A college student strolls through the sidewalk kiosks of New York's Canal Street. She browses through handbags, jackets and shoes with designer logos: Louis Vuitton, Prada, Fendi. She finds a Gucci bag that matches her shoes and pays the merchant $40 for a designer bag that would cost 20 times as much at a store on Madison Ave.
Meanwhile, in the basement of a nearby building, a West African immigrant is locked in a tiny room. Day after day he glues fake designer labels to generic handbags, for sale in New York's Chinatown and in similar markets across the U.S.
"China's laws on trademarks and copyrights are not bad laws," says Ethan Horwitz, a partner with Goodwin Procter. "But the reality is there's no benefit to China in stopping it."
The U.S. government can apply pressure on China via diplomatic and trade channels, but most of America's leverage is being applied to other causes deemed more important--such as nuclear proliferation and Taiwanese autonomy. Trademark owners must rely on their own devices to fight counterfeiting.
"Trying to get laws enforced is frustrating," Heban says. "Enforcement resources are spread thin, and it takes time to turn evidence into an indictment. But we're no longer standing alone."