Counterfeit Goods

A fake product used to be considered good when the brand name was spelled right. Now, the top-notch international counterfeiters can duplicate everything from product codes to government certificates that verify the good's authenticity. Quantity is increasing along with quality--the international trade in phony products is now estimated to be worth $100 billion a year.

Imitation, as Tonka Corp. discovered, can be an unwelcome form of flattery. Manufacturers in East Asia in 1984 began copying the design of the Minnesota toy maker's Go Bots line--toy action figures that fold into miniature robots or vehicles--and thereby capturing millions of dollars in illegal sales. So, late that year Tonka turned to Jack Fox of Sherman Oaks, who left a job as a toy company executive to start his own firm--one to counter the counterfeiters.

In Taipei recently, criminal investigator Eric F. Ellen came across a cheap, pirated edition of the book "International Maritime Fraud." Ellen was co-author of the original. It was a salutary lesson for the man who has just been appointed to head a new Counterfeiting Intelligence Bureau in London. It showed Ellen, 54, that if counterfeiters could turn a profit on a relatively obscure book about crime at sea, they could make money on anything. That's just about the way it is.

In a stuffy yellow warehouse, a dozen men cheat the Chanel clothing company of big-time bucks. Sweating, the men stitch Chanel's chic double-C logo onto flimsy cotton T-shirts. A few minutes at their sewing machines and they can transform a generic dime-store undershirt into a coveted $50 status symbol. The same black magic converts cheap Korean handbags into trendy French purses.

A team of U.S. Customs agents based in Kentucky swept into Los Angeles this week and arrested seven importers, including five Korean nationals, and seized thousands of allegedly counterfeit high-fashion handbags, watches and articles of clothing. According to arrest warrants made public Wednesday in U.S. District Court in Los Angeles, the seven arrested sold counterfeit merchandise bearing such names as Louis Vuitton, Gucci and Rolex to Customs agents in Kentucky, shipping the merchandise by United Parcel Service.

Pomona police said they have confiscated $183,000 worth of counterfeit computer chips and software from 14 locations. The seizure was the culmination of a three-month investigation that began with a sting at the Los Angeles County Fairgrounds computer show. Pomona Police Det. Don Sevesind, working with investigators from Intel and Microsoft corporations, developed a series of leads from that sting operation.

The massive Long Beach warehouse is as well stocked as any big-box discount store, filled with brand-new electronics, designer jeans, famous-label handbags and toys. And cigarettes. Cartons and cartons of them, seemingly enough to supply a small kingdom. There are no shoppers, however. All of the goods in this 500,000-square-foot warehouse were seized by federal agents — mostly counterfeits, along with banned items such as elephant ivory and drug paraphernalia. Smuggling is on the rise, with seizures by U.S. Customs and Border Protection up 35% in fiscal year 2010 from 2009.

Giant balloons reached toward the clouds. Hundreds of customs agents stood in rows, listening to marching music that included a chunk of "It's a Small World After All." And outside the Ping Pong Pavilion of the Zhuhai Athletic Center stadium, 15 industrial-strength wood chippers did what they were trotted out to do Tuesday afternoon: made minced plastic of 16 million counterfeit CDs, DVDs and CD-ROMs.

SACRAMENTO - California dairy farmers and cheese processors are fighting again over milk prices. It's not Grade A, homogenized, pasteurized milk that's at issue in the state Capitol. Rather, agriculture lobbyists are focused on the price of whey, a milk byproduct probably best known to consumers who've read the Mother Goose nursery rhyme about little Miss Muffet eating her "curds and whey. " Once thrown away as waste, whey has become a valuable commodity, left over from processing cheese and then used in hundreds of foods, including baby formula and protein powder.

Manufacturers and distributors of prescription drugs argued strongly Monday against legalizing the importation of medications from other countries, telling a federal task force that such a system would be neither safe nor cost-effective. The millions of Americans who now buy their prescription drugs from Canada at a cost savings of as much as 70% "assume an incredible risk," S. Lawrence Kocot, senior vice president and general counsel of the National Assn. of Chain Drug Stores Inc.