It was August 2005, less than a year after Antik Denim’s launch, and the jeans manufacturer already had friends in all the right places. Leggy celebs Teri Hatcher, Kylie Minogue, and Cameron Diaz had been photographed in the company’s signature Western-inspired styles. At Kitson, the L.A. shop that pipelined Ugg boots and Von Dutch caps to popularity, $250 Antiks were zipping off the shelves.

But the company was about to discover the downside of infiltrating the in crowd. Antik reps were weaving through the annual Magic fashion trade show in Las Vegas when they came upon a distressing sight: a Chinese manufacturer proudly displaying exact copies of their designs.

“We freaked out,” says Samuel Bellahsen, legal counsel for Antik’s parent company, Blue Holdings. “We made a civil seizure and closed the booth.”

The counterfeiters who flood street markets and websites with fake fashion once preyed solely on Chanel, Louis Vuitton, Dior, Prada—luxury Goliaths owned by multibillion-dollar corporations. But now they’re mimicking this-minute trends from niche designers and forcing companies like Blue Holdings, which did $49 million in sales in 2006, to set aside part of their budget for scrubbing out impostors.

“We’ve spent an enormous amount of resources to fight it,” says Blue Holdings C.O.O. Scott Drake. “These guys that do it, they do it and then lay low for a while, and we think we’re okay.”

Just the day before, Drake got word that ersatz Antiks had turned up among $230 million worth of faux merchandise that police found in a raid of Queens and Brooklyn warehouses. The jeans had been retailing on Manhattan’s Canal Street—historically, a knockoff hotbed—for $45 a pair. “I sigh because it’s a never-ending battle,” he says.

It’s not profits they’re fighting for. Most high-end designers will tell you that phonies don’t significantly detract from sales, simply because their customers don’t make a habit of frequenting sidewalk vendors. They’re more concerned with how fakes chip away at a brand’s cachet—how customers could be lost when they see someone else in a bad imitation of their pants and are turned off for good.

Hoping to keep such instances to a minimum, Blue Holdings retains the watchdog services of a nationwide network of antifraud law firms. (The company declined to name the organization.)

As Hellahsen explains, Blue Holdings paid the firm a $50,000 flat fee to scour flea markets and the internet for takeoffs on their designs. The lawyers then use that money to purchase any fakes they can find—actually buying the goods is usually the only way to track the sellers to a real address. Once Blue Holdings confirms that the designs are counterfeit, the lawyers notify the sellers of impending legal action. “Usually, these are individuals, small people, and 95 percent of the time they pick up the phone, call our law firm, and apologize,” Hellahsen says. The lawyers then arrange for an out-of-court settlement, which the firm collects.

Still, the best defense against scam artists, designers agree, is chameleonic change. “If we make a new jean and ship it on July 1, that product will be on the street by the end of August,” says Drake. So Antik has accelerated its design cycle, introducing new pocket motifs at a faster rate. They also abolished their old trademark patch—an easily