has accused of importing and selling counterfeit Osiris footwear.

Osiris managers were tipped off when their German distributor reported gray-market shoes in unauthorized retailers throughout the country. In August, Osiris partners Doug Weston, Brian Reid, and Tony Chen visited many of the stores and quickly realized that the shoes weren’t gray-market products, but outright counterfeits.

Weston, Reid, and Chen worked with Osiris’ European attorney to file injunctions against the stores, and German authorities cooperated with them in confiscating over 12,000 pairs of counterfeit shoes from 23 stores. The defendants challenged the injunctions, but in his testimony Magnusson cited Osiris’ distribution policies and pointed out significant technical aberrations between original Osiris shoes and the seized product. The judge upheld the injunctions, and the case will proceed to trial unless the parties reach an agreement.

Neither DC nor Osiris have yet been successful in bringing charges against the manufacturers that produced the counterfeit products, but both are adamant about prosecuting every case of illegal manufacturing and distribution of counterfeit products bearing their trademarks or designs. Magnusson says he’s gained valuable experience through this process that he would share with other companies facing overseas counterfeiting. DC management has dedicated members of its staff to investigate any unauthorized use of its copyrights and violations of its contracts with vendors and suppliers. DC has also distributed information regarding its investigation into Jaysport, Joffe, and Cal Stores on the major news wire services, and will continue to publicize its efforts to stem piracy and gray marketing.


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