Until a few years ago, Vibram, was known for making soles for hiking boots. It is the only thing the company did for over 75 years. One day, a member of the design team came up with a quirky idearunning shoes that look like gloves for your feet. The prototype he designed was thin, lightweight, and kind of funny looking since it had individual sections for each toe. As he explained, the shoe would give the wearer the feeling of running barefoot, while protecting his or her feet from dirt and cuts. Seemingly overnight, the shoe, called FiveFingers, became a sensation. It was praised by professional athletes, amateur runners, journalists, and even the Harvard Medical School. Scientists wrote about how these shoes promoted a "barefoot" running style producing less stress on the joints, and it increases leg, ankle, and foot strength. Due to these benefits, consumers could not get enough of this shoe. Sales for the current year are expected to top $50 million, up from $11 million in the previous year. To meet demand, Vibram doubled their warehouse space and expanded from one factory to five.

Unfortunately, Vibram has some challenges. First, it faces stiff competition from some of the biggest names in the athletic apparel industry. Brands such as Nike, New Balance, and others are planning to release a similar product. Even more worrisome are counterfeiters. Over the past few months, managers discovered more than 200 websites selling fake versions of the FiveFingers shoes. These websites are not just selling shoes that sort of look like Vibram'sthey are almost exact copies and have the same styles, colors, logo, and box design. These counterfeit shoes have a return label which looks just like Vibram's and has the company's address on it. When consumers want to return the fakes, they send them to Vibram, and customers want the firm to refund them for shoes they bought from a counterfeiter.

The company wants to fight back against the counterfeiters. Not only do the fake shoes reduce sales, but they could also hurt Vibram's reputation of producing high-quality products. However, fighting counterfeiters is expensive. The company needs to hire and send inspectors to China, where most of the factories producing copies of your shoes are located. For every fake website discovered, it costs $2,500 to get the World Intellectual Property Organization to shut it down.

Questions

1. As a manager, would you recommend Vibram keep paying the costs associated in dealing with the counterfeiters? Why or why not?

2. Some Virbram employees might be discouraged by counterfeiters, feeling the innovations they worked hard to create are stolen too quickly. How would you nurture the creative environment at Vibram despite counterfeiters?

3. How should you respond to companies that take advantage of a product your company worked so hard to design?