If your company makes trademarked products, chances are high that someone is considering counterfeiting those goods, if they’re not already doing so.
Counterfeited items include everything from batteries and light bulbs to shoes and baby food, and the list doesn’t stop there, says Sam Watkins, a senior attorney at Theodora Oringher Miller & Richman PC.
“If you make or distribute popular trademarked goods in this country and you’re paying U.S. taxes, employing U.S. citizens at U.S. wages, complying with U.S. laws and safety regulations and still making money even with all these costs, counterfeiters in another country are going to rip you off by making and selling fake versions of your goods cheaper than you can,” says Watkins.
Smart Business spoke with Watkins about how to determine if your company has a counterfeiting problem and the steps you can take to combat it.
How can counterfeit products hurt a brand?
People don’t appreciate the harm they do buying counterfeits. They look at the price of a pair of brand-name shoes that they really want but can’t afford, and then they buy the counterfeit version instead for a quarter of the cost. But counterfeit goods erode brand value. That pair of counterfeit shoes is not manufactured to the same high quality as the genuine article. Then when people see the quality of the product, they think, ‘I thought that brand was good, but it looks so shabby.’ So even if a company didn’t lose a sale because the person couldn’t afford the real McCoy, it is still victimized because the shoddy quality of the goods is going to erode the company’s good will.
There also are safety and moral issues. For example, a counterfeit drug may or may not contain the correct active ingredients and may, in fact, contain harmful chemicals. You stand a great chance of being harmed by ingesting dangerous chemicals or by failing to get the proper dosage of medicine. Also, many counterfeit goods are made by children under horrible conditions. People really should think twice about these victims before they buy.
How can companies determine whether they have a counterfeiting problem?
Some companies train employees to be their eyes and ears, and if they suspect something in the marketplace, internal security will investigate. Also, pay close attention to consumer complaints. Companies may be able to detect a pattern in the type of complaints they are receiving or in the region of the country the complaints are coming from. If the complaints are all of one type or from one area, that’s a good indicator that counterfeits are in that region, and consumers have been disappointed with the quality.
Another indicator is a serious and unanticipated drop-off in sales in a region. That often means a company is no longer in competition with its normal competitors but is instead in competition with counterfeits.
Finally, companies often become aware of counterfeiting when law enforcement contacts them to determine if goods they have detained are counterfeit or genuine.
