By SCOTT HAMILTON
Senior WriterFor several years, a coalition of U.S. equipment companies has worked to stem the flow of counterfeit golf clubs into the country. But its members always have known that seizing illegal goods on this end would only do so much. For real progress, they needed help at the source in China.
Last month, they finally got it.
The decision by the Chinese judiciary to jail 23-year-old Tan Jian for four years and three months for running a counterfeiting club operation marked a watershed moment: Heeding the endless pleas of U.S. officials, local authorities began addressing the crime as an offense meriting stiff sentences. It’s one thing to raid illegal foundries, another to actually hold perpetrators accountable.
“This sentence is absolutely significant,” said Rob Duncanson, a Southern California-based attorney who serves as director of the U.S. Golf Manufacturers Counterfeit Working Group. He said the punishment is the most severe to date issued for a Chinese golf counterfeiting case. It’s a victory, but one that has come at a steep, if not precisely quantifiable, price.
“That’s a question that’s always asked – how to put a hard and fast number to the impact counterfeiting has,” Duncanson said. “It’s certainly in the millions (of dollars), possibly in the low billions. It’s so hard because of so many factors: loss of sales, damage to reputation, cost of enforcement. “With such a big chain of distribution around the world, you could probably just throw a dart at a big number.”
Founded in late 2003, the U.S. coalition held its first official meeting at the 2004 PGA Merchandise Show. The group is comprised of six major equipment companies – Acushnet (parent of Titleist and Cobra), Callaway, Cleveland, Nike, Ping and TaylorMade – and each provides a liaison to the coalition. Duncanson is a third party charged with directing the group and, because of the parties’ common interests, making sure antitrust laws are followed.
The group maintains ties with a Hong Kong law firm that acts as its legal arm and works in tandem with Chinese authorities. It harvests tips from numerous Chinese private investigators about counterfeit goods and illegal operations. Based on such intelligence, the coalition authorizes strikes either on retailers or foundries.
Duncanson said the coalition’s impact can’t easily be calculated, noting the difficulty in tallying the dollar value or even the number of clubs seized in dozens of raids, mainly in China and a handful in Thailand. He says the group gauges its influence by the number of facilities and retail stores that had been manufacturing or moving counterfeits but are now shut down.
For all of the coalition’s success, however, it struggled to persuade the Chinese judiciary to take greater action. But signs of progress surfaced April 30, 2007, when local authorities – the Public Security Bureau – arrested Tan, charging him with trademark counterfeiting.
On Oct. 15, a three-judge panel held a criminal hearing. The court determined the sale of counterfeit products in this case caused “great economic harm and damage” to authentic brands, many of which manufacture their products in southern China.
In addition, the significant value of the seized golf clubs – estimated at $640,000 – established that Tan’s counterfeiting constituted a “very serious crime,” according to the judges. The defendant was sentenced in compliance with the PRC Criminal Code; he also was fined $16,667.
But counterfeiting remains a persistent problem.
The goods enter the U.S. in a variety of ways, sometimes simply via Americans who visit Asia and buy cheap sets for personal use. Others buy sets in bulk to later hawk on street corners or outside driving ranges and other golf facilities.
The most visible sources are online auction sites such as eBay. Savvy buyers often will know a counterfeit simply from its “too-good-to-be-true” price, but other buyers aren’t so experienced, especially when the cosmetic quality of the products replicates the real things.
“Counterfeit clubs can’t match ours, and consumers need to remember that when making their purchase,” said Leah Chan, global corporate counsel for TaylorMade-Adidas Golf. “We will continue to battle the never-ending counterfeit fight to preserve the trust we’ve earned with our consumers over the last 30 years.”
Some U.S. retailers report that consumers, often unknowingly, bring in counterfeit clubs as trade-ins. If retailers unwittingly accept them, they end up offering unintentional discounts to such consumers, and they can’t resell the fake clubs.
Lisa Rogan, Acushnet’s trademark manager, concedes that counterfeiting is “getting worse.’’ She cites a soft economy that entices golfers and counterfeit peddlers “trying to find a deal and make an extra buck.’’
“That’s definitely having an impact on the counterfeit products getting to the U.S.,’’ she said.
“We’ll never stop counterfeiting, but we’re trying to (be) a deterrent.”
Posted: 5/26/2008
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