Updated, April 2015
1. What is counterfeiting?
Counterfeiting is the practice of manufacturing, importing/exporting, distributing, selling or otherwise dealing in goods, often of inferior quality, under a trademark that is identical to or substantially indistinguishable from a registered trademark, without the approval or oversight of the registered trademark owner. Counterfeits are most commonly called “fake goods” or “knock-offs.” Many well-known and successful brands, spanning various industries, are victims of counterfeiting.
Counterfeiting is different from traditional trademark infringement or passing off, which involves, inter alia, the selling of products under confusingly similar trademarks or service marks (as opposed to identical or substantially indistinguishable trademarks or service marks).
2. Is counterfeiting illegal?
In most countries, counterfeiting is prohibited by both civil and criminal law. The civil and criminal penalties for counterfeiting vary greatly from country to country. Generally, brand owners can sue counterfeiters in civil court for damages and injunctions, and the government can sue counterfeiters in criminal court, where the penalties include fines and imprisonment.
3. Where do counterfeits originate?
The production of counterfeit goods is most prevalent in developing countries with strong but low-cost manufacturing capability, including a number of nations in Asia, Eastern Europe and Latin America, although counterfeit goods are sold around the globe. Counterfeits are manufactured to a lesser degree in developed countries.
4. Where are counterfeits sold?
Counterfeits are sold through various outlets. Examples are brick-and-mortar stores; flea markets; online marketplaces; street vendors; and individual vendors advertising through social media platforms. Counterfeits can be found in legitimate-looking stores. Counterfeiters are constantly adapting their sales and shipping strategies to circumvent regulatory and legal obstacles.
The Internet has made it even easier for counterfeiters to sell counterfeits with impunity and anonymity. To deceive consumers into thinking that a product sold online at a discounted price is the real thing, online sellers of counterfeits often advertise the discounted product under a nice photo of the real product. Only after the consumer has received the product in the mail will that consumer realize that he or she has been tricked into buying a counterfeit.
5. What types of products are counterfeited?
Any branded product that is successful can be counterfeited. Counterfeit goods include, among other things, clothing, jewelry, purses, personal care products, home care products, food, alcohol, pharmaceuticals, cigarettes, electronic equipment and parts, airplane and car parts, CDs, DVDs and toys. Service marks, such as names of restaurants, dealerships and gas stations, can also be counterfeited.
6. Does counterfeiting cause any damage?
Although some believe counterfeiting is a victimless crime, it has many far-reaching consequences. Depending upon the nature of the product being counterfeited, there can be serious health and safety concerns for consumers, as, for example, in the case of counterfeit baby formula, children’s toys, medications, car parts and electronic goods. Typically, counterfeit goods are not made with materials of the same quality or under the same high standards of manufacturing or quality control as the originals.
In addition, counterfeiting damages brand owners’ reputation and lowers consumer confidence in the affected brands. Counterfeiting also damages brand owners and retailers selling legitimate products by causing missed sales opportunities and actual job losses by manufacturers and retailers. Consumer confidence and the value of branding may suffer when purchasers discover that the product they bought, believing that it was being sold under a recognized brand, is in fact not authentic. Damages do not stop with brand owners and consumers; counterfeiting also deprives national economies of customs duties and tax revenues.
Counterfeiting may also be linked to organized crime or criminal activity, which may pose serious threats to the health and safety of consumers, economies and national security.
7. How do I avoid counterfeit products?
The best way to avoid purchasing counterfeit products is to buy products directly from the brand owner, from its authorized resellers or from reputable retailers. Also keep in mind that if a price seems too good to be true, it probably is.
8. As a business owner, how do I keep my products from being counterfeited?
You can take various legal, technological and business steps to prevent, or at least minimize, counterfeiting. These include (1) registering your trademarks in countries where you sell, manufacture, ship or store products; (2) recording your trademarks with national customs where possible; (3) monitoring and auditing your company’s supply chains; (4) adding authentication devices to genuine products; (5) setting up a corporate brand protection program and training employees about anticounterfeiting measures; (6) monitoring brick-and-mortar and online stores; (7) taking legal action in civil court; (8) providing training for local law enforcement personnel on your company’s brand protection program; and (9) assisting and supporting law enforcement in the seizure of counterfeit goods and the arrest and prosecution of counterfeiters. Brand owners should also work closely with legitimate online and brick-and-mortar retailers to prevent inadvertent sales of counterfeit products.
In the event that counterfeiting has become a problem for your company, consult with counsel regarding strategies to confront the issue. Your options will depend greatly upon which country or countries are involved.
Additional INTA Resources
Topic Portal: Anticounterfeiting
Addressing the Sale of Counterfeits on the Internet