Did you receive a counterfeit gift this Christmas? With many of us scouring online stores to source products at the best possible prices, it’s highly likely that we came across ‘copycat’ items with similar features to the real deals.
All year round, both consumers and brand owners should be mindful of the risks with counterfeit goods, including to health and safety. Here, Mpho Kgatuke explains why this is such a key issue and what action brands can take to mitigate the risks.
How many goods are counterfeit?
According to a report by the European Union Intellectual Property Office, the value of counterfeited and pirated goods entering the EU in 2019 reached €119 billion, accounting for 5.8% of all goods that passed through.
This comes with consequences, such as the possibility of proceeds being used in crime and the fact that most counterfeit goods don’t conform to health and safety requirements.
Fake beauty products have been found to contain a variety of toxic ingredients, including cyanide, arsenic, lead and mercury — with animal urine a common ‘stabiliser’ ingredient.
Counterfeit goods also result in a loss of profits and jobs, with supply chains subverted and trading standards ignored.
In 2022, the UK Intellectual Property Office published its strategy to reduce the prevalence of counterfeit goods. This focuses on preventing consumers from accessing them and encouraging the use of technology to aid in detection.
Where are counterfeit products being sold?
Yet the reality is that amid the global expansion of eCommerce — arguably exacerbated by the pandemic — ever more of us are used to buying a wide range of products online.
Consumers should be wise to the fact that online marketplaces and social media platforms are accessible options for counterfeiters to increase their activity. They’re able to quickly list items and make sales in large volumes, with quick and easy distribution via anonymous accounts. Owners of eCommerce sites may be unable to trace the accounts and consumers are often left with no redress should issues occur.
The increasing speed of social media marketing and vast number of unverified accounts is complicating matters. Products sold via TikTok Live can’t be traced once the live stream has closed. Items that need to cross borders to reach their destination are unlikely to be checked, with border control services lacking the resources to examine millions of parcels and distinguish counterfeits.
We should all be wary of goods that seem much cheaper, with lower quality packaging, where listings aren’t linked to legitimate brands. Particular care should be taken when hyperlinks on social media sites are connected to different products than those advertised.
What can brands do to mitigate counterfeiting?
Consumers are likely to view brand owners as being responsible for protecting them from buying counterfeit products, distrusting brands that are repeatedly subject to infringement. Many may be unable to identify counterfeit products from legitimate ones, particularly where third-party providers or campaigns that seem to be linked with official brands are concerned.
Ultimately, brands are at risk of undermining consumer confidence, having their IP rights infringed and potentially losing significant revenue.
Brand owners should be mindful of the importance of having a robust and active IP strategy to both deter fraudsters and increase the reputation of their brand. Broad IP protection through trade mark and design rights is a must, particularly where things like product branding, packaging and shape are distinctive.
Increasingly, technological measures like holographic or coded packaging can be incorporated to improve brand distinctiveness and value. Services are also available for monitoring IP applications and registrations across the globe that can aid in tracking infringing products. Online marketplaces (including Amazon Brand Registry) may also have their own anti-counterfeiting initiatives, where brand owners can register their products and assist the platform to investigate copycat listings with a view to taking down illegitimate sellers.
The UKIPO’s anti-counterfeiting strategy states that it will work with local enforcement teams to identify targets and take civil or criminal action. It also suggests that brand owners should consider implementing aggressive online policing and takedown policies, including passing information to private investigators.
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