Cheap overseas knockoffs problem for U.S. businesses

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October 29, 2006|By Robert Manor | Robert Manor,Chicago Tribune

CHICAGO -- Ridvan Tatargil's factory makes pillows, comforters and duvets destined for the homes of customers willing to pay more for bed furnishings than some might pay for a car.

But Tatargil, who grew from a one-person shop with 300 employees on Chicago's West Side, says he faces a growing concern: knockoffs.

Many U.S. businesses are seeing their products, including golf clubs, backpacks and sunglasses, duplicated cheaply in foreign factories and sold here at a fraction of the price of the real thing.

No one can say how much U.S. businesses lose to knockoffs, except that it runs into billions of dollars.

The Turkish-born Tatargil has sued a large furniture company, previously a customer, claiming that it engaged in unfair business practices by knocking off his bedding designs.

His suppliers, American textile mills and other companies have joined in his suit, alleging infringement on copyrights of their fabrics' designs. The lawsuit was filed in federal court in North Carolina.

"This stuff is made in China," Tatargil said, holding with disgust a printed polyester fabric similar in appearance, at least from a distance, to a top-quality embroidered cotton fabric that he uses.

Knockoffs are hardly new. Decades ago, Japan copied U.S. designs and products, followed by Korea and, now, China.

Knockoffs seem to be the hallmark of developing nations. When Japan and Korea became top economic powers, they diminished as sources of knockoffs.

Observers say that occurs because developed countries have a vested interest in intellectual property rights, having come up with knockoff targets of their own.

Pradeep Chintagunta, a professor of marketing at the University of Chicago's Graduate School of Business, said the knockoff business is welcomed in developing nations.

"These businesses provide employment at the local level, and for a while the government doesn't really mind that this is happening," Chintagunta said. "They turn a blind eye to it."

Copyrights, besides protecting literary, dramatic and musical works, can cover a design. But, like patents and trademarks, they do not protect a function, meaning that many items - including bedding - might not be covered.

In the fashion industry, knockoffs are the norm as couture moves from the models' runway to discount retailers in days.

Court decisions have found that knocking off clothing is legal. That will change if Congress approves legislation by Rep. Robert W. Goodlatte, a Virginia Republican, that would extend copyright protection to apparel.

Small-business people who might be able to copyright their work often neglect to do so, said Jonathan Hudis, an intellectual-property lawyer and a member of the American Intellectual Property Law Association.

"Business people are not in the business of making lawsuits," Hudis said. "They are in the business of making money."

Corinne Kevorkian, president of Schumacher, a fabric design firm in New York, said it is often difficult to find the source of knockoffs, although retailers who sell them can be sued. "It's expensive to pursue legal action," Kevorkian said.

Knockoffs are distinct from counterfeits in that they do not falsely bear another company's brand name. Instead, they try to mimic a product's look or feel, appealing to the consumer who does not know - or perhaps does not care - that it is a copy of someone else's work.

Tatargil started his business, Eastern Accents, shortly after he arrived in the United States in 1982.

"It was just myself," he said of the early days. "My next worker I married."

He is in the midst of a $10 million expansion of his complex, where employees design, cut, sew and package bed furnishings for furniture stores and interior designers. They work among thousands of yards of fabric of various colors.

"This is as good as it gets," said Tatargil, whose success has attracted imitations, legal papers say. His suit against Ashley Furniture Industries Inc. claims that Ashley knocked off a number of Tatargil's bedding collections.

Ashley, of Arcadia, Wis., is a major furniture manufacturer with 170 retail stores run by licensees across the country, according to the suit.

"Ashley did not merely copy a design here and a design there," the lawsuit said. "Ashley's copying has been wholesale."

Tatargil said he learned of the alleged knockoffs late last year.

"They retail for about $300," he said, far less than the retail price of his products. He says it costs him about $100,000 to design a full set of bed furnishings.

Charles Burke, an intellectual-property specialist in Winston-Salem, N.C., who is defending Ashley, denies that his client is knocking off anyone.

"Ashley's position is that it has done nothing wrong," Burke said. "It hasn't duplicated anything."

He said there are numerous dissimilarities between his clients' bed furnishings and Tatargil's, and that consumers would never notice the alleged similarities.

Lee Silberman, one of Tatargil's suppliers, got a knockoff shock this summer. Silberman, one of the owners of Duralee Fabrics Ltd., said he was at a trade show in China in August "and saw many of my designs copied at exhibitors' booths."

That was not so unusual. But one exhibitor was offering something extraordinary, he said.

"Two designs that we are introducing in January were shown at a booth," he said. "They beat us to market with a knockoff."

Robert Manor writes for the Chicago Tribune

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