Counterfeits are goods that are manufactured and sold with the intent of confusing the potential customer into thinking they are buying the genuine article. They present fraud on the public and their manufacture and sale is illegal. In addition, counterfeits may displace sales of the genuine goods they have copied.
The impact of counterfeiting on business
Counterfeiting of perfumes, trainers and alcohol in the UK is currently worth around £8bn, and £60bn across Europe. This figure relates to the direct annual losses across economic sectors such as pharmaceuticals, smartphones, wine and spirits, as well as clothing and fashion accessories.
Counterfeiters are becoming ever more sophisticated in their replication of branded goods. Counterfeiting is now a global industry that can destroy a brand name and of course damage goodwill. Its impact on the business include:
- Loss of sales revenue and profit margin,
- Reputational damage to the product and the brand name,
- Costs due to over-production (due to a percentage of sales going to counterfeited goods),
- Fraudulent product warranty claims,
- Additional product liability claims (due to poor quality goods).
The problem of counterfeiters was highlighted with the recent conviction of a gang that had imported up to 1.5m fake perfume bottles, worth about £5m. They were filled with essence from Germany and labelled as luxury brands such as Chanel, Armani, Dior and Estee Lauder. The counterfeiting gang planned to sell the bottles at £12 each.
Each week Customs and Excise seizes thousands of litres of “bootleg” alcohol containing industrial-strength methylated spirits (which can cause blindness). It’s sometimes claimed that a fake videotape, watch or football strip hurts nobody, however many fake perfumes and spirits are produced in unhygienic conditions, or contain dangerous products.
Counterfeiting activity is often sophisticated, and well organized. This can make it problematic to detect in the first place, as well as difficult to identify the source of the counterfeited goods. It is therefore critical for any business that has built a trusted brand or trading name to ensure they protect their most valuable asset. Counterfeiting claims can lead to additional claims of trade mark infringement and passing off.
The best strategy to protect against counterfeiting involves a multi-dimensional approach, which may include trace and track technology alongside strong brand, trade mark, copyright and design protection.
Counterfeit products have been a problem for companies for many years. However, it is now easier than ever before to travel to all parts of the world. The more people travel to the less well off parts of the world, the more some unsuspecting people come into contact with “bargains” which they just cannot resist.
As improved technology for copying reaches more countries and the opportunities for counterfeiting increase, distributing these goods becomes easier. This, together with the “easy” money that can be made from stealing other peoples’ intellectual property, means that counterfeiting has become an increasingly attractive crime. This crime is no longer the preserve of organised crime; it could happen next door!
Potential penalties for illegal participation in trading counterfeits range from paying damages to criminal sanctions.
Strategies for Protection
Most companies rely on local “trading standards” offices with which we have great contacts. But these people cannot do it all. Vigilance has always been the byword for honest people and that maxim is true today as it always been. However, vigilance is sometimes not enough. At times like this, you need the help of an organisation that is well versed in anti-counterfeiting techniques. BRAND PROTECT can advise you on the solutions that will help you to beat the thief that is stealing your profits and damaging your reputation.
We help companies enforce their rights in both civil and criminal cases. We work with local law enforcement agencies to ensure that you obtain beneficial and cost effective solutions. The people at BRAND PROTECT are familiar with all types of counterfeiting operations. We have conducted many ” ex-parte” (without notice) seizures and provided information to assist law enforcement agents to obtain criminal search warrants and arrests of suspected counterfeiters.
Give BRAND PROTECT a call on 01869 369701 today. We can help to protect you from those who profit at your company’s expense.