Opinion

Felix Salmon

How the WSJ magazine fails its readers

Felix Salmon
Sep 13, 2010 00:30 UTC

Lucas Conley’s piece on Ugg for the WSJ’s magazine is a perfect example of why the WSJ shouldn’t have a glossy, fashion-friendly magazine.

Conley does a reasonably good job of covering the way in which Deckers Outdoor Corporation, the American company which owns the Ugg trademark, has become a highly-aggressive trademark troll, and in the process has helped to decimate a small but longstanding Australian industry. But having found that story, he buries it, and ends up capitulating to all the evil impulses of the fashion industry.

If you read closely, you’ll find Conley explaining how, despite the fact that “uggs have been a cottage industry in Australia for decades”, Deckers became extremely aggressive when it comes to those small local companies, slapping them with cease-and-desist orders and in general trying as hard as they could to use trademark law to shut down anybody who might be considered a competitor. It won in the US against Koolaburra, a US firm importing sheepskin boots and selling them under the name “ug”, although it lost in Australia against Uggs-n-Rugs, a 32-year-old sheepskin outfitter. But the big picture is clear:

While Deckers may have lost the Australian trademark battle, the company is winning the war. Today, Deckers owns “ugg” trademarks in over 100 countries, protecting them with high-tech anti-counterfeiting tools and a sophisticated network of lawyers, customs officials, corporate coalitions and private investigators. “Counterfeiting is one of the plagues of a popular brand,” says Leah Evert-Burks, Deckers’ inhouse counsel and director of brand protection. “There are some anti-counterfeiting measures I can’t even talk about. It’s amazing what you go through when you get involved in this world.”

By Deckers’ count, last year the company terminated over 20,000 eBay auctions, shut down over 2,500 websites, and accounted for some 60,000 pairs of counterfeit boots seized by customs officials. While Evert-Burks emphasizes that the vast majority were blatant criminal operations out of China (which often glue inexpensive cow suede to the exterior of the boot in place of twinfaced sheepskin), Stewart says he still receives complaints from Australian vendors who have been lumped in with counterfeiters.

Like a global mute button, the threat of legal action has stifled the Australian ugg industry’s efforts to market internationally. The McDougalls claim to have lost 90 percent of their international business since 2004. Their daughter gave up entirely after Deckers shut down her eBay business. “Almost anyone who sells anything with the word ug, ugg or ugh is infringing on their trademark,” Bronwyn says. “There’s no argument.”

At the same time, however, Conley, or his editors, go to great lengths to be as friendly as possible to Deckers. For instance, he doesn’t actually come out and say that uggs have been a cottage industry in Australia for decades: he feels the need to call them “generic uggs” instead, as though they were somehow copying the Deckers Uggs long before the Deckers Uggs even existed.

What’s more, throughout the article, the Deckers product is referred to in all caps, as an UGG. No self-respecting newspaper style guide would ever allow such a thing, but glossy fashion magazines never had any self-respect in the first place, and it’s clear which side of the line the WSJ magazine falls.

Worst of all, however, is the sidebar, which compares Deckers’ boot to the competition:

The UGG Australia Classic boots come in short (midcalf) and tall versions. Any variation on these heights are not genuine UGG boots.

A genuine UGG has the registered trademark symbol ® next to its logo on the label…

Some fakes use synthetic “fleece”.

My emphasis, but you get the point, which almost tips into self-parody here:

Deckers’ UGG boots are made in China, so if the label says “Made in Australia,” it is not an UGG.

The point is that there are lots of Ugg boots. The most popular Uggs are made by a US company in China. That company owns a bunch of trademarks, which somehow means that the WSJ can talk with a straight face about “genuine UGG boots”, while saying that all other Ugg boots are fakes. But the fact is that an Australian Ugg boot, made by a company which long predates the Ugg trademark, is by any sensible definition just as genuine, if not more so, than the boots that the WSJ is falling over itself teaching us to recognize and distinguish.

Yet somehow Conley feels impelled to inform us that if a boot is made in Australia — the home of the Ugg boot — then “it is not an UGG”.

To give an example of how ridiculous this all is, imagine that an American company — maybe even Deckers, you never know — decided to buy up a small knife-making company in Thiers, France. And say that after doing so, it started to register the name Laguiole, and the famous bee symbol, in jurisdictions around the world.

Deckers then decides to outsource production of Laguiole knives to China, while at the same time slapping anybody else trying to sell Laguiole knives with a cease-and-desist order. It starts impounding any Laguiole knives which are imported into the US, and shuts down any market in Laguiole knives on eBay or in other marketplaces.

Laguiole knives have been made by thousands of French craftsmen for over 150 years, but suddenly there would only be one “genuine Laguiole® knife”, and all the others would, overnight, be branded “counterfeits” or “fakes”; their sales would collapse, while Deckers would essentially hijack all of the brand value which has been painstakingly built up over the generations. And heaven forfend that anybody else try to make Laguiole knives in China — those would get seized at customs, and branded as “blatant criminal operations” by Deckers’ in-house counsel.

If that were to happen, one would hope that the WSJ would try to expose the evil trademark troll, instead of running gushing articles about how the company was serving up “stunning results in the midst of a global recession”. It certainly wouldn’t — one hopes — tell its readers how to make sure they were buying a genuine Laguiole® knife rather than an expensive French “fake”.

Conley mentions in passing, in his piece, that after Deckers lost the lawsuit in Australia, it failed to pay certain legal costs of the winning side, as required under Australian law. If he ever asked Deckers counsel about this, there’s no sign of it in the story. Instead, he concludes with a paean to a highly-successful company:

Although UGG is not the haute couture brand it was years ago—the darling of fashion spreads, the envy of A-list gift bags—its sales are bigger than ever. That “alpha consumer,” the mother picking up her kids at private school in the Range Rover? While she may no longer roll up in a pair of the latest UGG boots, her counterparts at the neighboring public school are pulling away in Explorers full of UGG-boot-wearing adolescents. UGG Australia has become a mainstream brand, always in stock—found in several stores in any mall—and begrudgingly approved of even by its critics for its comfort and utility. It’s an appropriate irony; the humble boot of the masses has come full circle—albeit with a trademark this time. And that’s fashion, according to Simonton. “Things come back,” he says, “but they’re never quite the same.”

Well, “irony” is one way of putting it: the humble boot of the masses is still a humble boot of the masses, but now it’s wrapped up in aggressively-enforced trademarks, ensuring that all the profits from that humble boot accrue to a single multi-billion-dollar multinational corporation. But yes, “that’s fashion”. And you can be sure that a glossy fashion-focused magazine is never going to cut against the grain of the fashion industry when it comes to issues surrounding trademark law and intellectual property.

Which is why it’s crazy that the WSJ tries to cover the fashion industry from within the covers of a glossy fashion-focused magazine. The conflicts are far too big — and, as this story shows, the winner in those conflicts is always going to be the big fashion multinational, rather than the magazine’s readers.

Update: It turns out there already is a Laguiole trademark troll! Thanks to vb2b, in the comments, for the link.

COMMENT

I just discovered this article and it contains a lot of inaccuracies. It also omits several important facts. Before the mid-1990s, when Deckers bought the rights to the “UGG” trademark (and the company Ugg Holdings) from an Australian, and tiny companies with similar names in places like Cornwall and New Zealand, a typical Australian ugg boot “factory” consisted of a shack at the edge of a sheep farm, with two or three people working there — all members of the sheep herdsman’s family. They made, at most a few hundred thousand dollars a year. Ugg boots were considered a lower-class, trashy type of footwear, worn by young suburban thugs called “bogans” who didn’t have any money. The American equivalent term would be “white trash.” In the UK you call them “chavs.”

Then Deckers embarked on a very clever and expensive marketing campaign, giving away thousands of pairs of boots not only to celebrities such as Pamela Anderson, Sarah Jessica Parker, Cameron Diaz and Oprah Winfrey, but also the entourage and fans for each celebrity. They carefully sought product placements in trendy films and TV series. The strategy paid off and Oprah named UGG brand boots one of her “Favorite Things” two consecutive years.

The UGG brand boot is now a high fashion item like Jimmy Choo shoes and Ralph Lauren sportswear. Instead of a few hundred thousand dollars in sales to a crowd of suburban Australian chavs, Deckers has just reached US$1 billion in annual sales worldwide. They have every right to protect the lucrative worldwide market that they have created, because they’re the ones who created it. The little Australian shacks on the edges of the sheep farms have every right to sell their wares in Australia but Deckers planted the seeds in the rest of the world, and now they’re reaping a bountiful harvest.

http://www.pjstar.com/business/x18959986 31/Ugg-kicking-it-in-the-U-S

Posted by JimDavis | Report as abusive

Those weirdly persistent counterfeiting statistics

Felix Salmon
Dec 6, 2009 20:42 UTC

Renee Richardson Gosline has done some research which, if it turns out to be true, could well show that the cost to established businesses of counterfeit luxury goods is actually negative:

In a working paper she just finished this fall, “The Real Value of Fakes,” Gosline interviewed hundreds of consumers who knowingly bought fake luxury apparel, many at “purse parties” where such goods are sold. Gosline found that within two years, 46 percent of these buyers subsequently purchased the authentic version of the same product — even though other people could not necessarily tell the difference.

I haven’t been able to find a copy of the paper (put it up on SSRN, Renee!) but this is an astonishing finding. It seems that fake luxury goods are pretty much the best form of advertising out there: people who buy them and live with them have a very high probability of being converted to the brand and then going out and buying the real thing. What’s more, every time they go out with their fake item, they’re publicly displaying the desirability of the brand.

This explains why smart companies like Dolce & Gabbana refuse to get involved in prosecuting counterfeiters. The more information that emerges on the scale of counterfeiting, the more it seems as though it’s small and helpful, rather than large and extremely damaging. And yet Bloomberg’s Meg Tirrell, reporting on Gosline’s research, still feels compelled to include garbage pseudostatistics:

Counterfeiting costs U.S. businesses as much as $250 billion a year, according to the Washington-based International AntiCounterfeiting Coalition.

No, it doesn’t. Not even close. And given that Gosline’s own research shows that counterfeiting might help US businesses more than it hurts them, one might think that Tirrell would treat the baseless numbers from the IACC with a bit more skepticism. But unfortunately they’ve been repeated so many times at this point that they seem to be lodged in the collective journalistic consciousness. Maybe Gosline can try to help a couple of her interviewers to join the anti-anti-counterfeiting crusade.

COMMENT

“Counterfeiting costs U.S. businesses as much as $250 billion a year, according to the Washington-based International AntiCounterfeiting Coalition.”

Beyond the fact that numbers like this and the ones that the record industry claims they lose to piracy are completly inflated is that a) the “lost” money is in revenues, not profits, and b) most people who bought the knock-off or downloaded the song wouldn’t have bought the real thing in the first place. In the case of the luxury item, people buy the fake stuff because they can’t afford the authentic product. And lots of people download every song they see, just because they want to have every song they hear of. Extreme downloaders may not ever listen to 90% of the songs they steal, so they would never buy them. As a result, the impact on profits is negligible, if unfair.

Counterfeiting and piracy are not nice things to do, and should be discouraged, but on the list of things the government desperately needs to address, they’re not even in the top 100.

Posted by OnTheTimes | Report as abusive

Brand licensing and counterfeiting

Felix Salmon
Apr 26, 2009 22:58 UTC

Ryan wades into one of my favorite subject areas today: counterfeiting.

Ryan is absolutely right that counterfeit goods are, in many cases, more likely to help than harm the business being knocked off. Dolce & Gabbana, as I’ve mentioned in the past, passively encourages the counterfeiting of its brand by refusing to lift a finger to help prosecute counterfeiters. But Ryan goes one further:

Why don’t designers sell their own knock offs? Even if they couldn’t put other counterfeiters out of business, they’d at least capture some share of the revenue. And while perhaps the designers aren’t all that interested in investing in such a low margin business, one would think they’d at least consider licensing someone to legally produce knock offs. That looks to me like big bills left on the sidewalk.

This one, I’m afraid, doesn’t quite fly. There’s always pressure on luxury goods manufacturers to produce “diffusion” lines and the like at ever-lower price points — but go too far in that direction and you end up with what happened to Gucci in the mid-80s: so much brand dilution that you cease to be luxury at all.

What’s more, we live in a world where “expensive” is largely synonymous with “quality” or “luxury” — price is the main criterion that people use to determine how good something is. If you can get a real Prada bag for $20, your inclination to buy one for $2,000 or $20,000 naturally evaporates somewhat.

Looking at it another way, the luxury brands are already licensing their own knock-offs, but to avoid cannibalizing their own high-end sales, they make sure that the licenses are always for a category outside the headline-grabbing formalwear sector: things like perfumes or eyeglasses or jeans. You didn’t think those Prada shades were handmade by Milanese artisans, did you?

COMMENT

If your brand is good enough to be counterfeited, then you know you have a strong product.

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