Faking it: why brands must protect against rising trade in counterfeit products

Young Europeans are buying more fake goods than before, and they’re doing it intentionally. That was the finding of the European Intellectual Property Office’s recently published IP Youth Scoreboard, which explored attitudes towards buying or accessing fake goods and pirated content. Thirty-seven percent of the 22,021 15 to 24 year-olds surveyed said that they had deliberately bought goods that they knew to be fake in the previous 12 months, an increase from 14% who said the same in 2019.

The reasons for buying fake products are not surprising: price and accessibility were the main reasons cited for buying counterfeit items. However, the study also identified that social influences, such as the behaviour of family or friends, are also gaining ground.

On top of those knowingly buying counterfeit goods is the same percentage of consumers (37%) who have purchased fakes by accident, saying they find it hard to distinguish between these and genuine products.

Counterfeit risk for brand owners

For brand owners, both scenarios are concerning. While someone knowingly purchasing a fake product may never have any intention of paying the true retail price, a genuine customer has been duped into handing over payment (often at or close to retail price) for an illicit product. This results in a lost sale for the brand and disappointment for the consumer, who is left with a product that doesn’t meet the standards they expect from a product bearing the brand’s trade mark.

Fake products tend to be lower quality, using cheaper materials and processes and this can result in brand damage if the lower quality goods come to be associated with the genuine brand. Further, the existence of abundant fakes can act as a devaluing pressure on the brand among those who would prefer to buy the genuine article and don’t want others thinking they have bought a fake item.

It is also worth noting that fakes/counterfeits differ from what are termed “knock-off” items. Knock-off items are designed to closely mimic the look and feel of a product, but don’t bear the trade mark or logo of the brand they are copying. Knock-offs are usually easily identified and buyers are aware that they are not buying the genuine article.

A fake by any other name, would it smell as sweet?

Sweets seem to be a particularly common area for counterfeits at the moment. Recently, authorities seized £100,000 of fake “Wonka Bars” from an American Candy Store on Oxford Street, warning consumers not to eat any purchased products as they were found to contain allergens not listed on the label.

On a more artisan scale, a Welsh shop owner was fined £1880 for repackaging 30p ASDA chocolate with home-printed “Mr Wonka Bar” wrappings and selling them for £3 each. The defendant had previously had an application to register “Mr Wonka Bar” as a trade mark refused on the grounds of likelihood of confusion with Nestle’s Wonka products.

Again, this is an attempt to trade off the reputation of the well-known product for financial gain.

Here, the risks are not just financial loss and disappointment, they are also potentially life-threatening should someone eat a product that contains unmarked allergens, or substandard ingredients.

More than an inconvenience – the dangers of counterfeit products

Indeed, while the issue of counterfeit sweets is concerning, when it comes to counterfeit pharmaceuticals, cosmetics, and even baby formula – all of which are commonly found in counterfeiting circles – the risks and concerns are magnified. If low quality or even dangerously toxic substances are used in production, the threat to health and wellbeing is considerable. The same is true of car parts and construction materials – again commonly counterfeited – that will not have passed the rigorous safety testing undergone by a genuine product.

It is not just brands and consumers directly that suffer the effects of counterfeiting. It is, by definition, an illegal practice, meaning its financial rewards are channelled to criminals and used to fund organised crime and terrorism.

What brands can do to combat counterfeits

Defending the brand against counterfeiting is an important role that may be undertaken by trade mark attorneys, brand protection teams and in-house legal departments. It can involve a wide variety of activities from working closely with authorities to identify and seize shipments of fake products, to devising new and discreet ways to mark products to enable them to be identified as genuine.

A robust anti-counterfeit programme involves multiple layers and should be supported by sufficient budget allocation to enable it to be effective. The following are some of the activities involved.

• Registering IP rights: Brands must ensure that the relevant IP rights are registered and rigorously maintained in all the territories in which the product is marketed or manufactured. This forms the legal basis on which the business can challenge counterfeiters.
• Monitoring: This is an important part of the process, particularly when it comes to online marketplaces, which can be a hotbed of fake products. There are various third party organisations that offer monitoring services to lift the burden from in-house teams.
• Communication: It is important to inform customs authorities of the details of your trade marks and set up lines of communication with enforcement teams. It is also essential to engage with the brand protection programmes offered by the different marketplaces to ensure fake products are removed from them as efficiently as possible.
• Creative protection: By adding “secret” authentication details to your products you can make it harder for counterfeiters to copy them and help authorities to more easily identify fakes.
• Raising awareness: By raising awareness of counterfeiting, its dangers, and how to spot fake versions of your products through education programmes with employees, consumers, and law enforcement personnel, you can make life harder for counterfeiters and help to reduce their market. If it is feasible, you may wish to publish a list of authorised sales outlets, so consumers can be confident they are buying genuine products from approved sellers.
• Monitoring your supply chain: Make use of solutions that assist with the tracking and tracing of products through your supply and distribution chain, such as placing codes on products. Regularly audit your suppliers to ensure that they are physically protecting components and finished goods.
• Taking legal action: It is essential that brands use the power of the law to make cases against counterfeiters in the civil court, and that they publicise the outcome of successful cases to deter would-be counterfeiters.

Protecting the business against counterfeiting is an important aspect of a trade mark professional’s role. It doesn’t just benefit the brand, but also has a positive impact on consumers and society and, for that reason, can be one of the most satisfying parts of the job.