True Religion Jeans Gets Hip to K St.

Posted April 16, 2010 at 5:15pm

Meetings on K Street just got a lot more fashionable.

With overseas knockoffs threatening its hold on the high-end dungarees market, True Religion Brand Jeans is bringing in the lobbying cavalry to persuade Members to crack down on Chinese counterfeits that now threaten it and other small, niche manufacturers.

“This is an issue that has to be dealt with,” said Michael Wessel, a lobbyist and member of the U.S.-China Economic and Security Review Commission.

“We’ve seen it go all the way through the economic food chain, from counterfeit auto parts to clothing lines and many other things.”

“Our economic exposure is so broad now,” he added.

So broad, in fact, that True Religion is making its first foray into the influence scene, hiring Akin Gump Strauss Hauer & Feld last month to represent it in “counterfeiting and trademark matters in China,” according to a disclosure filed with the Secretary of the Senate.

The company, whose yellow-stitched wares are ubiquitous with celebrities, declined to discuss the hire for this story, deferring instead to its Akin Gump team for comment.

Former Rep. Victor Fazio (D-Calif.), a senior adviser at Akin Gump, said that these days “anything that has a brand name can be stolen” by sophisticated rogue Chinese manufacturers.

His colleague, Stephen Kho, said today’s technology also presents unique obstacles for trendy boutique firms, like True Religion, which are big enough to generate millions of dollars in revenue but not quite ready to engage in a full-on trade battle.

“They’re not our typical client when it comes to [intellectual property] violations,” Kho said.

Until his firm was brought on, Kho said the company’s primary strategy for combating cheaper Chinese facsimiles was working directly with government officials, who he said are soft on illicit apparel purveyors. And in addition to teaching the jeans company the ways of Washington, D.C., Kho and the firm’s other lobbyists are schooling True Religion executives on Chinese political culture.

“For China, it’s all about political will — they react to pressure, they’re a political animal,” Kho said. “Their system is built up as a political system. It’s not really a rule-of-law system at all.”

“For True Religion, their brand is their livelihood,” Kho added. “Without that, they’ve got nothing — to a point that they need to go all out.”

Trade official Wessel agrees that the jeans-maker and other small and mid-sized players are taking the right approach by bringing their trade beefs to Congress, rather than to the Office of the U.S. Trade Representative, where disputes can be costly to settle.

“Trade law actions are expensive, they take time and they expose companies that may have operations in many different countries, including China, to political exposure that many of them don’t want,” Wessel said. “For a boutique jeans company, this is the right kind of strategy.”

True Religion is also trying to exert its leverage on lawmakers through an anti-piracy group, the International AntiCounterfeiting Coalition. The group’s president, Robert Barchiesi, estimated that China produces more than 85 percent of all fake merchandise that arrives in U.S. ports. He also said his No. 1 issue with lawmakers is a proposal that would require federal agents to disclose more information about the fake goods that they seize.

And in the tough economic times, the
anti-counterfeiting lobby is joining forces with organized labor to underscore how Chinese replicas exacerbate an already-high national unemployment rate.

AFL-CIO trade expert Bob Baugh said unions are having success persuading lawmakers to crack down on counterfeiting not only to assure “quality and safety,” but to keep voters employed.

“It’s a jobs issue,” Baugh said. “If you find false product coming in and taking your market away — literally — they’re taking your jobs away.”

And while no layoffs appear to be looming for True Religion, counterfeits may make its workforce particularly vulnerable. The Vernon, Calif.-based jeans-maker, a publicly traded company, employs about 1,200 and makes its products domestically.

“They’re your typical success story in the U.S.,” Kho said of his client.