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August 1998 Vol. 13, No. 8   RSS Feed for Undercurrent Issues
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Scubapro Counterfeit BC

A result of the Grey market?

from the August, 1998 issue of Undercurrent   Subscribe Now

Among diving aficionados, no topic is more hotly debated than the sales of discounted diving equipment by mail. To witness the debate, you only need to tune in to the maze of Internet dive forums, where hardly a week passes without someone asking where to buy, say, a Scubapro regulator on the cheap. He'll be barraged with responses that range from vitriolic criticism for destroying his local dive shop to telephone numbers and website locations where he can save 25 percent to warnings that there will be no warranty card with it, the equipment will be defective, or he won't be able to get it serviced.

Dive shops deplore the discount houses. They counter by emphasizing their personal service and trying to get manufacturers to guarantee that they won't condone mail order discounts of their equipment. Some manufacturers do deal exclusively with dive shops, while others say they do but turn a blind eye toward the grey market -- that clandestine market where people ostensibly purchase gear to retail to consumers only to turn around and job it to mail order companies.

The mail order dive business has been around as long as diving. As a kid, I bought my first dry suit -- they didn't have wet suits or even dive shops then -- in the late 50s through a U.S. Divers mail order catalogue. When Skin Diver magazine became the prominent publication for divers in the 1960s, it carried the forerunner of today's mail order ads. In the 1970s, Skin Diver carried more elaborate mail order pitches for a range of gear from Honest Archie at New York's Central Skin Diving and others. In the next decade, mail order underwater photo gear ads proliferated and companies like Adorama that originally specialized in land cameras expanded into diving gear.

Many dive stores registered their protest by refusing to carry Skin Diver magazine. In 1990, Performance Diver raised the ante by developing a mail order dive gear catalogue to supplement its mail order bicycle business. By 1996, according to an estimate by the Scuba Retailers Association, the mail-order business was taking four to six percent of the $400 million in sales made by the dive industry.

All this has not been free of legal hassles. The most prominent suit was filed three years ago, when the Justice Department sued the Scuba Retailers Association. The government claimed that, in 1992, the SRA told snorkel manufacturer Divaire that the Association's trade magazine would carry a critical article about the company and that the industry would blackball their products if it did not stop selling snorkels through the mail. According to the complaint, Divaire soon halted its mail order initiative.

The complaint further alleged that Association representatives told Rodale's Scuba Diving magazine that 450 member stores would not carry the magazine if they accepted ads for scuba gear mail order houses. The Department alleged that, because of the pressure from the Scuba Retailers Association, Rodale decided not to accept mail order ads. At the time, Assistant Attorney General Anne K. Bingaman said that the government's lawsuit sought "to ensure that consumers can get scuba equipment through the mail as well as from dive shops" so divers can find "the best prices and quality a competitive market can deliver."

Scuba Retailer's Association Executive Director Jim Estabrook, owner of United Divers in Somerville MA, acknowledged that, while an individual member might have said something, "there was no boycott, no nothing." He claimed no wrongdoing and said the SRA was not opposed to mail-order sales. But the suit was never heard. After running up $50,000 in legal bills, an amount roughly equal to its annual budget, the SRA closed its doors. As of today, there are no ads in Rodale's Scuba Diving.

The latest skirmishes began last April, when Johnson Worldwide Associates, the owner of Scubapro, sued Leisure Pro, a major mail order supplier of dive gear, and Cindi Walters, a past DEMA board member who does business as Cal Pacific Manufacturing. While the primary charge is that Walter manufactured counterfeit and dangerous Scubapro SeaHawk BCs and Leisure Pro sold them, other elements of the lawsuit may affect more people.

The basic charge of the lawsuit, taken from documents filed by JWA, alleges that:

From 1995 until 1997, Cal Pacific was JWA's manufacturer for the SeaHawk BC, using tools belonging to JWA. In September, 1997, JWA informed Ms. Walters that it was moving its production to another facility and expected final delivery in December, 1997. Cal Pacific had possession of the BC tooling until April, 1998.

From consumers, JWA learned of counterfeits on the market and purchased one. JWA's Product Manager, David McLean, compared the tooling with the tools returned by Cal Pacific and found identical impressions (a fingerprint, he said) on the counterfeit BC, tying the counterfeit BC to the tooling formerly possessed by Cal Pacific. The labels on the counterfeit were printed on material designed by Cal Pacific and printed uniquely for them. And Cal Pacific's own proprietary "Forte" valve fittings -- which are not on the genuine model -- were built into the counterfeit BC.

"There is no doubt," says the suit, "that Cal Pacific is the ultimate source of the counterfeit SeaHawk BCs. Defendants' method of operating may be that Cal Pacific Manufacturing produces the counterfeit SeaHawk BCs -- using the tools owned by JWA -- and provides the counterfeit product to Leisure Pro, which then sells the counterfeit SeaHawk BCs to the public. . . . Leisure Pro knows or is willfully blind to the fact that the SeaHawk BC that it offers for sale is a counterfeit product, and that Leisure Pro has intentionally and deceptively advertised and sold the counterfeit BC as a genuine Scubapro product."

The discovery of the bogus BCs occurred when Walton Willis, Technical Service Supervisor, received two phone calls from users seeking service. Both stated that they had just purchased new SeaHawk BCs from Leisure Pro and complained that the BCs had failed to inflate properly. When they received their BCs, they noticed that the valves did not look the same as the valves on the SeaHawk BC that they had seen advertised in the Scubapro catalog and the inflator mechanisms on their BCs were different from those in the catalog.

Willis said, "I informed the callers that they had not purchased genuine Scubapro products and that they had purchased their BCs from a company that was not an authorized Scubapro dealer. I recommended that the callers contact Leisure Pro about the product defects."

Tom Allen, Regional Business Manager for the Scubapro line, called Leisure Pro and ordered the SeaHawk BC for $349.95 (suggested retail is $649). The counterfeit that arrived was a reasonably good knock off, "styled identically, the same color, made from the same fabric, identical stitching, identical black strapping with blue lines, and two of JWA's logos, including the stylized "S" mark. . . .It included no instructions, owner's manual, or registration card -- all of which is always included with the genuine SeaHawk BC. Without the instruction manual, divers may not be able to operate the BC properly or safely. Without a registration card mailed by the purchaser to Scubapro, purchasers cannot be provided with warranty service or be notified of defects or recalls."

They also note that "like the counterfeit BC that Mr. Allen received through the mail from Leisure Pro, the counterfeit BCs purchased by the Leisure Pro customers had valves and inflation mechanisms different from that on a genuine SeaHawk BC ... and did not inflate properly. This defect would make the BCs impossible to use to properly regulate buoyancy."

While JWA is concerned about preventing injuries to divers using the bogus BCs, they note also that injury also consists "of injury to JWA's goodwill." JWA seeks to protect the Scubapro image and name "because of the quality, outstanding reputation, and extensive warranty and service associated with Scubapro equipment. . . .retail prices for Scubapro equipment are on the higher end of the price spectrum for scuba diving equipment." To maintain that image and advertise its Scubapro products, JWA spent $582,162 on advertising in 1996.

Also at stake is copyright protection. While they allege that their copyright was infringed upon by Cal Pacific, they say "Leisure Pro has intentionally and willfully infringed on the copyrights in the photographs and text appearing in the 1996 and 1997 Scubapro catalog by taking the photographs and text from the Scubapro catalogs and reproducing them in its own Leisure Pro mail order catalog."

Leisure Pro responded publicly in early May, saying "we are justifiably proud of our long and well-established record of sales and services in genuine brand name products at most competitive prices. This has angered some of our competitors and manufacturers alike.

"Recently, we purchased in good faith Scubapro SeaHawk BCs from Cal Pacific Manufacturing. This company was one with whom we had dealings in the past and had found to be reliable and who manufactured genuine BCs for Scubapro. We are now being advised that they are counterfeit Scubapro SeaHawk BCs. This is the first time in our history that we have ever discovered that goods that we sold are not genuine. We are presently helping Scubapro to resolve this matter with them and with Cal Pacific. We have no interest in selling anything less than 100 percent genuine merchandise.

"We must emphasize that the counterfeit product at issue as identified by Scubapro consists solely of the small number of Scubapro SeaHawk BCs that we offered for sale and not any other Scubapro product or any other brand name product sold by Leisure Pro."

We called Cindi Walters to discuss the suit with her, but she has not returned our calls. Eugene Mendelorts, President of Leisure Pro, said that Leisure Pro was settling with each side individually and would soon be out of the suit, leaving only Walters in contention. "We are just an innocent customer," he said, "that assumed it was a Scubapro product that we purchased." JWA's Guy Miller acknowledged that they are negotiating.

JWA has received a restraining order permitted them to inspect Leisure Pro's and Cal Pacific's records to determine if there are more bogus BCs on the market and who owns them. In addition, they are suing for unspecified treble damages.

There's an ancillary issue here that isn't involved in the legalities. How did Leisure Pro, an unauthorized dealer, get Scubapro goods in the first place? After all, the suit states:

"Scubapro sells its equipment only through authorized retail dealers and does not authorize its dealers to sell by mail order. Scubapro requires that dealers sign dealer sales agreements prohibiting the dealers from selling Scubapro equipment on the wholesale market, wherever such contractual restrictions comport with local law. . . .

"Some of the Scubapro equipment that Leisure Pro sells is obtained through wholesale channels from authorized Scubapro dealers in the United States and throughout the world, in violation of the dealer sales agreements with plaintiff which prohibit wholesale dealing. On information and belief, Leisure Pro approaches authorized Scubapro dealers in the United States and throughout the world and induces them to breach the terms of their dealer sales agreements by selling Scubapro products to Leisure Pro on the wholesale market. . . ."

So Leisure Pro claims it has legitimate Scubapro goods for sale, and Scubapro admits that, although it does not authorize its dealers to sell on the wholesale market, "some ... Scubapro equipment that Leisure Pro sells is obtained through wholesale channels."

Just where does it come from? More about that next time . . .

-- Ben Davison

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