Oakley Raids Counterfeiter, Sues Smith

Oakley, Inc. announced the results of successful raids at three Chinese factories and two South African distributors engaged in the production and distribution of counterfeit Oakley sunglasses. In related news, Oakley has also sued Smith for alleged patent infringements.

The raids resulted in the seizure of over 200,000 pairs of finished and semi-finished counterfeit Oakley sunglasses and sunglass parts, along with manufacturing equipment and supplies used for their production. It is the largest quantity of counterfeit Oakley products ever seized in either country.

“We are very pleased with the level of cooperation our legal team received from local law enforcement agencies and government officials of both countries, helping to ensure the success of these raids,” commented Oakley Chairman and Chief Executive Officer Jim Jannard. “Oakley has acquired a reputation as a persistent protector of its intellectual property rights. In 1999 alone, we have recovered over 1.7 million units of bogus product and arrested over 210 individuals in conjunction with intellectual property rights violations around the world. These raids should put other counterfeiters on notice that we will not tolerate activities that threaten the integrity of the Oakley brand and the trust placed in our products by consumers. We are serious about locating, raiding and prosecuting to the full extent of the law.”

The raids in China occurred between October 27 and November 3, 1999 in Wenzhou City, Zhejiang Province after 5-to-8-week-long investigations that relied heavily on the cooperation of government officials and private investigators. The targets were the Ming Liang Glasses Manufacturing Co. Ltd., located at Bei Tou Industrial Zone, ShuangAo, Shuang Yu, Wenzhou City, Zhejiang Province, People’s Republic of China; Ou Hai Qiang Hung Glasses Co. Ltd. and Yuan Liang Glasses Co., both at Shuang Yu Town, Wenzhou City, Zhejiang Province, PRC.

The counterfeit goods were apparently destined for a variety of markets, including Colombia, Venezuela and New York City. The company intends to pursue charges against the responsible parties alleging violations of various PRC patent and trademark laws but declined to give estimates of the potential fines that might be assessed upon successful prosecution.

The South Africa raids occurred on October 8 and 13, 1999 with the assistance of the South African Police force and private investigators. The first involved a distributor located at Madrassa Arcade, Grey Street, Durban, found to be selling several styles of counterfeit Oakley sunglasses. Its inventory of nearly 2,000 pairs comprising several styles was seized. In the second, Sunny Specs Enterprises, a manufacturer located on Orange Street, Botshebelo Industria, was found to have possession of over 9,000 pairs of counterfeit Oakley glasses as well as lens cutting machinery, frame molding machines, paint bays, and assembly line equipment. Also present were additional counterfeit Oakley samples believed to have originated in China.

In related news, Oakley has filed a lawsuit in the U.S. District Court, Central District of California against Safilo America, Inc. and its subsidiary Smith Sport Optics, Inc.

The suit alleges that certain sunglass models marketed under the Smith brand name, including the Slider SL2, Slider Bazooka, Slider 01, Toaster, and Buzzsaw, among others, infringe on Oakley’s XYZ Optics(TM) patents. In addition, Oakley alleges that Smith’s Slingshot, Boomerang, and Moab H/P models, among others, infringe on Oakley’s design patents protecting its distinctive M-Frame(R) model.

Oakley’s claims against Safilo and Smith alleging infringement of the XYZ Optics patents are similar to those alleged in separate suits pending against NIKE, Inc. (NYSE:NKE) filed in July 1997, and in June 1998 against former Bausch & Lomb, Inc. (NYSE:BOL) brands Ray Ban, Revo, Killer Loop, and Arnette, purchased in June 1999 by Luxottica Group S.p.A. (NYSE:LUUX).

“Oakley defines itself around innovations that inspire and enhance performance,” said Chairman and Chief Executive Officer Jim Jannard. “In our 25 year history, over 400 patents have been issued worldwide, attesting to the company’s passion for inventions that set Oakley products above any competitor’s. In addition, we are equally recognized by consumers for wrapping our superior technology in artistically distinct styling, such as that reflected in our highly successful M-Frame line. Because of this, we are passionate about protecting and defending ourselves against those who attempt to use our inventions and emulate our designs without permission. We will continue to pursue legal action against any perpetrators of infringement.”

Jannard explained that the XYZ Optics technology ensures the optimal relationship between the lens geometry and the as-worn orientation to the wearer’s eye. The result is reduced optical distortion at all angles of vision, maximum peripheral vision and protection against sun, wind and other hazards encountered by the active wearer. The XYZ Optics technology is currently embodied in several of the company’s most successful styles, including the Jackets(R), Wires(TM), X Metal(TM), and Frogskins(R).

“The technology is currently the only method the company knows of to achieve such a superior level of optical quality in a wrapped and raked non-prescription dual lens design,” Jannard concluded. “The applicable patents validate Oakley as the originator and owner of this technology and provide a valuable tool with which to defend against competitors who attempt to incorporate it in their products.”