Birkin vs. Wirkin: Are Knockoff Products Ethical?

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by David Hagenbuch - professor of marketing at Messiah University -
​author of Honorable Influence - founder of Mindful Marketing -
author of Mindful Marketing: Business Ethics that Stick 

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If “Imitation is the sincerest form of flattery,” should one of the world’s most renowned  luxury brands feel honored that an upstart company created a knockoff product and sold it to the masses through a full-line discount retailer for a fraction of the price?
 
Such was the “flattery” paid recently to Hermès, the French fashion house known for finely tailored leather and silk goods and other exquisitely crafted, high-priced items. The specific focus of the emulation was one of Hermès most prestigious products, its Birkin handbag, “the epitome of luxury and style, a true icon in the realm of high fashion.” Surprisingly, the flattery came through . . . Walmart.
 
In choosing a retail strategy, marketers often consider three levels of distribution intensity, or selectivity:

• Intensive: a product is available virtually everywhere in a very wide variety of retail outlets (e.g., many snack foods are intensively distributed).
• Selective: the product’s manufacturer more carefully chooses specific retailers that align with the item’s brand image and positioning (e.g., brand-named athletic apparel is often selectively distributed)
• Exclusive: there are only one or two retail options for purchasing the product (e.g., new cars usually can only be purchased through the manufacturer’s own dealerships)

 
Birkin bags, which sell for $10,000 and up, introduce a whole new level of distribution intensity, even more restrictive than exclusive, that might be called elusive distribution.
 
First, Birkins can’t be purchased through Hermès own website; they must be acquired in-store, and even then, they are very difficult to obtain. Apparently, the bags are not displayed. Someone wanting to buy a Birkin first needs to establish themself as a brand-loyal customer by purchasing a significant dollar value of other Hermès products and by building a relationship with a Hermès sales associate. Only then, the strictly qualified customer might be given the privilege of buying a Birkin.
 
That’s the context that inspired a Chinese firm to create a knockoff bag bearing a striking resemblance to a genuine Birkin, likely with less of the fine craftsmanship and also for a small percentage of Hermès’ price. The company successfully sold many of the bags on Walmart’s website until the page suddenly disappeared, replaced by a "no-longer available" message.
 
However, before the knockoffs were knocked out, many people purchased the Walmart-distributed bags and posted their shrewd finds on social media, leading to a multitude of  lookalike likes and shares and to the coining of the clever name: Walmart + Birkin = “Wirkin.”
 
Helping fuel the knockoff bags’ viral rise was a phenomenon some have dubbed “dupe culture,” which describes the trending consumer tendency of buying less expensive product facsimiles in favor of more prestigious and pricey originals.
 
Saving money and being content with less are often good consumer outcomes, but do they make it right for one organization to cash-in on another’s’ innovation and hard-earned reputation? To answer the moral question, it’s helpful to ask a few factual and legal questions:
 
Q1: Are knockoff products the same as counterfeit products?
No, while knockoff products bear some or even a close resemblance to the originals, counterfeits are designed to be as indistinguishable as possible from the real thing, including specific logos and other proprietary branding. Consequently, counterfeit products typically infringe on companies’ trademarks, making them illegal.
 
Knockoff products, in contrast, are not illegal, in fact, they are commonly found in all types of retail stores, including on supermarket shelves where private label, or store, brands are often placed right next to the manufacturers’ brands they emulate.
 

 
Some may argue that the intent of both product types is to deceive, but that argument is more tenable for counterfeits, whose creators want consumers to believe they’re purchasing the authentic product. While a knockoff certainly banks on perceived similarities, it’s not pretending to be the original.
 
Q2: Can a handbag be patented?
 
Of the three patent types, utility, design, and plant, a design patent is the one most applicable to a bag. Given that handbags of all types and sizes have been used for centuries for similar purposes, it’s not easy for a bag’s design to meet the criteria for “ornamentality,” which requires that “no alternative designs could have served the same function.”
 
Despite that challenge, Hermès does have a patent claiming unique “ornamental design” for a handbag that appears to be its Birkin.
 
Q3: Can a handbag be trademarked?
 
Trademarks can be secured for a unique word, phrase, symbol, or design used to identify an organization’s products or services. As might be expected, Hermès has trademarked the Birkin name. However, knockoffs like the “Wirkin” bag intentionally avoid using trademarked names, which shifts the question to the product itself.
 
Fortunately for Hermès, it also has for its Birkin bag the less often referenced trademark design coverage called trade dress protection, which is used “to protect the overall appearance of a product or company” and can include “features like color, shape, design, packaging, and more.” Like other types of trademarks, trade dress ultimately helps consumers distinguish one company’s product from another’s.
 
More specific to the Birkin bag, trade dress offers protection for the handbag’s overall distinct design and its unique elements, including the bag’s rectangular sides, rectangular bottom, dimpled triangular profile, and “rectangular flap having three protruding lobes, between which are two keyhole-shaped openings that surround the base of the handles.” Furthermore, “Over the flap is a horizontal rectangular strap having an opening to receive a padlock eye. A lock in the shape of a padlock forms the clasp for the bag at the center of the strap.”

Handbags have a virtually limitless number of design possibilities, but legally, no bag can combine the elements identified above, unless it is a genuine Birkin by Hermès. That’s what the law says, but what about ethics?
 
We always should be careful not to assume that what’s legal is ethical or what’s illegal is unethical. Historically, there have been plenty of exceptions to complete moral/legal overlap, e.g., slavery, segregation.
 
However, in the case of counterfeit and knockoff products, U.S. laws have considerable moral sensibility.
 
Of the five universal values Mindful Marketing routinely applies (decency, fairness, honesty, respect, and responsibility), the operant ones here appear to be honesty and fairness. It’s dishonest for a counterfeit product to pretend it’s the authentic item – Like someone claiming a reproduction of a painting is the artist’s original work.
 
In addition, counterfeit products are unfair because their sellers benefit from the original designer’s hard work and creativity with relatively little effort of their own. Counterfeit products also can be considered unfair in that their typically lower quality can tarnish the image, or reputation, of the original brand, particularly among people who thought they had purchased the real thing.
 
In terms of responsibility, one also might argue that counterfeit products enact a broader cost on society as a whole because they disincentivize innovation and entrepreneurship.  
 
As mentioned above, knockoff products are usually legal, unless the item walks too close to the line of the original, in which case it essentially becomes a counterfeit. However, the legality of knockoffs doesn’t make them moral; again, it’s important to view them through the lenses of the five values.
 
Knockoffs tend to uphold honesty in that they don’t pretend to be originals but maintain some visual/verbal separation from them. Shoppers who buy the grocery store brand of chocolate chip cookies know that they’re not getting Nabisco’s Chips Ahoy!
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Fairness is more complicated and shouldn’t be evaluated as if one-size-fits all. In the case of chocolate chip cookies, even though the supermarket makes its store brand loosely resemble Chips Ahoy! by way of product name and package design, Nabisco also benefits by being allowed to sell its cookies in the store, which might represent legal consideration.
 
However, in many cases there is no express benefit-sharing, and to some extent, sales of the knockoff product come at the expense of the original. In these common situations, though, several other factors should be considered.

• Different Target Markets: Knockoff products often cater to a distinct target market, e.g., people who want slightly different product features or a lower price point, or they don’t want to buy the name brand or what everyone else has.
• Product Category Growth: The markets for most products start small and grow as more people realize the benefits the products bring. Competing products, including knockoffs, often accelerate that growth and expand primary demand, i.e., they make the market larger than it could become with just one company.
• Insufficient Supply: When a product category becomes very popular and really blossoms, the market’s first mover often can’t meet all the demand by itself, so it helps to have competitors’ product offerings.
• Increased Exclusivity: The presence of knockoff products tends to increase awareness of the product category and accentuate the original product’s exclusivity, e.g., Kia’s production of luxury vehicles, some of which resemble those of Lexus, probably encroaches little on Lexus’ sales but rather helps to enhance Lexus’ exclusive image.
• Makes Companies Better: Few companies would say they want competition, but all benefit from it, maybe for the reasons mentioned above and certainly because competition forces them to become better. As the adage goes, “Iron sharpens iron.”

 
Counterfeits and knockoff products are not the same but are closely connected. The “Wirkin” bag likely disappeared quickly because it flew too close to the sun, legal and morally, i.e., it was a knockoff that too closely resembled a counterfeit Birkin. In an age of rapidly advancing AI and increasingly sophisticated 3D printing, it’s a good reminder that it’s never right to deepfake, or counterfeit, another’s intellectual or physical property.
 
Although there are exceptions, knockoff products can bring a variety of benefits, including ones for the original products their imitation “flatters.” Increased supply, more variety, and fair competition tend to be good things that make for Mindful Marketing.
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