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It took almost 30 years of practice for Kevin Brown, assistant general counsel at Nike Inc., to realize just how little he’d learned in law school. “The rules of Oregon just don’t cut it in Nigeria,” he says, speaking from company headquarters in Beaverton. Brown, who is in charge of the company’s brand protection, learned the hard way. He and his fellow in-house lawyers knew counterfeit Nike clothing and footwear were being sold around the world. But the conventional wisdom among IP lawyers was that there was little they could do to stop it. For example, Nike employees in China who monitor production, which is performed by subcontractors, were spotting copycat shoes at street markets. There was a general sense within the company that the Chinese government was unhelpful in rooting out counterfeiters. “At first, when we found counterfeits in the market, we would go to local lawyers and file cases. But we found that they went nowhere,” says Brown. “We had a difficult time getting factories raided. We just couldn’t get the attention of the appropriate authorities.” After repeated frustrations, Nike started asking its own local employees what they thought the company should be doing to alleviate the situation. The answer — work within the system — came from Nancy Chen, who was running Nike’s government affairs office in Beijing. Complaining to the U.S. trade representative every time the company thought the process was too slow was angering the Chinese authorities — Nike wasn’t following local procedures. It would do better, she reasoned, by doing it the local way. “In China, you nudge, encourage, nourish, educate and train,” says Brown. By following the advice of a few local “coaches” (everything at Nike is a sports analogy), Nike lawyers put aside the aggressiveness so prized among Americans and did it the Chinese way — by being patient, polite and respectful. “We finally concluded, despite the conventional wisdom among our competitors, that the Chinese authorities are eager to work with foreign countries to protect intellectual property,” says Brown. “But you need to understand their system.” Now, he says, “we’re getting results that we are completely happy with.” That philosophy recently helped the company win an impressive victory in Vietnam — another country with a reputation for being unhelpful. Earlier this year, at the urging of Nike and several other footwear companies, Vietnamese authorities raided a counterfeiting factory, seizing 24 truckloads of fake Nike, Adidas, New Balance and Reebok sneakers. There were almost 22,000 pounds of Nikes alone. “This was a big monster,” says Brown. Usually, Nike’s goal in these situations is just “to get the counterfeits off the street,” says Jim Carter, Nike’s general counsel. Taking the culprits to court can often be more work than it’s worth, particularly in countries where the legal system is less developed or perceived as biased against foreign businesses. But in this case a Nike employee based in Vietnam worked with the local authorities and a local lawyer who specializes in counterfeits. In March, the company won an astonishing ruling by Vietnam’s People’s Court. It not only confirmed the illegality of the manufacturer’s conduct, but levied a $9,000 fine and ended with the comforting statement: “We have worked with Vietnam Recycling and Development Center to destroy all fake Nike shoes, components and logos by grinding into small pieces.” Brown is thrilled. “They’ve done all the right things,” he says. “And given that the official position of the Vietnamese government is that everything is community property, that’s amazing.” Although Nike only won a token $333 in damages, it’s unusual for Vietnamese courts to award damages in these situations at all. To Brown, the decision means one thing: “The common wisdom is debunked.” Nike’s anti-counterfeiting strategy began in earnest about five years ago. “We looked at all these polls that were commissioned, and consistently, our swoosh trademark came out as one of the 10 most recognized brands in the world,” says Brown. That, in turn, was attracting more counterfeiters. Consumers worldwide wanted the Nike brand, but either couldn’t afford or didn’t have access to the real thing. It was time to step up brand enforcement. At that time, the company’s director of corporate security had started to assume responsibility for enforcement. Brown personally was inspired to change Nike’s strategy when he was working as general manager of Nike Mexico, based in Guadalajara, from 1992 until 1996. He ran into counterfeits all the time but felt powerless to respond. “I was frustrated as a lawyer that we had no formal approach to dealing with it,” he says. As general manager, he didn’t have the authority to enforce the trademarks. In 1997 Brown moved back to Oregon to join the in-house legal team and put together a business plan for lawyers and the sales and marketing managers. Brown and the director of corporate security convinced the company that its enforcement strategy, rather than being largely reactive, should aggressively analyze where the problems were and how to go after them. But the company soon realized that not every problem has a solution. In some parts of the world, there’s little the lawyers can do. Nike look-alikes thrive, for example, in Cuba. But U.S. law prohibits Nike from doing business in Cuba. What to do? “We do nothing,” shrugs Brown. The shoes may be counterfeit, but the company couldn’t get anyone over there to testify to that in court. So it just has to cut its losses. In countries where action can be taken, Nike must decide if it can rely on its own employees or if it needs to involve local lawyers to represent the company’s interests, often before an administrative agency. “There is no general rule. Every legal system is different,” says Brown. “Every national priority for commercial justice is different.” In Russia, sometimes the solution involved knowing when to just leave the counterfeiters alone. “It’s not the wild, violent place it was six years ago,” says Brown, “but there are still some scary people involved in these sort of crimes.” Russia isn’t the only perilous place. In one Southeast Asian country (Brown won’t say where), a local lawyer hired by Nike recently received a message from the police that it was not going to proceed in the investigation of a counterfeit case. “We don’t know if it was because the defendant was too violent or the authorities were on the take. But in that situation, you just have to let it go,” says Brown. Nike acquired its street smarts largely by hiring local lawyers and investigators to help it navigate each system. “We’ve developed a network of outside lawyers and professional private investigators who specialize in IP defense and focus on protecting the Nike brand,” says Carter, the general counsel. Local lawyers often accompany the authorities on factory raids, for example. “We have law firms skilled at identifying the product and making sure the right procedures are followed in making seizures,” says Carter. Launching this new strategy kept Brown on the road much of the time. “I’ve seen the inside of many more airports than I care to remember,” he says. Five years later, he has cut back to about three or four trips a year, down from about twice that when he started the in-house legal job. Still, just getting through his e-mail can feel a bit like world travel. One recent morning, “I dealt with issues from Bulgaria, France, Holland and Estonia,” he says. The afternoon took him to problems in Dubai, South Africa and Angola. Ever the “Just do it” optimists, Nike lawyers like to see their continuing counterfeiting problems as evidence of a job well done. “Counterfeits are a barometer of whether or not the consuming public wants your brand,” says Brown with pride. “It’s a maddening form of flattery.” Daphne Eviatar is a contributing editor at The American Lawyer , which is affiliated withIP Magazine . Her email address is [email protected] .

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