I've always seen this as slightly shady even if it is considered a valid business model.

It's often unclear if consumers are fooled about the true quality of goods, whether they are Veblen goods.

If it's a Veblen good or if they genuinely do value the brand name alone then I guess it's fine but it's not too exactly ethical to fool consumers about the quality of your products or what the brand actually represents (which is what consumers always say they value about brands - not the name itself).

I'm likewise not very sympathetic to the idea that these brands deserve government protection from knock offs. If consumers genuinely aren't bothered about whether their Nike shirt is "real" why does the government need to be?

Extreme Gross profits margin is entirely what enables marketing and funding for luxury brands.