Business Management

The Confusing Case of the Counterfeits

The proliferation of copycat products and some outright counterfeits have made manufacturers defensive and technicians confused.

As the popularity and reputability of professional salon products grow, a whole murky business is evolving around them. It isn’t diversion, which has been fended oil with varying degrees of success, but the growth of product impostors, copycats, and out-and-out counterfeits.

These products are flooding the market today at an astonishing rate, not just in the United Stales but all over the world. Some products are; full-blown counterfeits; others are merely look-alike products that claim to be “just like the original.” But which products fall into which category is seldom clear-cut, and the whole business has given new meaning to “let the buyer beware.”

The hair care industry was the first to be hit with a slew of wanna-bes John Paul Mitchell Systems recently won a permanent injunction against the makers of copycat bottles that contained inferior product, and the products were seized and dumped by court order.

Although the reputation of an established manufacturer suffers from the proliferation of the copycats, it is the consumer who is the end loser when she cannot tell if she’s actually getting what she thinks she’s buying.

Since many professional nail products, such as acrylic systems, are sold to nail technicians only, counterfeiting in the nail industry has taken a highly creative turn. It’s not just a matter of a look-alike bottle in a drug-store. Some companies have had their patented products resold with false labels on them (which is definitely illegal); others have had their trademarks used in foreign countries with products that were not theirs (which is actionable and potentially damaging to the nation’s export business). While some of these products are easy to spot by their “just-like” assertions, others are impossible to ferret out because their packaging and labels are copied so precisely that only a chemist could figure it out.

Flattery Gets You Nowhere

If imitation is the most sincere form of flattery, why aren’t manufacturers flattered?

Says Larry Gaertner, CEO of No Lift Nails, “Our company is 16 years old and we’ve created a name with the number one primer in the industry. That’s not bragging; it’s a simple fact about market share. With an item that popular, guys are getting in line to knock us off. We put money into advertising, promotion, and training. We have worked all these years to help the technician become highly trained and educated, and loyally should go both ways. Counterfeiting translates to lost sales.”

According to Gaertner, companies like his put profits back into technical training and technician support, something counterfeiters rarely offer. Companies must protect their reputations, not only to save potentially lost sales, but to continue to ensure that when technicians buy a specific brand, they’re assured of getting a consistent quality of product performance.

Nothing Like the Real Thing

Many say that when those companies that invest in the professional nail industry lose sales, everyone gets hurt. According to industry leaders, this is not a time to lose sight of why you choose quality products and why you pursue continuing education so you can use them optimally.

Says Jack Sperling, president of Alpha 9. “If you see a known label at a highly reduced price, what you’re getting may be inferior. Just because you see ‘version of’ a product doesn’t mean you’re getting anywhere near the quality of the original.”

For the technician who still thinks this is so much hair-splitting between manufacturers or feels that a low-priced knocked will be similar enough to a name brand, there’s a compelling reason to stick with established companies: liability.

According to Gaertner, if is the established-name company that has research showing that, if used appropriately, a product is sale. You will need that kind of research and backup if you are sued by a client. If a nail technician uses inferior products or experiences a problem with a product she’s used improperly (because she thought she could use product X with the procedure for product Y), she’ll find herself standing in front of a judge all alone. Manufacturers will not back up users of their products if the products are not used correctly or if the product is mixed with a system it wasn’t intended to be mixed with. On the other hand, if a technician is sued after using a counterfeit, she may find that the “manufacturer” has folded up its tent and left town.

Not Quite Fakes

Some products are not true counterfeits, but make “just like” claims. The determination for whether these products can legally use the name of another company depends on if they are likely to cause consumer confusion.

Darrell Olson, an attorney for Knobbe, Martens, Olson, and Bear, a Newport Beach, Calif, law firm that specializes in patent, trademark, and copyright issues, says the most common counterfeit problems he’s seen involve the use of someone else’s name.

“Blatantly taking [another product’s or company’s] name is clearly illegal,” he says. According to Olson, while consumer confusion is the ultimate legal test, it is a valid argument to say someone is riding on your coattails and creating sales through assumed affiliation with you. Olson adds dial court cases have swung both wars. For example, a fragrance container that was labeled “Our version of Obsession” and had a “Not authorized or endorsed by Calvin Klein” disclaimer did not break the law, but one that said, “If you love Opium, you’ll love Omni was illegal because it did create consumer confusion.

“Comparative advertising is a tricky area,” contends Olson. “If you use someone else’s trademark in comparative advertising you’d better be careful and truthful – and use a disclaimer of affiliation.”

One problem with “just likes” is that many technicians think they can mix and match the “just like” powder with the brand name liquid to create a system.

Says Jack Megna, president of Backscratchers, “Our products are formulated for each ingredient to work with one another as a fiberglass system. Mixing and matching does not work. If you do mix, you lose your product liability protection. We had one woman who said she had a problem with our adhesive, but she was using an activator from a hobby shop that was making the resin non-porous. She burned her fingers because she was playing chemist.”

“If there is a health concern,” Olson says, “the courts are more protective. There is a body of law for heightened protection of trademarks if health is at risk.”

With sanitation an issue in nail salons and infections and allergic reactions real possibilities, it is not unimaginable that nail companies will one day gain heightened trademark protection.

It’s The Law

As the John Paul Mitchell Systems’ case proved when products confuse the consumer and are ruled illegal, a court can order the products seized and destroyed. If you’ve stocked your entire salon with counterfeit nail polishes and they become part of the seizure, guess who is out the money.

So, how can you protect yourself? Know from whom you are buying and know the company’s reputation. Read the label, question the seller (especially if the product doesn’t look right), and read the small print. It’s only there that you’ll find the disclaimer required on “just likes” that reads. “Our version of X,” “Just like X,” or “Equivalent to X at a lower price.”

Comparative advertising is legally permitted, and “just likes” aren’t necessarily inferior. A company that markets its product based on the reputation of another doesn’t have to spend the money advertising and building credibility that the original company did. As a result of some of those savings, copycat marketers can provide the product at a discount. It’s not necessarily the buyers of the originals that the copycats are after – it’s the techs who are buying on price but who like the eachet of a name brand.

Says Charles Loveless, general manager for American International Industries, which manufactures knockoff nail products. It’s a myth that knockoffs are inferior just because they’re cheaper. The public is asking. “Why pay more?” In the fashion industry, often no one can tell the difference between the knockoff and the designer label. And the knockoff is just a good.

We believe that if you took the blind taste test, so to speak, you wouldn’t be able to tell the difference between our products and the labels they are knocking off. That’s how close they are. We tested our products and theirs over a long period of tie. We gave both products to manicurists to test. We’re of the opinion that a generic brand can be as good, if not better than the original at a fraction of the cost.

What Manufacturers Can Do

Trademarks, patients, trade secrets, and copyrights are known in legal terms as intellectual properly. The first line of intellectual property protection is for a company to obtain patent and trademark registration in the United States and in foreign countries wherever possible. Since current law permits a company to file an application for registration for a product name it intends to use, Olson recommends that companies file their application very early, especially if they intend to use a particular product name in the future. A manufacturer’s legal rights begin with the filing date, not the date of the trademark approval. Additionally, he recommends that manufacturers get a design patent if the product has a distinctive design.

“Design patents didn’t seem as strong 15 years ago, but the trend is toward upholding their validity,” he says. “They do provide valuable rights.”

Part of John Paul Mitchell .Systems’ winning argument was that the fakes, which closely resembled Paul Mitchell Products but carried a tiny disclaimer that said, “Not a Paul Mitchell product,” indulged on registered and common-law trademarks and the distinctive appearance of Paul Mitchell packaging. In one of the cases Gaertner fought, the judge thought she’d been handed two of the same bottle and rendered an instant decision based on her confusion.

Once a manufacturer has ensured its legal protection, it can take legal action – that is, if the company has the cash.

“A trademark or patent is only as good as the amount of money you have to defend it,” Gaertner points out. “Attorneys won’t work on contingency. You have to put a retainer in escrow and it goes fast.”

Overseas eases are even more difficult. According to Gaertner, manufacturers should register trademarks in any country they intend to do business in. If another company registers your trademark before you, you could be in for the hassle of your life. Olson adds that overseas pirates who take a United States trademarked name and register it first in another country can practically hold it for ransom.

What Technicians Can Do

Sperling recommends that all technicians red rain from buying counterfeits and that they recognize that any product that claims to be a version of something is not the original.

“If you’re looking to save money, you may be better off getting a lesser-priced brand name product with its own reputation,” he says.

Adds Megna, “We won’t mention other manufacturers in our classes, ever. Companies should sell on their own merits. If you are in a class and hear ‘We’re the same as X’ over and over, if should alert you to investigate X. If someone wants to be just like someone else, why not go for the original? The cost factor is not as important as the quality of a product.”

And Gaertner offers these suggestions: “Look for technical training, backup, and toll-free hot lines. Counterfeiters don’t offer them. It’s easy to put a label on something, but unless you provide backup and help if there is a problem, what good is it to the technician?

“We need eyes and cars around the world and every nail technician should report blatant fakes to the manufacturer of the original. The sooner we’re alerted, the sooner we can stop it,” continues Gaertner.

“Also, be aware of misleading claims that amount to total misrepresentation. There’s a lot being said verbally, but just because a person makes a statement doesn’t make it gospel.”

Why Technicians Should Care About Counterfeits

  1. You want the best.
  2. Blatant counterfeiters are looking to make money from someone else’s good name but won’t offer you the support the name’s owner will.
  3. As for “just likes,” unless you’re a formulations chemist, you’ll never know how alike they are. They may be somewhat alike or alike in a specific way, but they are rarely? exactly alike. And if they are exactly alike, there; may be patent Infringement going on.
  4. A company that commits a substantial portion of its profits to product research and development to build its reputation deserves your loyalty. In return, it offers you education and technical support.
  5. Education is not transferable, in many cases, meaning the precise application for product X may not be appropriate for products “just like X.”
  6. Many product lines are developed to be used as a system, and mixing in elements from a system you think is similar negates the product warranty.
  7. Counterfeits can be seized from, the salon, and it’s unlikely you’ll be reimbursed for your purchase.
  8. Manufacturers have had their labels blatantly and precisely copied in other countries and used for products that were not the same thing at all. Buyers were duped, vital U.S. export business was lost, and anyone who may have had problems with the inferior product was in for a surprise. In one such case, the real owner of the trademarked name could prove the ingredients were not his and users were left with a product for which there was no product liability insurance.
  9. MSDS are not applicable to copycat products. You’ll have to get new ones from the copycat manufacturer.


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