Ubiquiti winning war against counterfeits

Wireless communications specialist Ubiquiti Networks is starting to gain the upper hand in its fight against counterfeiters, helping revenues bounce back.

The California-based company posted revenues of $83m in its third fiscal quarter - a rise of 11 per cent over the prior three months - although sales were still depressed 9 per cent year-on-year.

"We're approaching the financial metrics we achieved prior to counterfeiting," said recently-appointed chief financial officer Craig Foster, who noted that a rebound in sales of the company's flagship AirMax WiFi technology range was a major factor in the recovery.

AirMax accounts for around two-thirds of Ubiquiti's total sales, and is used to provide high bandwidth broadband to outdoor locations such as city streets, beaches, parks and stadiums.

Strong demand for the brand in 2011-2012 coupled with supply constraints stimulated a thriving counterfeit business that even penetrated the legitimate supply chain, with fake products being sold by the company's official distributors.

Now, thanks to an aggressive global litigation strategy, the adoption of anti-theft manufacturing technology and a more organised and comprehensive intellectual property (IP) filing regime is starting to turn the tide, according to Ubiquiti's chief executive Robert Pera.

"We've got a handle on this counterfeit nonsense," he told investors on the firm's third-quarter conference call.

Last May, the company filed a lawsuit in the US against Kozumi USA Corp and its owner Shao Wei (William) Hsu alleging IP theft and illegal manufacturing and sale of counterfeit copies of Ubiquiti products, scoring a victory later in the year after the court issued a preliminary injunction against Kozumi and froze Hsu's assets.

The news will be welcomed by investors in the company, who have suffered a 12-month rollercoaster ride as shares in the company fell from $30-plus to under $8 and rebound above the $20 mark. The stock is currently trading at around $16.

On July 9, Ubiquity will have to defend itself in court in a class action lawsuit, filed by aggrieved shareholders, who allege that the company has not been sufficiently transparent about the scale of the counterfeiting problem. The company maintains the allegations are without merit and says that it will "vigorously contest" the case.