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.

Add to that the fact that Mitchell & Ness has outsourced its manufacturing overseas, making it cost-prohibitive for the company to police its factories. In July, Capolino's crew found its new line of John Elway jerseys available on eBay from sellers in Korea before those same jerseys were available in Philadelphia. "They weren't counterfeitsthat was the worst thing," Capolino says. "They were going out the back door of one of the factories. When that happens, I'm really dead in the water."

The U.S. Chamber of Commerce Anti-Counterfeiting and Piracy Initiative puts the annual cost of counterfeiting in the United States at $250 billion, and Executive Director Caroline Joiner says small and midsize businesses are hit especially hard. "Larger companies are investing tens of millions of dollars in fighting this, and companies like Mitchell & Ness can't do that."

Joiner knows of one family-run tool manufacturer that's lost its entire market share in China to fake versions of its own products. A few brand owners have even pulled their manufacturing back to the United States, deciding that whatever they saved by manufacturing overseas was being lost to counterfeiting and product diversion. The counterfeiting problem, Joiner says, is "one of the ultimate effects of globalization."

Capolino says he can't afford to move his manufacturing back to the United States. His jerseys already cost more than the competition's. And partially because of counterfeiting, he says, his revenue has dropped from a high point of $36 million in 2003 to an anticipated $20 million in 2006. In response, he's doing everything he can to fight backwhich often means handling the problem one jersey at a time.

A Sisyphean Task

For someone intimately familiar with the product line, fake Mitchell & Ness jerseys are easy to spot. They're the wrong sizes. The wrong colors. The wrong designs. In Pittsburgh, Suzy sifts through 5,000 to 6,000 eBay listings every workday, with the help of a software tool from the brand-protection company GenuOne.

"I go really fastboom, boom, boom, boom," says Suzy, describing her work. "If it is a counterfeit, I hit a button, and GenuNet fires off a note to eBay to shut the seller down."

Suzy estimates that over the past two years, she has shut down 270,000 eBay auctionsalmost 2,600 a week. On a single day in July, she shut down one seller who had listed 3,000 fake jerseys.

Novick sends out cease-and-desist letters to those who violate the Mitchell & Ness trademark, filling in a template designed by Mitchell & Ness's law firm and hoping for the best.