Everyone likes to make a quick buck. In the summer, garage sales are common in neighborhoods. Some towns hold flea markets. Small carts with various items for sale adorn the aisles of most shopping malls. People sell items on Ebay. At any one of these places you might find a knockoff designer good for sale. As a kid, I had my fake Oakley sunglasses. Just recently, my sister returned from New York having purchased a knockoff Prada bag from a street vendor. Knockoff or fake designer goods exist, but what happens if you sell such goods here in Illinois and hold them out to be real? [1] How about selling such goods here in Illinois and holding them out to be fake? This article will seek to generally answer these questions for non-internet based sales in Illinois.
The Illinois Consumer Fraud and Deceptive Practices Act deems fraudulent business acts unlawful. [2] Under the Illinois Consumer Fraud and Deceptive Practices Act merchandise “includes any objects, wares, goods, commodities, . . . or services.” [3] In Illinois, fraud consists of:
(1) a false statement of material fact; (2) the party making the statement knew or believed it to be untrue; (3) the party to whom the statement was made had a right to rely on the statement; (4) the party to whom the statement was made did rely on the statement; (5) the statement was made for the purpose of inducing the other party to act; and (6) the reliance by the person to whom the statement was made led to that person's injury.
[4] Thus, a person likely violates the Act if they knowningly sell knockoff merchandise as genuine. A violation of the Illinois Consumer Fraud and Deceptive Practices Act could warrant up to a $50,000 fine. [5]
The Fraudulent Sales Act governs going out of business sales.[6] If a seller makes a misrepresentation as to the quality of the goods at a liquidation or going out of business sale, and arguably holding an item out as genuine when it is in fact fake would qualify, the person making the misrepresentation can face a class B misdemeanor. [7]
As for selling knockoff goods and holding the goods out to be knockoffs, I was unable to find a case or statute prohibiting such activity in Illinois; you are, however, prohibited from knowingly selling baby food and cosmetics at flea markets. [8]
If you are a consumer, you can find more information about your rights and you can even file a complaint at the Illinois Attorney General’s website. [9]
End Notes:
[1] For a discussion of lawsuits filed by famous designers against retailers for selling knockoff products see Stephanie Francis Ward, Knockoffs Landing on Retail Shelves, A.B.A. J., Feb. 2007 at 10.
[2] 815 Ill. Comp. Stat. Ann. 505/2 (Westlaw 2007); see also American Airlines, Inc. v. Wolens, 513 U.S. 219, 228 (1995) (concluding the Act, with respect to airlines, is preempted by the Airline Deregulation Act).
[3] 815 Ill. Comp. Stat. Ann. 505/1 (Westlaw 2007).
[4] Elston v. State Farm Fire and Cas. Co., 691 N.E.2d 807, 816 (Ill. App. Ct. 1st Dist. 1998).
[5] 815 Ill. Comp. Stat. Ann. 505/7(b) (Westlaw 2007).
[6] Id. at 350/0.01.
[7] Id. at 350(11); 730 Ill. Comp. Stat. Ann. 5/5-8-3(a)(2) (Westlaw 2007) (stating class B misdemeanors are punishable by up to six months in prison).
[8] 225 Ill. Comp. Stat. Ann. 465/5.5 (Westlaw 2007).