According to the Organization for Economic Cooperation and Development (OECD), the international forum composed of 37 democracies with market-based economies, counterfeit and pirated goods represent approximately 3.3% of all global trade volume. Counterfeit goods may not only infringe patents, trademarks, copyrights, and other forms of intellectual property but pose a great reputational risk to the brands of the legitimate companies these products impostor. Three years ago, the OECD partnered with the European Union Intellectual Property Office (EUIPO) to explore the Global Trade In Fakes, noting that as much as 5.8% of imports to European Union countries were counterfeit or pirated goods. The outlook for growth in counterfeit goods was advanced last month by brand protection company Corsearch, which presented research “predicting that the size of the global trade in counterfeit goods could reach $1.79 trillion by 2030.”
Counterfeit goods have long plagued various sectors, extending beyond clothing, cosmetics, and handbags to increasingly complex products like airbags, automotive equipment, electronics, and pharmaceuticals. The growth of e-commerce has further strengthened the economics of counterfeits while providing an opaque shield around the sellers and the sources of their goods.
Counterfeiting is a legal issue and a significant threat to legitimate manufacturing, supply chains, and brands. The National Association of Manufacturers estimated that in 2019, counterfeits cost the U.S. economy nearly $131 billion, including $22.3 billion of lost labor income, 325,542 fewer jobs, $5.6 billion of lost federal tax revenues, and nearly $4 billion less in state and local tax collections.
Counterfeiting is a concern for manufacturers, importers, distributors, and consumers. Counterfeit products can damage a manufacturer’s reputation, and consumers may avoid their products. Distributors are wary of the legal and financial issues of unknowingly importing counterfeit goods. Consumers do not want to receive an inferior product.
Detection of counterfeit goods is both an art and a science. The more complex the product, the more technical understanding is required to detect counterfeit products from legitimate sources. Detection may be done in several ways, and manufacturers or distributors can use these methods to provide extra protection against counterfeits and make them easier to detect:
- There are often spelling mistakes on the packaging, or it simply looks different. Manufacturers or distributors can provide samples to customs, importers, and sales channels to easily detect fakes.
- Unique elements may be added to packaging including holographic elements.
- RFID chips could also be added that would allow simple or complex methods to be used to scan and validate a genuine article.
- Products may be x-rayed. Counterfeit devices often look different inside.
- Software products may be used to verify the capacity of a memory card. Many of these exist. Photographers have been concerned with counterfeit memory cards for many years.
In the coming weeks I will explore the process of securing business intelligence to support counterfeit detection in memory products, sharing the many challenges associated with counterfeit good detection in the electronics industry.
