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IP values and counterfeiting

25 April 2012

Counterfeiting concerns the misappropriation of trade marks. It is big business and its getting bigger. The Organisation for Economic Co-operation and Development estimates that counterfeiting costs companies £160bn worldwide; this figure is predicted to rise to £900bn by 2016. The problem is not just financial, however. In addition to brand damage and depriving governments of legitimate revenue, counterfeit sales often fund crime and pose significant health risks.

Whos at risk?

All sorts of goods are counterfeited, from cigarettes to pharmaceuticals to bootleg alcohol. In few areas, however, is the problem as rife than in respect of luxury goods. Its easy to see why: high profit margins; and sky high demand from an established "customer" base, the demographic of which cannot afford the genuine article.

Route to market

Historically, counterfeit goods were most likely to be found down the local pub, or at market stalls and car boot sales. However, while fakes are undoubtedly still available at such venues, the savvy counterfeiter has taken distribution online. The advantages of internet platforms over traditional trade channels are readily apparent. They provide anonymity to buyer and seller alike; give access to a huge, multinational, customer base; and can be tailored to mirror the trading platforms of legitimate sellers. A successful anti-counterfeiting strategy must, therefore, tackle online sales.

Combating the problem

It is impossible to stop counterfeiting in its entirety. There are, however, steps that a brand owner can take to stop itself being a soft target:

  • registration - Identify and, where possible, register key brands as trade marks and, where appropriate, designs. Although it may be possible to act without registration, the existence of a registered right invariably makes it easier to police the market
  • notify Customs - As most counterfeits are sourced from abroad, one of the most effective steps that a brand owner can take is to file customs watches with the appropriate border agencies. Customs then act as a business eyes and ears, stemming the flow of illicit merchandise before it enters the territory
  • assist police and governmental agencies - Counterfeiting is a criminal offence and can attract serious sanction, including fines and up to 10 years in prison. However, enforcement agencies have limited resources. It is in a brand owners interest to assist these organisations, for example by providing market intelligence, evidence and being prepared to attend court where necessary
  • fake-Proof (and regularly change) packaging - for example: employ devices such as holographs, codes, watermarks and radio-frequency identification tags; display manufacturers contact information; and steer clear of plain boxes which are easily copied

Conclusion

There is no single solution. Counterfeiters use multiple routes to market and are becoming ever more sophisticated in the tactics they employ. Such tactics change daily in this perpetual game of cat and mouse. At the end of the day, collaboration is key. Businesses need to be flexible and work in conjunction with organisations such as the police, trading standards, customs and Nominet if they are to minimise the risk to their brand and society.

This article was first published in INFO (French Chamber of Commerce in Great Britain)

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