The Purse-Party Blues

Inside Louis Vuitton's sleek flagship store on New York City's Fifth Avenue, customers are ogling the now ubiquitous Murakami Speedy, a monogram handbag that sells for $1,500 and is carried by such A-list celebs as J. Lo and Reese Witherspoon. Four blocks south, the same bag or what looks like it, anyway can be had for $35. A California woman, in town with her fiance last week, was spotted perusing a table stacked with fake Vuitton, Kate Spade and Marc Jacobs handbags. She was looking for a new Vuitton bag because the strap on the one she bought in Chinatown had already broken. "I need a new bag, and I don't want to pay $600 for the real thing," she said with a shrug.

It's a familiar refrain these days. Counterfeit shopping has become something of a sport, much to the chagrin of luxury-goods manufacturers. Fake designer bags are everywhere, it seems so easy to buy that in some circles it's almost uncool to carry the real thing. Once limited to grimy stalls on New York's Canal Street, counterfeit luxury goods can be found online and in malls, and have even turned up at discount chains such as Daffy's, based in Secaucus, N.J. Among the ladies-who-lunch crowd, purse parties, where guests buy inexpensive fakes in private homes while they sip champagne, are the latest trend. With all this fun, cheap merchandise, why buy the real thing?

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That's a question that infuriates the luxury-goods manufacturers, the chief victims of what has become a global counterfeit-buying spree. There's nothing new about copying in the fashion business, of course. Product ideas have always trickled down from the high-end runways to the mass market. In the past, designers often took pride in their work being copied. But that was before counterfeiting became a multibillion-dollar, multinational business. Knock-off luxury products particularly the bogus designer bags coming out of China, where the majority of them originate have become a mortal threat. "Ten years ago we said it wasn't a problem, that it was even proof of our success," says Marc-Antoine Jamet, president of France's anti-counterfeiting lobbying group Union des Fabricants, and secretary-general of LVMH, whose Louis Vuitton bags are perhaps the most flagrantly ripped off in the world. "Nobody says that now. We see it as an economic and even a social danger."

The luxury fakes are part of a much bigger counterfeiting problem, also largely based in China. Worldwide production of counterfeit goods everything from DVDs to pharmaceuticals to brake pads has jumped 1,700% since 1993, according to the Italian anti-counterfeiting coalition Indicam. No longer just a localized business in Asia or Mexico, counterfeiting accounts for more than 6% of worldwide trade, or $450 billion a year. And some $100 million worth of fake goods are seized each year entering the U.S.

Luxury-goods manufacturers are fighting back. They are spending millions of dollars a year on legal teams and private investigators, who work with international customs officials to bust rings of organized counterfeiters. Louis Vuitton is one of the most aggressive manufacturers. The company employs 40 full-time lawyers and 250 freelance investigators around the world, and last year its operatives were involved in 4,200 raids on counterfeiting rings and 8,200 legal actions. Companies like Kate Spade, Chanel and Coach, whose purses are also widely copied, are members of several consortiums of luxury-goods manufacturers that facilitate civil and criminal seizures of counterfeit goods. "Every company affected by [counterfeiting] spends an inordinate amount of money trying to fix it," says Barbara Kolsun, general counsel at Kate Spade. La Chemise Lacoste, whose alligator-logo shirts are knocked off and sold around the world, reportedly budgets some $4.2 million annually to battle counterfeiting.