Viewpoint: The dangers of counterfeiting

When it comes to your brand, imitation is certainly not the most sincere form of flattery. The trade in counterfeit goods contributes almost $500bn to the global economy annually, and is already increasing 25 per cent year-on-year. The damage resulting from these sales can have major consequences and threatens the existence of many companies.

The scale of online sales of fake goods is particularly alarming, in fact since e-commerce’s inception, sales of counterfeit products have risen by 20 per cent a year meaning online sales of counterfeits will soon overtake those of physical vendors.

Large companies have professional brand protection experts, often on the payroll if not outsourced, allowing them to avoid the full force of online counterfeiting. For small businesses that often lack the knowledge and resources to fight back, however, it’s a very different story.

With high-tech equipment, counterfeiters can manufacture convincing knockoffs of for a fraction of what it costs to produce the real thing. These products are being marketed online, using stolen but genuine images, and sold at lower than retail prices, undercutting the authentic brand’s RRP and luring in bargain-hungry consumers. Instead of bargains, however, what these consumers get are disappointing, potentially dangerous, rip-offs which can cause irreparable reputational damage.

The financial implications of this can be catastrophic especially for small brands reliant on their intellectual property (IP). This is evidenced by the estimates of the Federation of Small Businesses which state that almost a third of small companies with IP rely on protection for three quarters of their turnover.

Small businesses are stuck between a rock and a hard place: they can’t afford to fall foul of counterfeiting scams, but equally can’t afford the protection that is enjoyed by larger brands.

So, working on a shoestring budget fighting online criminals, what can you do? As it turns out, quite a lot.

It is not always necessary to get any lawyers involved in the first instance of online IP infringement, however, it is advisable to look into this should you be entering any new markets or pursuing legal action against counterfeiters.

Trademarks can be your best, and cheapest, form of protection. Make sure you register them in your home market, in China and in any other countries in which you intend to trade. If you’re finding this expensive, then your main targets should be your home market and China – you won’t regret doing including China, should any copycats strike.

You can also register your brand and products, for free, with customs authorities via an Application For Action on the EUIPO’s Enforcement Database. Completing this registration ensures that customs agencies throughout the EU will be on the look out for products similar to your own and their onward travel, and sale, can be prevented should any be identified.

Including an identifier on your product, such as a secret logo, can also protect your brand. This should be hidden and shared on a ‘need to know’ basis with relevant authorities. In doing this, you give customs authorities a way to separate genuine products from knockoffs allowing fakes to be spotted and confiscated.

Also, keep hold of any old marketing material or images, store these properly as they are invaluable and can be used as evidence of origination.

Learn about current counterfeiting scams prevalent in your industry; staying one step ahead of any would-be counterfeiters will save you a headache or two further down the line.

Also, if the worst does happen and you find yourself the target of counterfeiters, don’t panic. Act quickly and you can stop them before they have the chance to damage your business. First, buy a counterfeit of your product, this will allow you to find the differences between it and the original. Online marketplaces should have a process for reporting fakes and, in most cases, they only require you to provide evidence that the IP is yours for them to remove the copies from sale.

The sale of fake goods is a billion dollar industry and as such crooks are ready to pounce on anything they can assemble quickly and cheaply. Stay vigilant, take appropriate precautions and tackle problems early, doing this will protect your business and send a warning to anyone else thinking of capitalising on your product.