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Monday, Aug 8, 2022

Fashion Police

Luxury jean designers looking to stop sellers of counterfeit denim duds have long turned to lawyers to enforce their trademarks. But law firms can be too expensive to use in pursuing smaller resellers who are a big part of the problem.

Los Angeles litigation boutique Gareeb Pham LLP is trying to capitalize on the demand in that area by offering a flexible billing arrangement for ferreting out apparel fraud. It is effective in pursuing the smaller operators.

Founding partners Alexander Gareeb and Christopher Pham opened their downtown L.A. firm one year ago, and have developed a process for pursuing copyright and trademark infringement claims against middlemen on behalf of their clients, including high-end brands True Religion Apparel Inc., Antik Denim LLC and Joe’s Jeans Inc.

“We got into intellectual property law, we learned it and we developed this program that’s suitable for a lot of industries, including the apparel industry,” Gareeb said.

The firm, which has six attorneys, also works on behalf of makers of custom wheels who want to stop distribution of fake versions of their products.

Gareeb and Pham chose to concentrate on the apparel industry because they already had some client contacts. So they developed a business model where each manufacturer gives the firm seed money, around $50,000, to scour Web sites such as eBay and purchase jeans that appear to be fake. The lawyers help the manufacturer analyze the authenticity of the jeans through several different processes. If the jeans are counterfeit, a copyright and trademark infringement lawsuit is filed in federal court.

Other attorneys pursue trademark violations by Internet research, but Gareeb Pham’s billing structure allows it to file more lawsuits than other firms.

In order to make their services affordable to clients, Gareeb Pham charges a reduced hourly rate. To compensate, the firm later takes a percentage of the money recovered from a settlement or monetary damages awarded after a trial.

“Instead of the $300 to $400 billable hour, which is what you will find in the arena because intellectual property trial work is specialized, we have created a contingency-based structure where the law firm and the client share in the recovery,” Pham said.

With a flexible billing arrangement, the firm is able to take a more aggressive approach, filing multiple lawsuits a week to weed out counterfeit sellers and manufacturers.

Other firms will only take this type of case on contingency if the potential reward is worth the risk, said Michael Heimbold, a partner at Steptoe & Johnson LLP.

“We will consider contingency cases,” said Heimbold, who works with clients including 7 for All Mankind and Rock & Republic on counterfeit cases. “There has to be a large potential award to justify the risk.”

In most of Gareeb Pham’s cases that’s unlikely, as the defendants aren’t big companies but individual resellers.

Commerce-based Blue Holdings Inc. started working with Gareeb Pham nine months ago to fight individuals they believe are selling counterfeit Antik Denim jeans, one of the company’s labels.

“Their program gives us the possibility to send a message to all the people who try to counterfeit our goods,” said Samuel Bellahsen, Blue Holding’s general counsel. “We are saying, ‘Wherever you are, we can go after you.’ ”

Former Assistant U.S. Attorney Christopher Johnson, who was a prosecutor in the computer crime and intellectual property section, works as the firm’s chief investigator on these cases.

Johnson said he has learned to spot counterfeits just by looking at pictures on a Web site. “There are distinguishable traits, such as the stitching and pocket design.”

Another tell-tale sign that an item is counterfeit: the price. Antik Denim jeans sell at retail for $200 or more. A $100 price tag would be a sure sign of counterfeiting.

Once Johnson purchases a pair of jeans, attorneys from the firm and experts from the company analyze their authenticity. Everything from the tag and zipper to the length of the inseam is examined. Within the first six months of its work with Blue Holdings, Gareeb Pham filed more than 40 lawsuits on behalf of the company.

The suits are most often settled quickly because the defendants are resellers who don’t have the resources to take the case to trial.

“When you talk about litigation, attorneys’ fees and consequences, the seller doesn’t want to go there and that’s why we settle,” Bellahsen said.

In a typical settlement, the defendants would pay damages for infringing the company’s trademark and copyrights. They would also promise to stop selling the counterfeit products again and turn over information about the source of the jeans.

If the supplier is in the United States, the firm will sue and try to seize the counterfeits. Foreign suppliers can’t be pursued, however, because of the cost involved.

“The idea is if we can make smuggling difficult or less profitable by stopping U.S. operations, then we can make an impact in minimizing counterfeit goods in the U.S.,” Pham said.


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