Probes of False Designer Labels Raise Questions

By the time Kris Buckner finishes investigating counterfeit trademark cases for companies like Nike and Calvin Klein, there’s not much left for the police to do.

Buckner, a private investigator, rummages through garbage looking for evidence. He sets up bogus deals. He pores over counterfeiters’ business records. He digs up facts for search warrants and, finally, goes on raids with police.

In a current case, he uncovered close to 1 million allegedly fake labels for Nike and Calvin Klein among others, and then volunteered his Hermosa Beach office to store them for police.

On the surface, taxpayers seem to be getting a good deal--police and prosecutors collar a crook on the cheap without diverting much attention from catching murderers, robbers and rapists. And it sweeps low-quality products with bogus brand names off the market.

But the trademark case now moving through Superior Court is raising questions about whether such prosecutions primarily benefit private corporations instead of the public.

It also has prompted a battle over whether Dist. Atty. Gil Garcetti’s office loses its independence by letting trademark companies finance and conduct most of the investigation.

Similar questions arose several years ago when Garcetti’s office came under fire for pressing trademark cases for Guess? jeans, whose $220,000 in campaign contributions added to the argument that Garcetti was under the company’s influence, a charge he denied.

Although the four companies in the current Wing Sing Labels and Accessories case are not on Garcetti’s contributor list, the prosecution was based largely on the work of their sleuths. Prosecutors late last year charged the owners of Wing Sing, of Industry, with counterfeiting Fila Sports and Mossimo labels in addition to the Nike and Calvin Klein tags.

They face up to three years in prison.

Some critics believe such cases belong in civil court, where the companies pay the lawyers’ fees--not in criminal court, where taxpayers pay them. Maximum salaries for prosecutors in the major fraud division, where the biggest trademark cases go, range from $98,000 to $117,000 annually.

Garcetti’s office has prosecuted 330 counterfeit trademark defendants in the last three years.

In federal courts across the country, by contrast, there were only 90 counterfeit trademark convictions last year, including five in the multi-county central district of Los Angeles, according to Justice Department figures.

The federal government only handles major cases involving several states or several jurisdictions in a state, said David Green, head of department’s intellectual property theft section in Washington.

Although corporations spend a lot of money for the investigations, the cost pales in comparison to the legal fees needed in a long civil suit. Seymour Amster, Wing Sing’s lawyer, says the firms have turned the public prosecutor’s office into their personal law firm.

John Wiley, a former federal prosecutor who teaches intellectual property theft law at UCLA, thinks such cases belong in civil court. Recalling his days as a prosecutor, Wiley said:

“If Guess? came to us about someone selling their jeans [illegally], I would say to them ‘OK, now which bank robbery do you want us not to prosecute today when we take your case?’ ” He added that “there are very adequate civil remedies, and they have the finances to use them.”

Deputy Dist. Atty. William Clark, the Wing Sing prosecutor, said he pursues such cases for public good. “People have the right to the control and to the value of their intellectual property,” he said.

Companies rely on criminal and civil courts to protect their labels. But criminal courts, with power to seize property and put people in prison, carry more weight and usually resolve cases quickly and at less cost.

In the Wing Sing case, conflict-of-interest questions are at issue.

Amster argues that Garcetti’s office relies so much on the companies’ resources that prosecutors become beholden to them. Such pressure could goad prosecutors to file weak cases they otherwise would reject or influence the type of charges filed, the plea deals offered and the prison term recommended, he said.

The private investigator had billed the corporations almost $13,000 by the end of 1998. Storage costs for business records, the labels and three gigantic weaving machines had climbed to almost $20,000. Instead of hiring independent experts, prosecutor Clark relied on Buckner’s investigators to analyze Wing Sing’s records and to determine who was buying counterfeit labels.

Amster said the private investigators’ role should have ended once they gave their evidence to authorities. At that point, the prosecution should take over--and pay all costs.

At the federal level, prosecutors do not rely on the companies’ resources to such a large extent. Green said that United States attorneys will evaluate any evidence private investigators bring them and rely on company expertise to demonstrate the difference between fake and real products, but they do not use privately financed storage facilities or use private investigators to examine the counterfeiters’ business records.

Nike security chief David Simpson scoffs at the issue. “I think it’s a fake issue unless you demonstrate prosecutors make bad faith decisions because we paid storage fees,” he said.

Clark, the prosecutor, also rejects the notion that his office becomes beholden to companies to such an extent that it cannot treat defendants fairly.

But the California Supreme Court takes the issue seriously. It upheld the disqualification of a district attorney in a 1996 trade secrets case financed by a corporation in Santa Cruz County. For similar reasons, Amster wants the Superior Court to disqualify Garcetti in the Wing Sing case and order the state attorney general to take over. A hearing is set for later this month.

The case started in September 1997, when Buckner called Wing Sing Labels posing as a garment dealer who sells bogus name-brand T-shirts and sweatshirts. He told Wing Sing he wanted Nike, Guess? jeans and other labels. Buckner worked the deal for about a month, visiting the company and exchanging letters. He got quotes ranging from $17.80 per 1,000 for Fila’s labels to $49.80 for Disney’s.

In October, he took his evidence to the Sheriff’s Department. Using Buckner’s work, a detective got a search warrant. With Buckner and representatives of several other companies in tow, deputies raided Wing Sing, seizing records, sample books, three weaving machines and 986,662 labels for 10 companies.

The prosecution’s next actions demonstrate the close ties with the companies, Amster said.

Rather than store the evidence in the Sheriff’s Department facilities or rent their own storage space, officers let Buckner keep the records and labels at his office, a decision that leaves the prosecution open to charges that someone could have tampered with the evidence. Eventually, the materials were moved to private storage and billed to Buckner.

Later Buckner received permission to personally analyze the business records, another possible breach of security, defense lawyers say.

“I trust these investigators,” Clark said. He said that without company help, there would be no major trademark cases.

“The only ones who can go out and investigate are the victims,” he said.