How do knockoffs affect the design industry?
Fundamentally, knockoffs are untruths offered to an unknowing public. The buyer is deliberately misled by the knockoff manufacturers, who make every attempt to use the original designer’s name, likeness, and history of the piece, in an effort to convince the buyer that the piece is authentic. The knockoff makers simply tag their work as "replica," "copy," or use veiled references like "case study" etc.
So consumers are led to believe that knockoffs and counterfeits are equivalent to the real goods, when they are not. The details, the quality finishing, and the materials are not the same in knockoffs and counterfeits. And it's not until the knockoff or counterfeit goods show premature wear, color fading, dimensional instability, or ultimately breaks, that consumers realize the difference. Often these same consumers are unable to get satisfaction from the seller of the chair, or they’ve sold or gifted it to a second owner who associates product failure with Herman Miller. We’ve had numerous instances where this leads to consumers contacting us with their complaints, only to learn they are holding a fake. The real question is: How many haven’t bothered to ask, and presume their negative experience is a reflection of Herman Miller's design and quality? The worst part is, they believe that the level of quality and craftsmanship came from the “authentic” provider—which is a huge disservice to the entire design industry.
As to dollar cost, it’s impossible to say with any certainty what the impact of knockoffs are on designers and their manufacturers. There is simply no way to track the lost sales of authentic pieces or the negative impact shoddy product has on authentic brands. But it is clear there is a large knockoff industry, and it will only get worse if not confronted by the design community, both directly through legal means and in a concerted effort to educate the buying public.
How do you protect your designs, both new pieces and old? What are the biggest challenges around preventing knockoffs of Herman Miller products, generally speaking?
Herman Miller registers trade names and trade dress associated with the products that it manufactures. In addition to aggressively pursuing our common law intellectual property rights, we have a litigation strategy which has resulted in numerous distributors and retailers getting out of the business of selling knockoffs of Herman Miller’s classic products. Unfortunately our legal rights vary by the prevailing laws in each country, and the expense associated in these efforts is substantial, but we prioritize and pursue those who infringe on our trade names and designs whenever and wherever possible.
However, much like the sellers of counterfeit bags, clothing, and electronics, the internet and manufacturing abroad has proven a boon to those intending to confuse and mislead the public. Unfortunately, some media outlets, intentionally or inadvertently, have added to the problem by failing to take a vocal stand in defense of authentic design—even going so far as to repeat the knockoff makers’ mantra about "accessibility" and "public domain" without considering the impact on an uninformed public or the creators of original designs. Again, awareness and education is the ultimate answer to reducing and eliminating the predatory knockoff industry.
Can you give me some examples of how Herman Miller has invested in original, authentic design in recent years?
As a business we invest tens of millions of dollars annually in original research and design, introducing new products each year that serve people all around the world, in their homes, workplaces, and in healthcare and higher education spaces. For example, the SAYL chair by Yves Behar was introduced in 2010 and offers great work-chair ergonomics and performance, for home or office, at a remarkably low price. SAYL also meets high standards for environmental sustainability, and has already been exhibited in museums in North America, Asia, and Europe. The Setu chair, by Studio 7.5, was introduced in 2009 with the ambition to set a new reference point for instant comfort, again with great attention to innovative performance and sustainability. The chair accomplished both—and more— receiving numerous international design awards, including the Industrial Designers Society of America "Design of the Decade" Gold award for "Best Sustainable Design Solution." Both of these products are at accessible price points, with beautiful style, and represent real innovations in form, materials, and environmental sensitivity.
Using a well-known Herman Miller piece, can you break down, in as specific and concrete detail as possible, what contributes to the retail cost?
The components that go into the cost of any consumer product include:
1. The investment in the design, development, prototyping, testing, and materials research and evaluation process. This is a major investment of time, intellectual capital, resources, and focus for Herman Miller. This ensures enduring quality, and longer warranty periods.
2. The cost of the materials and labor. We use the finest materials and craftspeople to manufacture our classic designs. Looking at a picture alone does not give the consumer enough information to discern the quality. I also urge customers to be wary of products that are half the price of the authentic design. In order to sell it cheaper, you have to make it cheaper. There is no other way.
3. Royalties paid to the designer or the designer’s legacy or heirs. This also connects the manufacturer to the source of authorization (hence, it makes the design “authorized”) and gives the manufacturer the opportunity to stay connected with the designer and assure the ongoing authenticity—especially if newly reissued items are introduced.
It’s also worth noting that in addition to the royalty Herman Miller pays to the Eames Office on every Eames sale, for example, we are a major annual contributor to the Eames Foundation, the Nelson Foundation, numerous other design-related organizations and programs, and multiple philanthropic causes worldwide that are focused on human needs. We also annually invests tens of millions of dollars on research and design (a multiple of the industry average) in support of new product development—compared to zero from the knock-off industry. But to your original question, as a public company anyone can take a look at Herman Miller’s audited financials and see fiscal 2011 gross margins at less than 33%, with adjusted operating earnings less than 7%–those results do not suggest predatory pricing. In fact, it would be a very good bet that the knockoff makers beat those numbers handily, because they’re not paying their people Herman Miller wages, profit sharing, and benefits, or carrying R&D expenses, or maintaining our social commitments of Herman Miller.
Can you think of any instances or situations where you'd say knockoffs are not entirely evil? Any cases where they actually help the design industry? I've heard people say they spur innovation, by provoking designers to keep creating new and exciting designs and moving things forward. And that since people who buy knockoffs often can't afford the "real thing," a knockoff isn't actually stealing a customer, since it's a different market. And that knockoffs create more demand for the real thing, and make it even more iconic, since more and more people are exposed to these examples of "great design"-- like it cultivates their taste and when they have more money they're be more likely to splurge on the real thing. Any thoughts on any of these points, or anything to add?
No, there is no instance when counterfeits somehow benefit authentic products. All the arguments to the contrary are made in self-interest by the knockoff makers to justify their profiteering on the work of others. Some consumers might also consider the "easy" answer, without recognizing the negative impact on the industry and the future of great design, as well as the far greater value and heirloom quality in buying authentic if they would simply save for the real thing. Or maybe they just don’t realize they can buy vintage or recently used products at equal or better prices to the knockoffs? As to creating demand for the real thing, we would prefer to let awareness and demand be created through design-driven media, the numerous museum collections and exhibits, and the visibility of authentic pieces in the homes and businesses of discerning buyers.
You might respond that buyers know the difference and are accepting the trade off in materials, form, and quality for the lower price, but again we know from first-hand experience that many don’t understand and believe they are buying authentic, particularly in the used market. Herman Miller routinely gets complaints from owners of knock-offs demanding repair for what ultimately proves to be a "replica." The further question is, how many of these shabby pieces are equated with the true design’s quality and ultimately turn-off other potential buyers.
At a minimum, the law should prohibit the use of a designer’s name and likeness, and the product’s name, unless that manufacturer or distributor is the authorized source for the authentic product. This would offer at least some measure of protection to both the buying public and the designer/manufacturer, and likely have a significant dampening effect on knock-off sales to the uninformed.
I've also heard people justify purchasing knockoffs with lines like "the designer is long dead anyway, so I don't feel guilty about depriving a huge business from my hard-earned money—it's not like the designer is benefiting from my purchase anyway." Any response to that idea?
This argument fails on many levels. Consider the source—where is that knockoff being made, under what working conditions, with what consideration for the environment, and to which national economy are the profits going? Is that manufacturer truly committed to design, including the ongoing creation of new products, or simply making a buck on someone else’s work? Finally, if you truly value the work and legacy of the original designer, do you think that designer would condone that knockoff? A good designer’s intent is always to provide a certain kind of product experience. It doesn’t matter whether he/she is alive or dead, and deeply cynical and morally suspect to suggest otherwise. It is up to the authorized manufacturer to deliver that special experience with every product. That’s what we do. Every day.