Attack of the $35 Gucci Handbag

Tweet

Pirated electronics can also present a significant safety risk, Daugherty points out. Last year, a seven-year-old British boy was electrocuted and killed when his parents unknowingly purchased a knockoff Nintendo Game Boy adaptor in Thailand.

Nintendo trains customs officials around the world to recognize knockoff Nintendo products, and has reached out to the U.S. trade representative to enact more aggressive anti-counterfeiting legislation. Countries such as Mexico, Brazil, and China are particularly challenging for Nintendo's market because their local counter-piracy laws have not effectively halted a rampant counterfeiting culture.

Fighting against counterfeiters is often an exhaustive process for companies, especially smaller ones short on resources and manpower. Once the counterfeited company has gathered proof that suspicious products are indeed fakes, it can approach the U.S. Immigration and Customs Enforcement and the U.S. Patent and Trademark Office. Brand-protection companies can help catch instances of online counterfeit sales, while private investigators can take counterfeits out of the market. Businesses are also increasingly turning to local authorities, like the economic crimes division of some local police forces.

Andrew Oberfeldt, a private investigator at New York-based Abacus Security, says that simply alerting authorities is not enough -- companies need to train customs and security in identifying their products and hire investigators who can be a 24-hour contact for law enforcement.

“It's like drug smuggling, Oberfeldt says. "There's so much money and it's so multifaceted that if you aren't doing it on every level, you're not doing anything."

"My mantra is that customs offices and officers are your best friend," adds Barbara Cason, intellectual property director at Columbia Sportswear, a company that seized 250,000 counterfeit items in 2005. "Not only do they provide the opportunity to register your trademark, but they also have opportunities for brand owners to come and present their products and show what an authentic or a fake looks like."

With trendy labels, advertisements for counterfeits appear in countless junk mail inboxes as physical products are strewn over discount street vendor racks. When a brand gains momentum, companies are encouraged to take action sooner rather than later. If a counterfeiting industry has time to take off, it becomes that much more difficult to extinguish.

"If you have a leak in your roof and you let it grow over weeks and months, it becomes a lot bigger of a problem," says Frederick Felman, chief marketing officer of MarkMonitor, a San Francisco, Calif.-based brand-protection company. It's very similar in the counterfeiting world. If you don't treat something, other people start to pile on and start abusing and copying your brand. But if you take action, it makes the economics of it less interesting, so they move on to a brand that isn't defended."

Some companies are taking a more grassroots approach. Abercrombie & Fitch, Coach, and Estee Lauder, among others, have partnered with the International AntiCounterfeiting Coalition to create a college outreach program, which provides case studies to marketing and public relations classes at schools like Harvard and New York University. Students get the opportunity and funding to practice crafting their own PR campaigns -- through blogs, Facebook, and fashion shows, and other efforts -- while the IACC raises awareness and enlists supporters for its effort.

No matter how focused the efforts, however, links on the counterfeiting chain are difficult to break. Factory raids might cause an individual manufacturer to lose inventory and machinery, but those running the operations from a distance are tough to identify.

"We end up raiding manufacturers and have a very hard time figuring out who really is behind all of it," Zippo's Duke says. Although the number of fake lighters on the Chinese market has dropped about 10 percent in the past two years, their quality seems to have picked up, he says.

"Without any question, we are still losing 15 percent" of total sales, he says. "That's a very big number."

 PREV  1 | 2 

Read more:

Sign-up for our Small Business Success Newsletter

Email Address: