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The problem of counterfeit products remains, paradoxically, both enormous and under the radar. One big reason: given how widespread, global and (by necessity) publicity-averse its practitioners are, it\u2019s difficult to put an exact price tag on the costs of counterfeiting.<\/p>\n
Difficult, but not impossible. John Ferdinand, who heads the anti-counterfeiting team at intellectual property (IP) management firm Marks & Clerk, said that in the European Union (EU) alone, the apparel industry loses approximately \u20ac12 billion <\/strong>($12.48 billion<\/strong>) annually to counterfeiting, equating to approximately 5%<\/strong> of all<\/em> clothing sales in that market. \u201cLook at the value of seized items that are picked up by customs \u2014 it\u2019s in the hundreds of millions of dollars<\/strong> in particular markets, so there\u2019s a real impact of taking steps to fight it,\u201d said Ferdinand in an interview with Retail TouchPoints<\/em>.<\/p>\n Ferdinand discussed the main contributors to counterfeiting today, how \u201cdupe\u201d culture is erasing the lines between real and fake, and what brands, retailers and manufacturers can do to fight the brand dilution (and lost revenue) that counterfeits represent.<\/p>\n Retail TouchPoints (RTP): Has the growth of ecommerce contributed to the problem of counterfeiting?<\/mark><\/em><\/strong><\/p>\n John Ferdinand: <\/strong>The changes in technology and consumer behavior, and the exponential growth in online sales activity for all products \u2014 but particularly in fashion \u2014 have all contributed. In an online world, it\u2019s harder to tell how to spot counterfeit goods and authenticate their origin [compared to] a physical store, where it\u2019s more regulated and more closely associated with the brand. Essentially, it\u2019s harder to tell online if it\u2019s genuine or fake.<\/p>\n Another thing to note is that counterfeiting isn\u2019t limited to luxury products: for example, there are a number of cases against Shein<\/strong> in Hong Kong involving swimwear, including H&M<\/strong> suing them for copyright infringement.<\/p>\n RTP: We\u2019ve heard a lot recently about \u201cdupe\u201d culture, particularly when the \u201cdupes\u201d are being promoted by influencers on social media. Does this trend make fighting counterfeits more difficult?<\/mark><\/em><\/strong><\/p>\n Ferdinand: <\/strong>Dupes, or lookalike products that don\u2019t carry the brand name but replicate the appearance of luxury brand products, is certainly a trend that\u2019s grown in the last few years. So while a counterfeit is designed to make the purchaser believe that they\u2019re buying a genuine product, a dupe is designed to give that same appearance \u2014 but in an environment where the customer isn\u2019t fooled [into thinking it\u2019s the real thing]. There\u2019s a dividing line [between dupes and counterfeits], but it\u2019s not completely unbroken.<\/strong><\/p>\n RTP: Beyond the economic losses and the threat of fakes diluting a brand, are there bigger, more \u201cmacro\u201d reasons for trying to reduce counterfeiting?<\/mark><\/em><\/strong><\/p>\n Ferdinand: <\/strong>It\u2019s true that there might be a perception that because counterfeiting is impossible to prevent absolutely, it\u2019s not worth investing in measures designed to protect brands and the enforcement activities needed. But counterfeiting activity is seen as one of the biggest sources [of revenue] for organized crime<\/strong>. That \u201cbad actor\u201d link is just one example of the wider, significant impacts of counterfeiting.<\/p>\n Maybe it is impossible to eradicate counterfeiting altogether, but let\u2019s say it does equate to 5% <\/strong>of sales. [The potential to bring that number down] makes it a problem worth tackling.<\/strong> Additionally, if brands, particularly luxury brands, don\u2019t enforce their intellectual property rights, the brand will become less exclusive and less sought-after. So [it pays to] be strategic about taking some actions that will have a positive impact on the brand\u2019s perception and its exclusivity in the market<\/strong>.<\/p>\n RTP: What are some of the most effective tools retailers and brands can use to fight counterfeiting?<\/mark><\/em><\/strong><\/p>\n Ferdinand: <\/strong>Brands need to rely on their IP rights. They can generally secure, via trademark and other forms of IP protection, various things related to the appearance of their products, and then they can take the legal steps needed to challenge [counterfeit] goods.<\/p>\n Protecting your IP rights can encompass different embodiments of the brand identity that are used on the product, for example the repeating patterns of \u201cLV\u201d on Louis Vuitton<\/strong> products. The name, the logo, those repeating patterns, as well as the packaging, branding and overall trade dress [a product\u2019s visual appearance that identifies its source] can be trademarked and sometimes copyrighted. It\u2019s about [a brand] comprehensively selecting all <\/em>these elements \u2014 anything that consumers associate with that exclusive item\u2019s origin. That way if a counterfeiter or a third party is copying just one<\/strong> of a number of IP [markers], the brand can make a move to stop that. Brands can achieve a lot through strategic applications of their IP rights.<\/p>\n Brands also need to monitor the marketplace and remain in close contact with their manufacturers. I\u2019ve seen a number of instances where certain manufacturers might produce \u201cextra\u201d products, beyond an agreed-upon number, and those \u201csurplus\u201d products might make their way into black market or gray market channels that haven\u2019t been authorized by the brand\u2019s owner, so it\u2019s also about managing your manufacturers<\/strong>.<\/p>\n Additionally, you should rely on your sales network and communicate to your employees, and the organization as a whole, about the importance of this problem, so that there are more \u201ceyes\u201d on it. There also are brand protection software and services that will [alert brands] when third parties are hosting their brands on marketplaces and social media platforms.<\/p>\n In terms of actual enforcement, counterfeiting activity is a criminal offense in most countries, so [brands] can engage with law enforcement to enforce their IP rights. For example, you can provide customs authorities with information about where you\u2019re seeing counterfeit goods coming from and who the known suppliers are. And online marketplaces will have their own IP rights compliance [tools], so brands can engage with these platforms to take down listings that they consider infringe on their rights \u2014 although, as I said, it\u2019s harder to tell [real from fake] online.<\/p>\n RTP: Overall, how should brands look at fighting counterfeits on a strategic level?<\/mark><\/em><\/strong><\/p>\n Ferdinand: <\/strong>Counterfeiting needs to be attacked from a number of angles; brands need a layered strategy, and one that mirrors the market for their products, which will of course vary from industry to industry. One big preventative measure is communicating with the public about the risks of counterfeit goods and the benefits of authentic products.<\/strong><\/p>\n In terms of that communication, social media influencers are really powerful today; a lot of people trust them to make purchasing decisions. These influencers could share the quality differences between counterfeits\/dupes versus the real thing. Retailers could also create opportunities for consumers to bring in their dupe products to compare them to the real thing and see that difference in quality. That kind of communication, and engaging influencers to promote the genuine products, should be part of the strategic decisions you make about where to focus your anti-counterfeiting efforts.<\/p>\n<\/p><\/div>\n