A Sports Clothing Company Wins the Battle Against Counterfeiters

Mitchell & Ness deals with Asian counterfeiters, then stops thousands of fake eBay sales dead in their tracks.

At Mitchell & Ness headquarters two blocks south of Philadelphia's City Hall, Wendy Novick scoops up an armful of athletic jerseys from one of five boxes, and then dumps them onto a leather couch. Wildly popular with the hip-hop crowd, the jerseys are a sports fanatic's dreamfully licensed, exact replicas of shirts worn by superstars such as Michael Jordan. That's how Mitchell & Ness can justify the $300 price tags.

Except for one problem. The jerseys Novick just spread out are all fakes.

"We don't make a Michael Jordan shirt," says Capolino, president of the 100-year-old sporting goods manufacturer. "And Michael Jordan didn't wear [a shirt like that]. The white shirt with the 23 on it never had the word Chicago on the front. It had the word Bulls on the front."

"If you look at that price tag, it's not a hologram," adds Novick, head of trademark enforcement. "It's a sticker."

"Those are made in Korea," says a consultant we'll call Danny, who's visiting from Seoul. "I recognize all the tags and everything. I could take Peter into shops in Korea, and people would be sewing Mitchell & Ness labels onto jerseys right there in the storefront. You can get a tag for two or three cents."

These threeplus a woman we'll call Suzy who manages counterfeit investigationsare Mitchell & Ness's makeshift anticounterfeiting team. (CSO is using pseudonyms for both Suzy and Danny because revealing their identities would compromise their ability to do their jobs.) Danny, who was born in Korea but raised in Philadelphia, offered his consulting services to Capolino years ago after seeing stores in Seoul crowded with fake jerseys. Suzy, a sports fan whose roommate is Capolino's cousin, got hired after sending Capolino eBay listings that she thought looked fishy. Novick, whose father used to sell Mitchell & Ness jerseys, started as Capolino's assistant but taught herself how to navigate the legal waters of trademark protection. Together, the group is fighting one of the world's biggest counterfeiting problems, with only the resources of a family-owned business with just 77 employees.

"I don't need anybody to answer the phones," Capolino says. "I need people to work on the counterfeiting problem."

Pssst, How About a Business Model?

When sports and hip-hop fans spend hundreds of dollars on a Mitchell & Ness jersey, they're actually paying for four brands: Mitchell & Ness, the league, the team and the player, each of which gets a cut. Take those licensing fees out of the equation and counterfeiters can produce a high-quality shirt for $35, sell it for $100 on the street or online, and pocket the difference. No wonder Mitchell & Ness is such an attractive target for counterfeiters that the International Chamber of Commerce ranked it 65 on the 2005 list of the world's most counterfeited brandsright alongside Cartier and Dolce & Gabbana. Oftentimes, the only difference consumers can discern between a fake jersey and the real thing is the price. "There's almost no pleading with the consumer, because they feel that counterfeiting is one way of getting back at big corporations for charging so much money," Capolino says.