2006_1_counterfeit.jpgOn Sundays, Gothamist posts opinion pieces about issues relevant to life in New York City. If you'd like to write one, email us! The opinions expressed below belong only to the author.

I was walking down Canal Street yesterday when I noticed this sign, taped to the shuttered gates of a store just off the corner of 6th Avenue. If you have trouble reading fine print, it says the store was shuttered for "the open and notorious sale of trademarked counterfeit merchandise." I was amused, because not three feet from the sign, a guy was selling pirated DVDs out of a cardboard box for $5 a piece, and in front of the building next store, three guys were doing a brisk business dealing Prada and Gucci handbag-knockoffs. Clearly, the current NYPD policy of dealing with counterfeiters is not working.

What then should the city do? It seems to me that we have two choices: either get serious about cracking down on the people that distribute and sell these goods, or give up on criminalizing counterfeit goods and simply regulate their sale. The first solution is obvious, but difficult to put into practice. It would require the NYPD to do constant sweeps up and down Canal Street and other popular counterfeit retail locations, and this would most likely just push the activity somewhere else in the city. Lots of money would be required to prosecute all the offenders, and the city would probably need to start locking up tourists to encourage people not to purchase these goods. That might not be in the interest of the other businesses in Chinatown, who benefit from the foot traffic.

The first solution fails largely because it is almost impossible to disrupt the supply of (and the demand for) counterfeit goods. As long as people want to buy crappy DVD copies of current movies, and poorly sewn imitation designer bags, black-market businessmen are going to find a way to satisfy this demand. Cracking down on this activity just pushes the behavior into the criminal realm, where distribution is controlled by gangs, and profits can be used to fund other criminal activity. We've seen this all before with the criminalization of drugs: people who want to smoke crack still find it very easily, and our society pays an enormous price for criminalization in the form of legal system costs and ancillary crime.

What if instead of criminalizing counterfeit goods, we simply regulated their sale? The government could set up zones in which counterfeit goods could be legally distributed (how about Canal Street, between Sixth Avenue and the Bowery?) and tax and license all the people that sell there. This would earn the city tax dollars that could be spent fighting more serious crime. Legal businesses would slowly replace the shadowy distribution networks that we have now, and crime related to counterfeit goods would go down. The brands that produce the original goods wouldn't be hurt (because counterfeits will be distributed whether or not they are legalized), and they could even be brought into the system-- perhaps some of the license and regulation revenue could be directed back to them. In short, we could create a market solution to a market problem.

Of course none of this is likely to happen anytime soon (at least in New York!), but it's worth considering. Our current system of counterfeit regulation simply is not working, and if we do not consider alternatives, everyone in the city is the worse off for it. Do any of you have a better idea?

Jake is the publisher of Gothamist. The only counterfeit item he has ever purchased was a DVD copy of the Matrix Reloaded. He was disappointed with the quality of the copy and the original film.