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Detroit News Online

April 30, 2004

FIRM ACCUSED OF SHOE POLISH FRAUD


A Michigan company is at the center of an international piracy lawsuit.

The case doesnít involved CDs or DVDs, but rather Kiwis.

The federal lawsuit accuses Pell Inc. of deliberately importing counterfeit shoe polish from China last year and selling it under the Kiwi label, a leading international brand.

Sara Lee Corp., the maker of Kiwi polish, says in its lawsuit that the counterfeit paste was peddled at Pellís shoe-repair stands inside Meijer stores in the Midwest.

Walker-based Meijer Inc. sells groceries and general merchandise in Kentucky, Indiana, Illinois, Michigan and Ohio. Pell operates small, independent shops inside 88 of Meijerís 158 stores.

Pell representatives denied knowing that the Chinese polish was not genuine Kiwi.

"We feel the case is without merit. We just have to let it run its course," said Brent Clark, Pellís general counsel. "That particular segment of our business is not significant."

Sara Lee is seeking more than $1 million in damages, but U.S. District Judge Richard A. Enslen said he hopes the two sides can reach a financial settlement.

In the meantime, he has issued an injunction prohibiting Pell from handling anything that violates Kiwiís trademark.

Pell sold real Kiwi polish until it was cut off in 2002 because of "late-payment problems," said Rodney Brown, an attorney for Chicago-based Sara Lee.

By summer 2003, Sara Lee was getting suspicious that Pell was still selling Kiwi shoe polish. Private investigators went to 17 Meijer stores in Michigan, Indiana and Ohio, and bought polish from Pellís Web site.

When tests confirmed that Pell wasnít selling the real Kiwi polish, Sara Lee used a powerful remedy available under federal law and got Enslen to authorize a surprise seizure at Pellís headquarters in Grand Rapids.

Armed marshals who entered the business Nov. 5 left with 46,000 tins of faux Kiwi polish and some computer equipment and documents.

"Itís the only way to get the evidence in a counterfeiting case," said Marc Bergsman, a Grand Rapids lawyer who is a trademark specialist and not involved in the case.

Pell was getting the paste from China for 9 cents to 18 cents a can, depending on size, while the real Kiwi cost $1.05 to $1.71, the lawsuit says.

There were differences in the labels and how the lids opened.

And then there was that odor.

"When they were getting foul-smelling product from China at such an extraordinarily low price, common sense would have suggested one would investigate a little bit," said Brown, Sara Leeís attorney, disputing Pellís insistence that it didnít know it had counterfeit goods.

Stephen Turner, an attorney for Pell, told Enslen that the strong aroma that resembled petroleum "concerned (company owner Paul Pell) but didnít lead him to the conclusion that this was counterfeit product. I donít think that ever crossed his mind."

Kessler International handled the investigation on Sara Lee Corp.'s behalf.


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