Awarding shameless counterfeits

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Cheap bargains and reputation loss

When it comes to buying fake products, consumers often apply double standards. Bearing in mind an alleged bargain, all scruples vanish into thin air and social standards in the counterfeiters’ factories do not seem to matter anymore. Generally, the evaluation of brand- and product piracy highly depends on the perspective. Entrepreneurs or consumers - as offenders they downplay the problem as a trivial offence, because they are beneficiaries of the circumstances. However, when being a victim of fraud and suffering financial losses or damages to health, the evaluation of the problem changes abruptly. In fact, original and plagiarised products are only misleadingly similar at first glance. Thus, consumers should not delude themselves into thinking that an identical product appearance automatically implies the same quality, functionality, precision and safety. As markets regulate themselves by supply and demand, each consumer bears considerable responsibility: Users who deliberately purchase counterfeit products, not only specifically undermine the brand name producers, they also support child labour and criminal business practices.

Often affected brand name producers suffer even more from unjustified reputation losses – generated by substandard forgeries - than from factual financial losses due to non-realised sales. It is a fact that disappointed customers are likely to turn away from a brand and may even influence other customers with their negative comments. However, product development is a time-consuming and costly process and each new product is the result of creativity and technical know-how. Therefore, it is essential for brand name producers that customers show more appreciation and respect for the product creator’s accomplishment in creating the original product. Innovative companies should enthuse consumers with the original product and convince them of the added value of their product in comparison with a visually identical but substandard plagiarism. Thus, brand name producers should not only invest in trademark protection but amplify their investments in consumer protection and sensitisation, in order to create higher awareness of the problem of counterfeits.

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According to the European Commission, in 2015 European customs officials seized more than 40 million IP infringing goods, with an estimated value of 650 million EURO at the EU borders – an increase of 15% compared to 2014. The majority of products seized had their origin in China and Hong Kong. Others among the countries of origin include the United Arab Emirates, Turkey and India. However, EU customs statistics can only shed light on part of this global problem. It is a fact that many Asian companies develop from the extended workbench of Western enterprises and become serious competing firms that successfully operate on global markets, register IP rights, and also consistently prosecute infringers. Furthermore, companies from industrial nations are often those responsible for ordering or importing these imitations. Also, in recent years, there were more and more European companies among the nominees of the negative “Plagiarius” award – often the genuine producer and the imitator come from the same country. And increasingly, the imitators turn out to be former production or retailing partners. In fact, nowadays, the offenders select a competitor’s successful product and purposefully check whether the product is protected by IPR. And when no such protection exists, they blatantly copy the product. To best secure their product know-how and trade secrets against theft, entrepreneurs should focus on a holistic strategy that involves legal, organisational and technical measures.