Jun 7, 2007

Attacking Counterfeits: Wal-Mart Unit Settles With Fendi Over FakesBy Miles Socha and Sharon EdelsonOnline.WSJ.com

The sidewalk sellers of fake designer goods now aren’t the only ones on high alert.

In a case bound to send a chill through the retail industry, Fendi and Sam’s Club, a division of Wal-Mart, have settled a dispute that claimed the U.S. warehouse club sold counterfeit handbags and leather goods in five states.

Under the sealed agreement, Sam’s Club agreed to pay the Italian luxury firm a confidential amount to settle the dispute and dismiss the action, which had charged the retailer with selling “significant quantities” of counterfeit items valued “in the millions of dollars.” Sam’s Club is also offering its customers a full refund for any counterfeit Fendi bags, wallets and scarves they purchased.

“We’re pleased with this outcome,” Michael Burke, chairman and chief executive officer of Fendi, told WWD. “It’s good for our customers, our trademarks and their customers, too. Counterfeiting is a global problem.”

Burke declined to discuss specifics about the Sam’s case, but pledged to continue Fendi’s efforts against counterfeiting, disclosing that the luxury brand has filed suits against five other U.S. retailers: Burlington Coat Factory, Ashley Reed, Filene’s Basement, Annie Sez and Colton International. Those cases continue. He noted that counterfeit goods were also widely distributed in Europe.

Sam’s Club had earlier removed all Fendi-label products from its shelves. When Sam’s Club was presented with the complaint, it initially balked at the idea of removing the products, maintaining they were not counterfeits but actual Fendi goods.

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