As a brand owner, it’s best to accept that counterfeiting remains a severe problem despite increased awareness. Intellectual property laws and trademark infringement protections are helpful, but how do you prevent counterfeiting in the first place?
If you want to end counterfeiting, what are the actionable steps you can take today to thwart con artists who stop at nothing to ply their illegal trade? We’ll go through the answers in this article to provide you with the necessary background to finally end fake goods entering the market. In short, implementing product authentication technology in concert with a new monitoring system is one of the most efficient strategies to defend against persistent criminal enterprises.
What is counterfeiting?
The exact definition of counterfeiting is easy enough to pinpoint but comes with a few caveats. Essentially, counterfeiting is when someone infringes upon the rights of a trademark’s legal owner, and it can take many forms, including fake intellectual property. Yet, there’s something else you need to keep in mind as you determine ways to check for fake goods: it’s not always a single person executing the fraud. Often, a criminal organization may be behind the operation, especially if it spans several countries throughout the supply chain.
Not only that, but these enterprises are also rather sophisticated with the technology and sheer determination to keep flooding the global market with illicit products. Unfortunately, law enforcement cannot stop every counterfeit good from reaching consumers, and the reasons are many. Making matters more difficult to mitigate, a gray market might be undercutting legitimate activity since counterfeiters can also circumvent loose trade laws and stay undetected, sometimes for months or years.
Even if a particular part of the world acknowledges the issue, it may not have the resources for effective enforcement. Trademark laws, indeed, exist throughout the European Union and in Western markets, yet not every country enforces those laws consistently or with the same tenacity. Whether it’s resource constraints or a lack of workforce, the result remains the same – counterfeiters are succeeding at a reasonably high rate to keep producing fake goods in volume.
In other words, counterfeiting is still profitable for con artists, and that’s the fact of the matter. They continue to find relatively nefarious yet straightforward ways to ply their trade, so brand owners need comprehensive tech solutions to defend against such an adversary. Otherwise, the following consequences can occur and significantly hurt the business.
Consequences of counterfeiting
The consequences of counterfeiting are immense because the damage can be widespread and difficult to quantify as well. At worst, counterfeiters can threaten lives if they’re producing illicit medical devices or prescriptions, but at a minimum, counterfeiting hurts a company’s market position, including:
- Fewer sales
- Damaged reputation
- Expensive lawsuits
The cumulative effect of all these negative consequences truly hobbles a company’s brand to the point where customers won’t know whether or not they can trust it.
If a con artist is producing replicas and selling them at retail price, a company will lose 100 percent of those sales. Eventually, the losses will accumulate to an unsustainable degree, and by that time, criminals may have already moved on to reproducing another item. On the flip side, a gray market can skew online sales figures, too, as unlicensed products are sold in different countries without authorization. In this case, the business receives no licensing fees despite its widely available product.
More often than not, the result of counterfeiting is a damaged reputation among consumers, especially the target market where you focus the majority of your resources. For example, if your brand manufactures toys – and a counterfeit product harms children – you will pay the price as parents may assume that you don’t care about kids’ safety. In reality, it’s the criminals who don’t care who they hurt; there is no moral revulsion against fooling or harming people accidentally because fraudsters want to turn profits. In this particular situation, the likelihood of an expensive lawsuit increases dramatically.
When the problem reaches its peak, costly lawsuits can start to affect your company’s bottom line. Your brand might receive regulatory fines, or you can get sued directly by the afflicted party. Either way, you may have to defend yourself in court and prove that you performed due diligence to prevent counterfeiting. Suppose you unwittingly manufacture products with defective, fake parts. In that case, you can be legally liable in some parts of the world, including the United States, which has strong consumer protections in place. As you might expect, legal expenses can add up quickly and damage your brand tremendously too.
What are the three main actions to prevent counterfeiting?
Having said that, the next question is this: what are the main actions you can take today to strengthen your anti-counterfeiting safeguards? At this time, the answers boil down to three activities, with the final one being most effective from a holistic standpoint.
At a minimum, a successful business should have trademarked logos and well-defined brands. If you don’t have a mature brand that includes the proper legal protection, it’s easier for counterfeiters to find the gray areas in the law and effectively siphon your brand’s power. They might make minor alterations to your logo, paraphrase your value propositions, or blatantly compete against you in the same market with similar trademarks. But if you cover the legal angles, you’ll strengthen your position overall as con artists won’t be able to leverage technicalities in the law to their benefit.
The following actionable step is to make sure consumers buy products only from authorized retailers, including in the online eCommerce sphere where anti-counterfeiting is crucial. Unfortunately, fraud can occur at any point in the supply chain, so if you don’t have a way to monitor this process, you’re increasing the likelihood that fake parts will enter your product pipeline at some point. Gray markets exist, and the only way to fight them is to combine anti-counterfeit safeguards like blockchain, mobile tech, or a monitoring system, which brings us to our final point of emphasis.
Without a doubt, anti-counterfeit tech comes in many forms, with enterprise-grade solutions available from several vendors, but is the software easy to use and effective? After all, if a human must perform every authentication manually, the likelihood of errors increases, so one answer to the problem is to leverage mobile anti-counterfeit technology to reduce mistakes. The fact is that going the mobile route is more efficient because you can collect critical data and gather it quickly.
Additionally, you can use those data to improve your anti-counterfeit strategy in a holistic system that includes the ability to authorize products while capturing and analyzing business-critical statistics. As such, we developed AlpVision’s Brand Monitoring System (BMS) to complement our mobile solutions.
AlpVision Brand Monitoring System
Ideally, any anti-counterfeit solution needs to integrate with your current IT infrastructure, so we designed AlpVision BMS as a server-based web application to offer you the ability to monitor met metrics online. You receive fast notifications when the system flags potential incidents, and you’ll also benefit from increased digital safeguard.
Not only can our BMS solution spot counterfeit goods, but it can also integrate seamlessly with additional solutions from AlpVision, such as AlpVision Fingerprint and Cryptoglyph. The idea is to develop 360-degree protection against a persistent problem. BMS offers the ability to store authentication statistics while providing real-time alerts too. We designed AlpVision’s BMS to include secure encryption online, providing an added layer of security. With BMS protection, you can view the problem from a holistic perspective rather than a meal approach.
If you’d like to learn more about how to prevent counterfeiting,Download our latest white paper for further details.