Insights

Counterfeit Goods: What Are They? And How Can You Stop Them?

September 20, 2022

Surely, trying to tackle counterfeiting is just a giant game of ‘Whack a Mole’?! Wouldn’t your money be better spent elsewhere? What’s the point? These are all understandable questions for any business trying to tackle the constant stream of counterfeit goods on the market.

However, counterfeits are damaging to both your brand and reputation and can also be harmful to consumers, communities, the environment and the economy. There is a much bigger picture behind the cheap knock-off handbags or watches being sold from a market stall or the listing for a fake branded motorcycle badge on an online marketplace.

Awareness is key to tackling the issue: both on the part of the brand owner, and the consumer. Brand owners need to know what effective steps they can take against counterfeiters and consumers should ensure informed choices are made about the products they buy. After all, if demand drops then supply will naturally dwindle.

Effective brand protection measures can safeguard your intellectual property investment, avoid the cost of rebuilding consumer confidence and reputation and also allow your business (big or small) to play a key role in tackling the bigger picture surrounding counterfeits.

What is counterfeiting?

Counterfeiting simply refers to the production and sale of goods bearing a third party’s registered trade mark, without their permission. It is a criminal offence in the UK as well as a clear-cut case of trade mark infringement. There is little doubt of success in the courts but the sheer volume of counterfeiters out there, in conjunction with tracing difficulties mean it is not feasible for brands and enforcement agencies to take action against them all.

Counterfeiting is big business. In 2021, the European Intellectual Property Office (EUIPO) and the Organisation for Economic Co-Operation and Development (OECD) reported the value of international trade in counterfeits totalled a massive $461 billion. In 2019, EUR 119 billion worth of counterfeit and pirated goods were imported into the EU. These figures account for the counterfeit goods that were seized and not the ones that made it to the point of sale, meaning the real figure is likely to be much higher.

Where can you find counterfeit products?

In a word, everywhere!

Significant volumes of counterfeit products are sold on the UK high streets through shops, market stalls and pop-up stores. This year, knock-off “Wonka Bars”, fake Peppa Pig toys and counterfeit Playstation controllers have been seized in raids on shops in Oxford Street alone totalling a value of £575,000.

In addition to physical stores, the Internet provides the perfect playground for counterfeiters where they can easily market their goods to millions of consumers whilst being harder to track down by both brand owners and enforcement agencies. In recent years, the pandemic has caused a shift to online shopping, and this has significantly boosted Internet sales of counterfeit goods.

What sort of products are we talking about?

Counterfeiting is not just limited to luxury goods and clothing; we are now seeing fake medicines, beauty products, sweets, drinks, toys, domestic cleaning products and power tools being offered for sale. The list is endless.

In many cases, the products look identical to the real thing, requiring consumers to dig a little deeper before they have a chance of spotting a fake.

So, what harm can a knock-off handbag really cause?

We can all appreciate the potential dangers and health risks posed by counterfeit food, drinks and medicines but what harm can a fake handbag really cause? After all, it looks like the real deal and does the same job; it just doesn’t come with the high price tag.

However…are the materials quality checked? Are they as sustainably sourced as the real thing? Who made the handbag and what are their working conditions like? Unlike established brands, counterfeiters do not need to be transparent about their supply chains, labour practices etc. There are also well-evidenced links between counterfeiting and organised crime, meaning it is often the income that feeds extremely serious criminal activity such as drugs, terrorism and trafficking. To discover more about this, counterfeit investigator Alastair Gray of Tommy Hilfiger delivered a fascinating Ted Talk on the dangers of counterfeiting. According to the United Nations Commission on Crime Prevention and Criminal Justice, counterfeiting is now the second largest source of criminal income worldwide.

In addition to this, counterfeiting has a significant impact on brands through damage to their reputation and dilution of the distinctiveness of the brand and its ability to identify the genuine products.

What can brand owners do to stop counterfeiters?

Hopefully, by now, we have convinced brand owners that counterfeiting has the ability to seriously damage your brand and the investment you have put into it to date, and consumers that there is a much darker side to that cheap handbag or t-shirt.

Many businesses can be overwhelmed by the level of counterfeiting and find it difficult to know where to start, or they may simply decide brand protection is not worth the spend. We believe it is question of spending your money wisely, developing a brand protection strategy that suits your business and looking to play the long game.

Here are some options to consider when creating your brand protection strategy:

  1. Brand monitoring – with a rise in online counterfeiting it is becoming increasingly important to monitor the Internet for infringing use of your brand; monitoring of online marketplaces and social media is essential. AI can play a big part here and there are a number of brand monitoring tools on the market to consider.
  1. Targeted cease and desist letters – conduct investigations, obtain test purchases and focus on the more prolific counterfeiters with assets and readily available contact details.
  1. Always follow up targeted activity: The common response is radio silence, but where regular follow ups are sent and multiple methods of contact are tried the engagement level increases and letters of undertaking are often signed to confirm no further infringing activity will take place in the future.
  1. Takedowns on online marketplaces and social media platforms of infringing listings and posts.
  1. Court Action – This is likely to apply to any particularly problematic counterfeiters to show your no-tolerance policy.
  1. Work with enforcement bodies - Trading Standards, Border Force and the Police are on the front line in terms of tackling counterfeiters. A good relationship with these bodies and good engagement from you in helping them to identify counterfeits ripping off your brand will increase their ability to seize counterfeit and prosecute counterfeiters.
  1. File an Application for Action with HMRC (UK) - this requests Border Force to detain goods suspected of infringing a range of IP rights with a view to stopping bulk consignments of counterfeits before they enter the UK market. A similar application can be filed on the EU’s Europa website to cover EU customs ports.
  1. Work with online marketplaces – Many online marketplaces are stepping up their efforts to combat counterfeiting, for example Amazon’s Counterfeit Crimes Unit and eBay’s Authenticate initiative. Engaging with these initiatives will bolster your power in tackling counterfeits, particularly prolific counterfeiters.
  1. Effective anti-counterfeiting tools - Many brands use anti-counterfeiting tools, such as digital watermarks, QR codes, radio frequency identification (RFID), tracking and tracing systems, to enable consumers to identify genuine products. However, counterfeiters are savvy and have found ways to imitate these methods, leading some brands to consider blockchain technology as the next level. This has the advantage of being unhackable and could also provide the consumer with transparent tracing of products in terms of supply chain and/or reselling.
  1. Last but no means least…education! - A large proportion of the public are unaware of the bigger picture around counterfeiting. Some are even complicit in buying counterfeit products and seek them out. Educating consumers of the dangers of counterfeits, the need to be vigilant, what to look out for and how to spot the difference is so important in tackling counterfeiting and will not necessarily put a huge dent in your brand protection budget.

Need some help with your brand protection? Our Intellectual Property Team can help you to devise a strategy to suit your business.

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