Counterfeiting (Intended for a non-legal audience)

1. What is counterfeiting?

Counterfeiting is the manufacture, import, export, distribution, and sale of consumer goods that are not genuine but are designed and branded to look identical to the authentic products in order to deceive consumers into believing that they are authentic. Counterfeiting also includes affixing the trademark or logo of a well-known consumer brand to a product, even though the product is not actually made or authorized by that brand.

In simple terms, counterfeits are imitations of real products that are manufactured without approval from the owner of the brand. Counterfeit products are usually of substantially lower quality than the authentic goods and can even be dangerous, as they are often poorly made without quality or environmental controls or are made using dangerous or toxic chemicals and materials. Unfortunately, many well-known and successful companies, spanning just about every industry, fall victim to counterfeiting.

Knock-offs or “dupes,” on the other hand, are designed to look like authentic products, but they are not exact replicas and may differ in some ways, often in terms of the quality of materials. Knock-offs or “dupes” also don’t feature the trademark or logo of another brand but will usually have the brand of the company that made them.

2. Is counterfeiting illegal?

The short answer is yes. In most countries, manufacturing and selling counterfeit products is prohibited by law and can result in civil and/or criminal penalties. Generally, brand owners can sue counterfeiters for damages and to obtain injunctions (or court orders) to prevent counterfeiters from continuing to manufacture and sell fake goods. In addition, in certain countries, the government can impose fines on, and even imprison, persons or manufacturers found guilty of selling counterfeit goods.

3. Where do counterfeits originate?

While counterfeit products are sold around the globe, the production of fake goods is most prevalent in developing countries with strong, but low-cost, manufacturing capabilities, including a number of jurisdictions in Asia, Eastern and Southern Europe, and Latin America.

4. Where are counterfeits sold?

Unfortunately, counterfeits are sometimes found in seemingly legitimate stores; they are also sold through a variety of outlets, including flea markets, online marketplaces, ecommerce websites, street vendors, and on social media platforms either by advertising products for sale from individual sellers or via shopping functions or sponsored (paid) advertisements. Counterfeiters constantly adapt their sales and shipping strategies to circumvent detection and legal obstacles.

The Internet has made it even easier for counterfeiters to sell counterfeit goods anonymously to avoid getting caught. Online sellers of fake goods advertise discounted products by using images of the authentic goods, often taken directly from a brand owner’s website, to entice consumers to buy the product. Using images of the actual product deceives consumers into believing the product sold online at a discounted price is the real thing. Often, it is only after consumers receive the product they ordered that they realize they have been tricked into buying a counterfeit.

5. What types of products are counterfeited?

Any consumer product, especially products that are popular and successful, can be counterfeited. Commonly counterfeited products include clothing, footwear, jewelry, purses, personal care (cosmetics and make up) and home care products, food, alcohol, medications, cosmetics, cigarettes, electronic equipment and parts, airplane and car parts, CDs, DVDs, and toys. There can even be counterfeit restaurants, auto dealerships, and gas stations, where someone, unauthorized by the particular restaurant chain, for example, opens a restaurant using the branding of that chain.

6. Does counterfeiting cause any damage?

Although some people erroneously think that counterfeiting is a victimless crime, it actually has many far-reaching consequences. Typically, to keep production costs and sale prices low, counterfeit goods are not made using materials of the same quality or under the same high standards or regulations of manufacturing as the authentic products. Counterfeits are often made using cheap or unsafe materials, toxic chemicals, or are assembled in a faulty way. Depending upon the nature of the goods being counterfeited, there can be serious health and safety concerns for consumers, especially in the case of counterfeit baby formula, cosmetics, medications, and automotive or airplane parts.

Counterfeiting also damages a brand’s reputation and lowers consumer confidence in the authentic products marketed and sold under the brand name because if someone unknowingly buys a counterfeit, thinking it is the authentic product, and the product is faulty, they will hold the brand responsible. Counterfeiting also causes missed sales opportunities for retailers selling legitimate products and has a negative impact on manufacturing, resulting in the potential loss of income for employees, or even their jobs, owing to the slowing or discontinuance of production of authentic goods.

Counterfeiting may also cause environmental damage. The production of counterfeit goods often bypasses environmental regulations, leading to increased pollution and waste. Factories that produce counterfeit goods may use low-quality materials and/or harmful chemicals. The production and disposal of counterfeit goods may also contribute to environmental degradation. Counterfeits that are seized by customs and police agencies often end up in landfills or are incinerated because they are unsafe, their content is unknown, or they cannot be recycled. This underscores the importance of combating counterfeiting to help protect the environment.The damage, however, does not end with brand owners, consumers, and the environment. Counterfeiting also deprives national economies of customs duties and tax revenues, as counterfeiters skirt the law in many ways, not paying the duties and taxes that legitimate manufacturers and shippers pay. Counterfeiting and the proceeds from the sale of counterfeit goods have also been linked to organized crime and terrorist groups, which pose serious threats to the health and safety of civilian populations, economies, and even national security.

7. As a consumer, how do I avoid counterfeit products?

The best way to avoid purchasing counterfeit goods is to buy products directly from the brand owner or from reputable retailers, as opposed to individual third-party retailers or from unknown or unrecognized websites. Also, keep in mind that if a price seems too good to be true, it probably is.

8. As a business owner, how do I keep my products from being counterfeited?

You can take various steps to prevent, or at least minimize, counterfeiting. These include (1) registering your brand, logo, and trademarks in countries where you sell, manufacture, ship, or store your products; (2) recording your trademarks with national customs organizations where possible; (3) monitoring and controlling your company’s supply chain; (4) adding authentication details to your genuine products that a counterfeiter would not be aware of; (5) setting up a corporate brand protection program and training employees on anticounterfeiting measures; (6) monitoring what brick-and-mortar and online stores are selling your products; (7) taking legal action in civil court against counterfeiters; (8) providing training for local law enforcement personnel, such as customs officials, on your company’s brand and products so that they can identify and seize counterfeits that that are passing through customs; and (9) assisting and supporting law enforcement agencies in the seizure of counterfeit goods and the arrest and prosecution of counterfeiters.

If counterfeiting has become a problem for your company, consult with a global brand protection attorney regarding options and strategies for combating counterfeiting activities.

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