A tricky ball game, this

Updated: Aug 28 2008, 07:37am hrs
Jason Yao lives a dangerous life for a guy in the golf business. He gets death threats. He raids factories and markets. He shakes down informants and hangs out with private investigators. He has 10 aliases.

China is the focus of the worldwide war against counterfeit golf products, and Yao is on the front lines. His employer, Acushnet, located 7,000 miles away in Fairhaven, Mass, makes the worlds most popular and most copied golf ball, the Titleist Pro V1, along with clubs, accessories, and shoes that counterfeiters mimic for sales around the globe.

As Chinese officials crack down this summer on the sale of fake items to Olympic fans in Beijing, Yao is further south in that country, raiding factories that make ersatz Titleist clubs and golf bags. Acushnet is one of a growing number of merchants fighting the increasingly sophisticated counterfeit operations, which are diverting billions of dollars globally to the black market for everything from golf balls and brake pads to pharmaceuticals and luxury handbags. In its most recent report, the Paris-based International Chamber of Commerce estimated that counterfeited goods cost more than $600 billion annually in lost sales, tax revenue, and jobs. For Massachusetts, the largest US exporter of golf balls, counter- feited Titleists could mean millions less in tax revenue.

Increasingly, Chinese fakes are being exported to US through online sales on such sites as eBay and Craigslist, where copycats see a chance to cash in on American consumers looking for deals. Technological advances make it easier to manufacture fake goods that look almost like the real products. About 81 %t of all counterfeit products seized in the US came from China in 2006, up from 65 % a year earlier, according to the latest US government statistics. And the slow reaction by Chinese officials to the burgeoning business of rip-offs has forced brands such as Acushnet, Gucci, and Tiffany to largely take on the fakers on their own.

Acushnet is spending more than $2 million a year to combat counterfeiting, a budget that didnt exist five years ago. The $1.4 billion company is training US federal customs agents to recognise fakesfor example, to know that since Titleist balls are manufactured in America, all imports from China are counterfeits.

Acushnet is paying for security services that monitor sites like eBay for fraud, a move that has allowed Acushnet to shut down 10,500 auctions of fakes since January. And it has hired Yao, a 35-year-old lawyer, and other investigators to ferret out wrongdoers in China and to lobby officials to pay more attention to their cases.

Im never going to stop the problem. Im just trying to make it harder to do, said Lisa Rogan, Acushnets trademark manager, who oversees the companys anticounterfeit efforts. Were not just protecting our reputation. Were trying to protect consumers who are getting fooled by these lesser quality copies.

Jimmy Rosen, of Harrisburg, Pa., was one of those consumers. He found what sounded like a bargain on Craigslist: $35 for a dozen Titleist Pro V1 golf balls in damaged boxes (typically $50 at stores). Rosen, 43, called up some friends who wanted in and negotiated for 42 dozen balls for $20 a dozen.

He met the alleged seller, Dallas Conrad, of Carlisle, Pa., and after giving the balls a cursory look, handed over $840 in cash. But when Rosen and his friends compared the balls to ones bought at a store, they saw they had been fooled: The counterfeit balls were a brighter white with a different font and had a visible seam.

It didnt even occur to me that golf balls were being counterfeited and brought in from China, said Rosen, who filed a lawsuit against Conrad.

Conrad could not be reached for comment. Calls to several phone numbers listed for Conrad were disconnected.

Rosens 504 golf balls, meanwhile, are locked in his lawyers office. Rosen sent photos to Acushnet, which is trying to track down links to different counterfeit rings.

While many factories make fakes for local markets in China, exporting products online is increasingly popular. A typical Internet operation includes factories in China; middlemen shipping products to sellers overseas in small packages to elude customs; and sellers across the world listing hundreds of items on websites like eBay, Craigslist, and Alibaba. Records are rarely kept, delivery instructions are often given via text messages to avoid detection, and merchandise is moved quickly by courier out of factories to the middleman so raids turn up few goods.

MarkMonitor, a firm that helps companies track fraudulent auctions, estimates the amount of counterfeit products sold online almost doubled to a record $120 billion from 2004 and 2007. MarkMonitor identifies fraudulent goods online for businesses to review and automatically transmits the counterfeit listings to eBay. Auctions are typically shut down by eBay within 12 hours.

But frustrated retailers, which want eBay to do more, are taking their cases to the courts with mixed results: This summer, a French judge fined eBay $63 million for failing to adequately prevent counterfeit items from appearing on its French site in a lawsuit filed by luxury merchant LVMH, which includes brands such as Louis Vuitton. eBay has said it plans to appeal the ruling. Several days later, a New York judge sided with eBay in a case brought by Tiffany, saying the high-end jeweler is responsible for policing its trademark.

Catherine England, an eBay spokeswoman, said the site tries to avoid counterfeit goods: Its bad for sellers, bad for buyers, and has no place on eBay.

Fighting fakers on their home turf in China is even more challenging for brands that must try to convince judges and government officials that counterfeiting is a serious crime.

In some instances, Chinese authorities have stepped up their efforts. They have raided factories and made arrests. During the Olympics, officials are conducting market sweeps in Beijing and targeting fans at the airport trying to bring back fake goods. And the government is playing a video titled Say NO to counterfeiting and piracy at airports featuring actor Jackie Chan posing as a customs agent who forces tourists to surrender counterfeit items.

Still, the complexity of tackling counterfeiters has led Acushnet to work with unlikely partners: rival golf businesses. Together, they share information and help fund investigations to target counterfeiters of multiple golf brands.

Companies do much of the legworkhiring investigators and cultivating informants among employees at suspected factoriesbefore local authorities will get involved.

But of the 40 factory raids Acushnet has helped with over the past four years, only nine have resulted in criminal cases. Chinese authorities rarely shut down factories permanently for making fakes, and some counterfeiters under investigation boldly keep up their illicit business.

NY Times / Jenn Abelson