To the most people, counterfeiting means forged currency. But counterfeiters are copying an ever-widening range of product. And now I would like to tell you which problems suppliers and buyers can face.
Just imagine for some time they have been churning out imitation designer fashion, software and CDs. But now they are coping medicines, mobile phones, food and drink, car parts and even tobacco. As long as there is a market for a product the copycats will imitate it.
In recent years the counterfeiters have gone from strength to strength. New technology has broadened the range of goods that are vulnerable to copying. It has dramatically improved their quality. As well as lowering their cost of production. Where once counterfeits were cheap and shoddy imitations of the real thing, today their packaging and contents often mean they are almost indistinguishable from the genuine article.
What is it a counterfeit by definition? It is something that is copied or imitated without the perpetrator having the right to do it and with the purpose of deceiving or defrauding. Such rights are legally covered by patents, copyright, trademarks and other forms of intellectual-property protection.
Counterfeiting is as diverse as any legal business, ranging from back-street sweatshops to full-scale factories. Counterfeiters often get their goods by bribing employees in a company with a valuable brand to hand over manufacturing moulds or master disks from them to copy. However, brand owners often willingly hand over production masters to counterfeiters without realizing it.
One of the most frustrating problems for brand owners is when their licensed suppliers and manufacturers “over run” production lines without permission and then sell extra goods on the side.
Distribution networks can be as a stall in the street, or a shop on the other side of the world. The internet has been a great help to counterfeiters, giving them detailed information about which goods to copy and allowing them to link consumers and suppliers with ease. Peter Lowe, head of the CIB, reckons that some: $25bn worth of counterfeit goods are traded each year over the internet.
Counterfeiting is not a victimless crime. For a start, legitimate businesses lose sales because of competition from counterfeiters. If their brands lose value (because it is seen as less exclusive or is confused with shoddy imitations), there is a long- term threat to profitability. In addition, firms have to bear the cost of anti-counterfeiting measures. Procter& Gamble recons it spends $3m a year fighting the copycats.
One strategy that companies increasingly use is to load their vulnerable products with anti-counterfeiting features. Some of these, borrowed from security devices developed for use on dollar bills, are clearly visible and are intended to help consumers distinguish fakes from genuine goods. Companies also use these features, primary to help them track their products through the supply chain and to distinguish genuine articles from fakes, especially should they need to take the copycats to court. But no amount of effort will ever completely stop the copycats. For as long as there is consumer demand, companies will find that imitation is the severest form of flattery.
To summarize the situation counterfeiters ignore patents, which protect intellectual property, copyright and trademarks, by producing cheap copies or fakes of branded goods. These infringements are openly practiced daily, affecting many businesses. Digitization and the internet have made it easier than ever to mass reproduce and distribute quality counterfeit products. The music industry in particular claims to be losing millions because of file sharing systems which allows the downloading of music free of charge.