Counterfeiting Case Study

1.3 Legal Aspects

The problems that luxury businesses face while being presented online are the counterfeiting of luxury goods, the possible future introduction of sales taxes on the online performance and the importance of the ethical commitment.

First of all, we need to define what is a luxury counterfeit. Counterfeiting is a violation of the other’s registered intellectual property. Luxury counterfeiting is a trademark violation, the improper use of the brand not only in terms of the brand name but also in terms of heritage, rarity, craftsmanship, the prestige and the quality. Luxury counterfeits diminish all these brand values in order to appeal to the final consumer. According to Ludovica Cesareo, Ph.D. “counterfeits ideally can be put

Or course, with the help of digital there are no more limitations imposed on the counterfeits and this market is hard to control. Moreover, it is hard to sue an infringer because it is impossible to decide the law of which country to apply: where the website has been registered or from where the fake goods have been shipped; and Internet does not have yet its law applicable to the problem of counterfeiting.

For a luxury brand it is important to understand that avoiding counterfeiting is impossible, in other words, brands should educate their clients about the brand’s DNA, register the domains and the online names used and, of course, prosecute the intruders. As Giorgio Armani once said: “Counterfeiting is the phenomenon of success.”

To continue with, running an online shop has lower costs compared to the physical store and online e-businesses are not taxed. “… if anything hampers the growth of jewelry e-tail, it will be passage of legislation mandating online sellers collect sales tax.” (Bates) Of course, this step might take decades and will not be introduced in the near future because online jewelry sales accumulate a small share of the whole jewelry market – about 4-5% (Dauriz, Remy and Tochtermann). But the share will continue to grow because Millennials are much more comfortable with shopping online than the previous

The prices are typically 20% to 40% lower than the competitors (Blue Nile). They even have the program called Diamond Price Guarantee in order to prove that their prices are the best and the lowest at the same time. Moreover, their business model is clearly explained on the website showing why the prices of the company are lower than other retailers so each client understands what exactly he is paying for.

Blue Nile also supports the Kimberley process so every diamond sold through the website has an authenticity certificate. It is stated on the company’s website and in its mission that Blue Nile ensures that all the workers dealing with the mining process work in an environmentally friendly atmosphere where their human rights are respected.

Overall, what makes the company unique and the leader in online selling is the integrated approach towards jewelry e-commerce. Every possible question and uncertainty a client could face during his or her online experience is clarified on the website with the help of visual materials, legal and technical aspects.

1.4.2 Tiffany &