Apple Computer, the global technology force, is finding that the formerly Soviet Republic of Georgia is a haven for copycat artists. But some Georgian high-tech experts contend that having unauthorized dealers in Tbilisi works to Apple’s advantage by boosting its brand recognition.
According to the company’s website, Georgia has only three authorized dealers of Apple products – and no authorized iPhone seller. But that has not stopped shops in the Georgian capital Tbilisi from imitating the look-and-feel of an official Apple store, right down to the employee uniforms.
With a chain of six shops expected in Tbilisi by the end of this summer, iPhone + is the most prominent example of this trend. On a recent weekday morning, customers at the store’s upscale Vake location maneuvered around piles of Apple boxes as blue-shirted workers stocked shelves lined with iPhones and iPods while fielding technical questions from potential purchasers.
Giorgi Tsiklauri, an administrator at iPhone+, said the company initially sought a license from Apple to become an authorized dealer, but the Cupertino, California-based company never responded to the requests. As a result, iPhone+ took matters into its own hands, and opened its first shop in 2009, Tsiklauri said. Like other unauthorized Apple product retailers in Tbilisi, the company claims that it sells genuine Apple goods, purchased from licensed dealers. The difference, however, is that the products are not covered by Apple’s warranty.
Apple representatives did not respond to repeated requests from EurasiaNet.org for comment about Tbilisi’s unlicensed Apple stores.
Aka Khukhashvili, the director of iPhones.ge, another unlicensed Apple retailer, noted that Georgian consumers are more interested in price and service than in the legal niceties of trademark rights. “[F]or us [what is] important is APPLE popularization,” Khukhashvili added in an email interview.
For official Apple vendors like GO! Electronics, grey-market retailers pose a significant threat to the bottom line. For example, GO! Electronics cannot sell iPads, the Apple tablet, since Apple has not yet launched the model in the region, said James Salvatore, the store’s general manager. Grey-market competitors face no such restrictions.
Pricing seems to be less of a problem. The 160-gigabyte iPod Classic sells for 550 lari (about $331.39) at GO! Electronics, a price just five lari (about $3.01) higher than at iPhone+. By comparison, the same model retails for $249 on Apple’s online store.
Georgia’s casual relationship to intellectual property rights is not restricted to Apple. Copycat versions of a diverse array of products -- from DVDs of The Simpsons to Schweppes tonic water -- coexist with the originals in the Georgian market, with little thought given to right of use. Similarly, the European Union flag flies proudly outside all government buildings, even though Georgia is not an EU member. Ironically, while trademark enforcement lags inside Georgia, the Georgian government has acted to gain international trademark protection for traditional Georgian foods, such as Khachapuri and Sulguni cheese.
Despite recent attempts to toughen Georgian legislation covering intellectual property rights, “industries that rely on copyright protection -- music, movie, software -- continue to suffer from extremely high levels of piracy that undermine their ability to succeed in the Georgian market,” observed Timothy Trainer, a specialist on intellectual property rights at the Washington, DC-based Global Intellectual Property Strategy Center.
A 2009 study by American software manufacturer groups Business Software Alliance and IDC Global Software found that 95 percent of all software used in Georgia is pirated.
Trademark holders can experience a “high level of frustration” trying to get protection for their property as well, Trainer continued. But in order to fight against trademark infringement -- like using Apple’s logo without its permission -- the trademark has to be registered in the country where the problem exists. Many multinational companies do not register their trademarks in every country, Trainer noted.
“Normally, trademark owners will concentrate their protection and enforcement efforts and expenses in countries where they have registered their marks,” he said.
iPhone+’s Tsiklauri maintains that since his store is buying its products from Apple, the American company is not losing anything by iPhone+ using the Apple logo for its store branding. The store, he added, would still like to become an authorized Apple dealer.
Dimitri Gogelia, head of the Georgian Mac Users Group, a fan club and non-government organization that supports Apple products in Georgia, contends that grey-market stores have benefitted Apple by popularizing the company’s products among Georgian consumers.
Gogelia also claimed that Apple allowed Georgian programmers to create a Georgian-language keyboard and application for the iPhone, to be released in September. Apple did not respond to EurasiaNet.org requests to confirm the report.
On the iPod front, he estimated that there are about 15,000 to 20,000 iPod users now in the country.
With that increased popularity for Apple products comes increased popularity for unauthorized Apple dealers. iPhone+ ranks as Georgia’s fifth most popular Facebook group, with 73,832 fans, according to statistics from Facebook traffic monitor Social Baker.
But GO! Electronics’ Salvatore argues that such stores mislead consumers. “[T]here is nothing illegal about grey-market imports,” Salvatore acknowledged. “However, using another company's registered trademarks without their permission is illegal. And using these trademarks to trick the consumer and create a facade of authenticity is unethical … Don't present your store as an Apple store if it is not. Allow the consumer to choose.”
Molly Corso is a freelance reporter based in Tbilisi.
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