WOMEN WHO TAKE COUNTERfeit birth control pills could be in for a big surprise. So, too, could folks who rely on bogus automobile brakes and helicopter landing gear. Pirates are knocking off as much as $20 billion worth of goods each year, a fourfold increase since 1980. And they've moved beyond tapes and designer jeans into the likes of pharmaceutical and electronic products.
Few manufacturers are immune from piracy, but the burden falls heavily on small companies. Some 70% of counterfeit victims have sales under $20 million, estimates Donald W. Baker, chief executive officer of Telstat Communication Systems Inc., a provider of anticounterfeit security systems.
The pirates are profiting by taking advantage of the increasing sophistication in copying techniques. That is especially true in the Far East, where they benefit from rapid industrialization. "Just as industries are getting smarter, taking advantage of technological advances, so are the crooks," says Joseph Dawson of the federal Office of Consumer Affairs.
Some imitators clone the product itself, while others put more effort into the packaging. "The key to counterfeit isn't the part, it's the package," says Frank Kery, a business-planning and strategy manager at Ford Motor Co. "Voltage regulators, fuses, switches, disc-brake pads -- most countries have been making these things for years, and nobody can tell a real one from a fake on sight. And there are a lot of printers out there who are very good at [copying] our trademark." Another manufacturer, G.D. Searle & Co., was shocked to find that more than a million fakes of its birth control pill were on the market. "Nobody had to copy the pills," says Dawson. "It's the package that fooled people."
The problem has grown so serious that a whole new industry is emerging to offer anticounterfeiting protection. Fifteen to 20 companies have drawn sabers -- some even lasers -- on the pirates, up from just 4 companies a few years ago. The number could double again this year.