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Supreme Breaks Silence on ‘Criminal’ Global Counterfeiting Menace

Sophisticated Italian counterfeiters are damaging the billion-dollar streetwear juggernaut’s brand reputation and may be slowing its post-Carlyle growth plans. In a rare interview, Supreme’s press-shy founder James Jebbia speaks exclusively to BoF.
A store selling "Supreme Spain" product opened on one of Shanghai's busiest retail streets in March | Source: Sam Gaskin
By
  • Chantal Fernandez

NEW YORK, United States — In mid-March, Italian police, acting as part of operation "Golden Brand," released a video showing a storeroom stacked high with boxes from which officers pulled products covered in shiny plastic sleeves. Most of the items — T-shirts, sandals, even skateboards — were branded with the distinctive box logo made famous by Supreme, though, of course, none of them were actually made by the New York-based streetwear giant. In a statement, the Italian authorities said that, in total, they had seized 700,000 counterfeit items worth €10 million as part of an investigation into the sale of counterfeit streetwear, which they characterised as a "new insidious phenomenon."

Supreme knock-offs, from T-shirts to cigarette lighters, can be found all over the world, from Canal Street in New York City to the souks of Marrakech. The market for these counterfeits has thrived in part because distribution of genuine Supreme product is so tightly controlled. Its goods are available only at the brand's 11 stores, via its website and at Dover Street Market, often in small batches released in weekly "drops," meaning that demand often far outweighs supply. Most items sell out online less than 10 seconds after they are made available.

Manufactured scarcity is a key part of Supreme’s incredible success. Over the last 25 years, the brand has grown from a single store on New York’s Lafayette Street that served as a de facto clubhouse for local skaters to a billion-dollar streetwear juggernaut that, in 2017, attracted investment from private equity giant the Carlyle Group, which paid around $500 million for roughly 50 percent stake in the business. Its red box logo, itself inspired by the signature style of artist Barbara Kruger, is now recognised worldwide.

But Supreme’s global profile, coupled with the scarcity of its product, has also exposed the company to sophisticated opportunists. The biggest thorn in Supreme’s side is Italy’s International Brand Firm (IBF) and a series of up to eight affiliated companies, known primarily as Supreme Italia and Supreme Spain to consumers. The company has brazenly set up Supreme-branded storefronts and websites in Italy, Spain and China that look real enough. It has filed trademark registrations using the word “Supreme” and versions of its logo in as many as 50 countries including Spain, Portugal and Israel. It has challenged Supreme for its trademark in international courts, and it has promised to open 70 more stores selling look-a-like Supreme goods.

Supreme Spain | Source: Instagram

All told, IBF appears to be doing swift business in what some call “legal fakes” because, according to Susan Scafidi, founder and director of the Fashion Law Institute at Fordham University's School of Law, the items fall in a legal grey area of trademark squatting. Even before IBF targeted Supreme, the streetwear brand faced an uphill battle in trademark registrations: its name has been considered too general and descriptive by some courts.

In 2017, IBF generated £514,000 (about $679,000) in revenue, according to public filings for part of its business. But if its plans to open new distribution channels go ahead, that number could grow significantly.

IBF's activities made international headlines last December when Samsung announced a product collaboration with Supreme at a press conference in China. The South Korean giant welcomed someone it believed to be the chief executive of the streetwear business to the stage. "Today is Supreme's official debut in the Chinese market," said the person on stage with Feng En, Samsung's head of digital marketing for Greater China, promising to open several stores in the country including a seven-story flagship in Beijing. Only later, after a backlash on the internet, did Samsung seem to discover that they were dealing not with the New York-based Supreme, but with the IBF-controlled Supreme Italia, and canceled the partnership.

In March, a Supreme-branded store opened on Middle Huaihai Road, one of Shanghai’s busiest retail streets, attracting a line of curious consumers wondering if the world’s most coveted streetwear brand had finally set up shop in China. Inside, shoppers can now find T-shirts and hoodies branded with oversized logos and tagged as “Supreme Spain” for 599RMB (about $90) to 1,599 RMB (about $240), as well as skateboard decks, backpacks and other accessories.

"I don't think another company has really had to deal with this like we have," said Supreme founder James Jebbia in a rare interview. "This is a whole new level with this criminal enterprise — these complete imposters and impersonators. This is a company that was able to convince one of the biggest companies in the world [Samsung] that they are the real thing."

It would be sad if a new generation thinks that's actually legit.

“People should know that the idea of legal fakes is a complete farce,” he said. “It would be sad if a new generation thinks that’s actually legit,” Jebbia added, likening IBF’s ability to spread disinformation to how “fake news” can easily be spread online today. “We don’t do a ton of press and we are quite quiet. These guys are taking full advantage of that… We haven’t had the time to basically go on this massive disinformation tirade or press thing that most people would.”

Some have chalked up Supreme’s counterfeiting woes to its failure to register its trademark faster than imposters in global markets — where trademarks are often awarded to companies that are first to file them, not first to use them — as the streetwear label grew more quickly than it was able to professionalise. Others say Supreme has little choice but to accept the situation.

But the truth is more complicated. For over two years, Supreme has fought its counterfeiters in the courts as it lobbies for trademark recognition in China and with the European Union Intellectual Property Office, jurisdictions in which no company yet has these rights. (Supreme has registrations in several European countries, parts of Asia and the United States.) In China, for example, Supreme filed for trademarks five years ago, though its application is still pending. Supreme Italia and IBF also have pending applications in the country that were filed in March 2018.

For Supreme, this is a highly inconvenient and expensive problem. Though the company was unable to provide an estimate in dollar terms, the cost is not only felt in lost sales and legal fees but in damage to the brand's reputation. And it comes just as Supreme enters a post-Carlyle growth phase which is believed to include expansion into China, the world’s largest fashion market. (Firms like Carlyle, which do not hold businesses indefinitely, typically aim to rapidly grow their investments and then sell their stakes within five to seven years).

In 2017, the same year as the Carlyle deal, Supreme hired its first general counsel as part of a wider professionalisation drive that has included poaching Converse's ex-chief marketing officer and hiring the Boston Consulting Group to evaluate its supply chain. General counsel Darci J. Bailey is overseeing the company’s multi-pronged trademark registration and anti-counterfeiting strategy. Supreme said it now has over 350 trademark filings around the globe.

“There is not a jurisdiction in the world that’s said what [IBF is] doing is lawful,” said Bailey. “Opening stores is only going to yield a bigger victory once we are able to shut those down.” She said that in addition to copying its products, opening fake stores and impersonating Supreme executives, IBF has duplicated Supreme's invoices, shopping bags and signage. “They are really after our DNA,” Bailey said, adding that IBF offered to “sell our trademarks back to us,” but Supreme will not consider payoffs as a way to solve its trademark issues.

“We will not stop, we will not relent,” she said. Supreme has made the most progress in Italy, IBF’s home country, where Italian and San Marino courts have prohibited IBF and its affiliates from using the trademark, and police have conducted over 100 seizures of counterfeit Supreme goods.

IBF and its lawyers declined multiple requests for comment from BoF.

Supreme's lawyers created this graphic to demonstrate that Supreme Spain's mark (far right) will be confused with Supreme's logo (far left) | Source: EUIPO

For years, brands from Nike to Chanel have faced sophisticated counterfeiting operations and trademark squatters. But the tactics used by IBF reflect a new level of sophistication. "I've never seen any brand subject to press conferences where there are people who are hired to impersonate the CEO," said Bailey. "I think that there is a lot of confusion in the marketplace."

The confusion is particularly palpable in Spain and China, where IBF has actual stores and the genuine Supreme doesn’t. The New York-based label’s cautious approach to expansion — which goes hand-in-hand with its carefully cultivated street cred — is a powerful part of its appeal to consumers. But as the company grows its customer base beyond longtime devotees, who have studied message boards and Supreme fan accounts for tips and tricks on how to buy its releases, the label may become a victim of its quiet approach if new consumers are duped by the likes of IBF. Or if, even worse, they knowingly settle for counterfeits that, in the case of items like logo T-shirts and hoodies, may not appear radically different from the originals to more casual admirers of the brand. “I don’t think we have a difficult time communicating to our core customer — they know how to get it — but any expansion is where it becomes difficult,” said Bailey.

David Fisher, founder and chief executive of influential streetwear and youth culture title Highsnobiety, said that shoppers who only see Supreme as the fashion trend it has become in recent years are less aware of the history of the brand and can’t as easily discern between real and counterfeit items. “They are probably going to buy one T-shirt and hoodie and that’s it… I’m sure there are thousands of people who have that level of engagement with the brand,” he said.

A first-time shopper coming to Supreme’s website — which offers e-commerce for customers in the US, UK, Japan, most of Europe as well as Russia and Iceland — can see a list of the brand’s retail stores, for example, but would not know that new products are released on Thursdays. Or that in order to manage long lines outside its stores, Supreme now assigns shoppers a 15-minute time-slot via text-message lottery that allows them to enter the store on what longstanding customers call “drop days.” The website also does not warn shoppers about the proliferation of counterfeiters.

While the company is likely contemplating opening more retail channels — online and off — in new markets, many of its products (including its coveted box logo items) are still virtually impossible for many consumers to buy, especially in places like Spain, Italy and China, where Supreme does not have stores and where IBF has taken root.

In the 13 months ending in January 2018, Supreme generated £63 million ($83 million) in sales in the UK, Europe and other regions outside the United States, up 156 percent year over year, according to public filings in the UK.

“These fake Supreme [pieces] that appear now make the real Supreme not as popular as it once was,” said a college student in Madrid, Beltrand Montauzon, who has purchased Supreme items on the resale market when traveling abroad. “[Supreme Spain] is way more accessible for people who weren’t able to buy it, which is 99 percent of the population.”

Supreme is believed to be considering new stores in Milan, Berlin and San Francisco, but Jebbia declined to confirm any concrete plans. Existing stores include two in New York (the original Lafayette location is closed for renovations, but another store is open nearby on Bowery), one in Los Angeles, one in London, one in Paris, and six in Japan. “We certainly wouldn’t say, ‘Let’s open in Spain because these fakers have opened up a fake shop,’” he said. “We do look, but we aren’t in any massive rush; it can take years to find the right space,” Jebbia continued. Supreme generated £1.8 million ($2.3 million) in sales between 2013 and 2018 in Spain through online sales, according to documents filed by Supreme's lawyers with the EUIPO.

We certainly wouldn't say, 'Let's open in Spain because these fakers have opened up a fake shop.'

IBF was incorporated in November 2015 by Michele di Pierro, a Barletta, Italy native who was previously affiliated with an apparel distributor Grew Sport. His biography on Twitter states, “No one is indispensable” and on Pinterest, “Thirst for innovation.” IBF has boasted that it registered Supreme’s trademarks in Italy before the New York brand could. But in fact, IBF filed a month after the real Supreme did, in November 2015. Then, in January 2016, Supreme Italia is thought to have made its debut during menswear tradeshow Pitti Uomo, where attendees reported the company had set up a booth.

The real Supreme started fighting back in July 2016, taking its case to the Italian courts. After a series of civil and criminal suits in 2017, Italian and San Marino courts ordered an injunction against IBF and its use of the Supreme or Supreme Italia marks, and police started seizing counterfeit product the same year.

IBF, in response, began shifting its business to Spain, where it filed for a trademark in April 2017, five days before Supreme did, and started opening stores in Madrid, Barcelona, Malaga, Ibiza and Formentera the following summer. Supreme also filed with the European Union Intellectual Property Office, where the trademark is still pending registration. Later in 2017 and 2018, IBF filed with the World Intellectual Property Organization (WIPO), where it has two active listings.

Meanwhile, IBF has been able to score points in the press. In July 2018, an Italian court in Trani unfroze IBF’s websites, even though the company was still barred from producing and selling products featuring Supreme branding. In October 2018, the European Union Intellectual Property Office said it would continue to consider Supreme’s trademark application, which IBF contested. Both of these developments were spun as wins for IBF by Italian streetwear blogs, particularly NSS and TheStreetwearMagazine.com, the latter of which Bailey said is published by IBF.

Supreme's new shop on Bowery in New York | Source: Courtesy

But Supreme isn’t backing down and is focusing on getting the EU-wide mark approved. “We are very confident we are going to get the trademark registration with the EU,” said Bailey.

Meanwhile, Supreme has obtained several trademark registrations in Spain, which IBF has opposed, but the proceedings are suspended until the EUIPO makes its ruling. Supreme is also trying to get Spanish courts to close IBF’s stores, but the relevant authorities have denied this request and Supreme is appealing.

Bailey said Supreme is also persevering in China, where she said the brand has been working closely with officials and is now “months away” from getting its trademarks registrations about four years after the application was first filed.

“It’s highly likely Supreme will create a lot of difficulty for Supreme Italia moving forward and may win,” said Scafidi. “Trademarks are born global; they cross borders without being stopped at customs and yet there is no way to simply protect a trademark globally.”

"We are doing every single thing that we can do to stop [IBF] and I think we are going to prevail,” said Jebbia, adding that although the complexity of running Supreme has certainly grown and the company was still in the process of bringing its operations up to speed, he was still animated by the same principles that guided him at the company's start. “I don’t think of it any differently today than I did 20 years ago. We’ve still got to make great products that hopefully people like and sell well. All we can do is go on instinct.”

Additional reporting by Zoe Suen and Sam Gaskin.

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