In 2012, Element Case founder Jeff Sasaki went to a Hong Kong technology fair to scout manufacturers for his high-end iPhone cases. What he found instead was three companies showing off imitation Element products.
Incensed, Sasaki demanded that they stop hawking their knockoffs. But within weeks, they were back at it, touting faux Element wares online. "It's a crazy cat-and-mouse game," he says. The San Carlos, California-based company spent years breaking into the iPhone accessories market--but when sales finally took off, so did the rip-offs. The problem sucks up Element's time and money, and has even prompted Sasaki to hire a full-time brand-protection manager. "Counterfeiting is huge--and it's so much more harmful to a company our size," he says.
The worldwide e-commerce boom has made it easy for fakers to attack everyone, even a smaller brand; counterfeiting accounts for $350 billion in global online sales annually, according to MarkMonitor, an antifraud software company.
So how can you fight back? First, assume you'll be a target--especially after any success. "While you're basking in the limelight, that's when they're attacking," says Frederick Felman, MarkMonitor's former chief marketing officer. Next, take these steps to fight the fakers.
Stay vigilant online
Set up Google alerts to watch for your brand name at knockoff stores--and be sure to check the results carefully. Now that eBay and Amazon are trying to crack down on fakes, counterfeiters are working harder to make their websites look like those of legit companies, with the right logos and photos. Scan Facebook, Twitter, and Instagram for hashtags with your brand and links to online stores, and report the results to internet service providers, which can shut down illegal sites. If that's too much to handle on your own, you could resort to an anticounterfeiting service, such as Counterfeit Technology, BrandShield, or KnowEm.
Don't go it alone
Form partnerships with other companies. Headphone maker Monster holds anticounterfeiting meetings with competitors and splits the costs of investigators, lawyers, and factory raids with up to 50 different companies. Monster has also shut down counterfeit websites by reporting offenders to Visa and PayPal, which cut off their credit card processing. Because fakes are getting better--sometimes even coming in lookalike packaging--it's a good idea to include secret features that distinguish your products from knockoffs, especially if you're worried about liability suits resulting from counterfeits. "You can put secret tells in your product," says Dave Tognotti, general counsel of Monster. It marks its headphones with microscopic dots, and stamps some of its packaging with codes and images in invisible ink, which its employees can detect with a special reader.
Deputize your customers
Use your website to post lists of legitimate retailers, high-resolution comparison pictures, and buttons for reporting imitations, says Susan Scafidi, founder of the nonprofit Fashion Law Institute. Sometimes loyal customers will take the initiative. For example, some eBay users have posted guides to spotting fake Diane von Furstenberg dresses or Longchamp bags. Customers are "the best weapon you have," Scafidi says.
Expanding Abroad? Buy Your Name Back--or Else
Rachel Dooley opened an email one day in 2012 and felt her stomach sink. The Gemma Redux founder was preparing to expand her New York City jewelry company's sales to China. But someone had already registered her trademark there--and now he was offering to sell it back to her, for $100,000.
Dooley had started her business in 2008, and watched her products take off as they hit the pages of fashion magazines. But that success also made her vulnerable. Because there is no such thing as a global trademark, many new companies fall prey to this novel form of extortion, known as trademark squatting. Fortunately, there are alternatives to paying, if you're willing to scramble.
Dooley's squatter gradually dropped his price to $50,000. But Dooley decided instead to spend her money creating a new, closely related trademark for her China business: Gems Redone. Now Dooley plans new market debuts carefully, lining up law firms to secure her trademark rights. "Take control over when and where your brand launches and plan for it, both with legal protection and with marketing," Dooley advises.
Timing is tricky; in some countries, if you don't start doing business within a certain time after filing an initial registration, your trademark rights could expire. Dooley and other targets also caution against giving into squatters, who function like an international mafia: Paying off one can make you more of a target to others.
How a few companies beat the copies.