Counterfeiting (Intended for a non-legal audience)
Updated July, 2016
1. What is counterfeiting?
Counterfeiting is the manufacture, import, export, distribution, and sale of consumer goods that are not genuine but are branded to look identical to an authentic product. Counterfeiting also includes merely affixing the trademark or logo of a well-known consumer brand onto a product, even though it is not a direct copy.
In simple terms, counterfeits, or knock-offs, are imitations of real products manufactured without approval from the owner of the brand. Unfortunately, many well-known and successful companies, spanning just about every industry, fall victim to counterfeiting.
2. Is counterfeiting illegal?
The short answer is yes. In most countries, selling counterfeit products is prohibited by law and can result in civil and criminal penalties. Generally, brand owners can sue counterfeiters for damages and injunctions, or orders, to prevent counterfeiters from continuing to manufacture and sell fake goods. In certain countries, the government can impose fines and even imprison persons or manufacturers found guilty of selling counterfeit goods.
3. Where do counterfeits originate?
While counterfeit products are sold around the globe, the production of fake 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.
4. Where are counterfeits sold?
Unfortunately, knock-offs are found in seemingly legitimate stores as well as sold through a variety of outlets, including at flea markets, on online marketplaces, through street vendors, and by individuals using social media platforms to advertise products for sale. Counterfeiters constantly adapt their sales and shipping strategies to circumvent legal obstacles.
The Internet has made it even easier for counterfeiters to sell counterfeit goods anonymously, too. For example, online sellers of fake goods advertise discounted products using images of the authentic goods in order to entice consumers to buy the product. Using images of the actual product deceives consumers into believing the product sold online at a discounted price is the real thing. Often, it is only after consumers receive the product they ordered that they realize they have been tricked into buying a counterfeit.
5. What types of products are counterfeited?
Any consumer product, especially products that are successful, can be counterfeited. Counterfeits include, among other things, clothing, footwear, jewelry, purses, personal care and home care products, food, alcohol, medications, cigarettes, electronic equipment and parts, airplane and car parts, CDs, DVDs, and toys. Even restaurant, auto dealership, and gas station names can be pirated.
6. Does counterfeiting cause any damage?
Although some believe counterfeiting is a victimless crime, it has many far-reaching consequences. Typically, counterfeit goods are not made using materials of the same quality or under the same high standards or regulations of manufacture as the authentic products. Depending upon the nature of the good being counterfeited, there can be serious health and safety concerns for consumers, as in the case of counterfeit baby formula and medications or fake car parts and electronics for airlines.
Counterfeiting damages a brand’s reputation and lowers consumer confidence in the products marketed and sold under the brand name. Counterfeiting also causes missed sales opportunities for retailers selling legitimate products and has a negative impact on manufacturing, resulting in the potential loss of income for employees, or even their jobs, owing to the slowing or discontinuing of production of authentic goods.
Damages do not stop with brand owners and consumers; counterfeiting also deprives national economies of customs duties and tax revenues. Counterfeiting has also been linked to organized crime and terrorist groups, which pose serious threats to the health and safety of civilian populations, economies, and national security.
7. As a consumer, how do I avoid counterfeit products?
The best way to avoid purchasing counterfeit goods is to buy products directly from the brand owner 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 steps to prevent, or at least minimize, counterfeiting. These include (1) registering your brand, logo, and trademarks in countries where you sell, manufacture, ship, or store your products; (2) recording your trademarks with national customs organizations where possible; (3) monitoring your company’s supply chain; (4) adding authentication details to your genuine products; (5) setting up a corporate brand protection program and training employees on anticounterfeiting measures; (6) monitoring what brick-and-mortar and online stores are selling; (7) taking legal action in civil court; (8) providing training for local law enforcement personnel, such as customs officials, on your company’s brand and products; and (9) assisting and supporting law enforcement agencies in the seizure of counterfeit goods and the arrest and prosecution of counterfeiters.
In the event that counterfeiting has become a problem for your company, consult with a global brand protection attorney regarding options and strategies to combat counterfeit activities.
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