Counterfeiting and Copycats – an accepted reality or underestimated challenge?
IP theft and misuse through counterfeiting and copycat products are one of the biggest challenges brands face right now.
The fast growing risk, particularly around copycat products, is still often underestimated by those that have the power to stop it.
New AI tools, such as DupeKiller, are emerging to tackle the more complex technical challenge of identifying copycat designs.
What are counterfeits and copycats?
There is a thin line between counterfeits and copycats, but there is a difference:
Counterfeit products are fake, inferior quality products using a brand name, without authorisation. Counterfeit products infringe registered rights and/or pass off unregistered rights. Also, depending on the nature of these products, they can be dangerous to the consumer. Therefore, it is vital that counterfeit products are found and destroyed, as well as the infringers producing and selling the products.
Copycat products (also known as look-a-likes) are often cheap, inferior imitations of a well-known product. They do not use the brand name itself but are designed to take the look and feel of that brand. It may be difficult to distinguish between the original product and a copycat product if a consumer is in a rush and not paying attention to what is picked up. The seller of copycat products relies on consumers being confused into thinking it is a genuine product or wanting a highly similar product at a fraction of the cost, despite the inferior quality. Copycat products sit within the legal ‘grey space’ and must be reviewed on a case by case basis if action is to be taken.
How has counterfeiting changed?
Counterfeiting has been around for a long time, but large-scale counterfeiting is accepted as a post-industrial phenomenon from around the mid-1960s.
However, globalisation really took hold in the 1990s and dissolved borders dramatically changed the world of counterfeits once again. This resulted in new and developed container freight systems, international postal and courier services, drop shipping and reduced travel costs, making the transport of goods and buying on consignment easier.
As well as the physical borders reducing, the banking systems globalised meaning large sums could be moved across the world at speeds never seen before.
Undoubtedly, the increased use of the Internet, online retail and social media to sell products has rapidly fuelled the rise in counterfeit products. It has made it easier for counterfeiters and copycatters to sell their products to a significantly larger number of people then they would be able to if they were limited to a physical location. The Internet has also allowed counterfeits to remain anonymous to the general public who are often unaware that they are purchasing a fake product.
Previously counterfeit goods were typically seen as being limited to clothing, footwear, bags and jewellery. However, counterfeiting has expanded in its scope and scale of manufacturing from these goods (which still represent the majority of counterfeit goods) to more potentially dangerous goods such as electrical goods, food and drink, pharmaceuticals and children’s toys. The 2018 Report on the EU customs enforcement of intellectual property rights found that counterfeit goods that may be potentially dangerous accounted for 36.8% of all detained goods (up from 34.2% in 2016).
It is also interesting that brand owners are reporting that counterfeit goods are no longer slavish copies of the originals – there has been an uptick in copycat products.
The Trends in Trade in Counterfeit and Pirated Goods study published by OECD and the EU’s Intellectual Property Office on 18 March 2019, states that the trade in fake goods represents 3.3% of world trade at $509 billion, up from $461 billion in 2013 (2.5% of world trade). For the EU, counterfeit trade represented 6.8% of imports from non-EU countries (EUR 121 billion), up from 5% in 2013. In the UK, counterfeit trade accounts for £13.6 billion, representing a loss of £4 billion in tax revenue.
These are significant numbers and only appear to be increasing.
What are the biggest challenges for counterfeit products?
Counterfeiters are sophisticated in avoiding detection. They act fast and are very adaptable. Brand owners need to be the same.
Counterfeiters know that the profits are high and the chances of getting caught are low.
Also, counterfeiting is generally undertaken by organised crime groups and we do not fully understand how they work. Whilst these may be large scale groups, they are often separated into networks of smaller groups. It is very unlikely that they are all under the control of one individual (as you see in films), so each will have different structures in place, with different tactics and different roles. These smaller networks can be more fluid and adaptable.
Counterfeiters will often sell their fake products via credible online marketplaces or social media where consumers may be under the impression that the sellers have been vetted and are legitimate. This is not the case.
Other tactics counterfeiters may use when selling online to avoid detection are:
- using imagery from official materials and websites;
- hijacking genuine listings by stealing unique listing codes from third parties;
- change the font in a listing so the brand is not easily detected by AI;
- use new brand names for look-a-like products to solidify legitimacy; and
- use generic key words only to describe the product, rather than the brand name.
These strategies make detecting counterfeit goods harder and slower. Often, these counterfeit goods are not identified until a test purchase is conducted.
Additionally, the increase in small parcels and small shipments make it difficult to detect counterfeit goods through the postal service. Where these are detected, counterfeiters may argue that these are not for commercial use due to their small size.
Where larger shipments are made, counterfeiters often ship the product and packaging separately, and assemble these at the end of the line.
Unfortunately, lockdown during the COVID19 pandemic has done little to stop counterfeiting. Consumers are increasingly turning to online shopping and social media, particularly those in lockdown, and counterfeiters are taking advantage.
It is clear that those involved in counterfeiting will use every situation to their advantage. For example, during lockdown the market has been flooded with counterfeit pharmaceuticals and medicines (Interpol released a notice on fake medicines in May 2020). This is clearly dangerous to consumers.
What are the biggest challenges for copycat products?
Whilst counterfeiting is generally undertaken by organised crime groups, copycat products can be produced by anyone from individuals who are fans of the original products through to well-known high street retailers.
There is a misconception that by changing or adapting a design to remove a number of elements, you are not at risk of copying or infringement. This is simply not true, and brands must work to educate the public on this point.
In the case of products protected via copyright, any unauthorised copying of a copyright work can potentially lead to legal action. Further, if the copycat product is subject to design protection, the requirement to prove copying falls away. Instead, the brand owner can rely on a similar overall impression between the design and the copycat product.
Also, unlike counterfeit products, for which there are established systems in place such as border control (albeit that these have their limitations), tackling copycat products is patchy and unpredictable. In the majority of cases, copycat products are often identified by chance.
There is a lack of reliable data when it comes to copycat products, making it difficult to understand the true extent of the problem.
How can brands effectively tackle counterfeiting and copycatting?
There are steps brands can take to prevent counterfeiting and copycatting, or at least reduce it. Ideally, the strategy should be to take action wherever counterfeiting or copycatting occurs. However, each brand will have a different budget, and each product will have its own strategy and risks, but you must do what you can to make your spend most effective.
However, all brands should:
- have a global strategy, covering both online and offline – it is essential to have a holistic strategy. It is not sufficient to remove the online risk as the counterfeiter will simply reappear on another platform. Brands must connect the dots and follow up leads so that they can shut down production as well. If you fail to take action at any one part of the chain, the counterfeiters will likely continue in a different location.
- collect and store intelligence – by collating intelligence and storing it so that it is easy to use at a later date, you can stay one step ahead. It may also enable you to create a portfolio of counterfeiters and/or copycat products.
- follow the money – counterfeiters will use legitimate banking systems and so you may be able to create a visual network of where the counterfeiting stages are taking place (as they are often not limited to one territory or group).
- adapt quickly to the changing marketplace and put resources into products and territories most at risk – this may change over time and needs to be continuously monitored. What happens in a small marketplace can impact elsewhere and have a big effect. This may be the marketplace of the future for your brand.
- look at IP protection – do you have adequate trade mark and design protection in place? If not, get it. This is your first stake in the ground.
- look at IP enforcement – once you have IP protection in place, use it.
- educate customs and border force agencies – this will help them to distinguish legitimate products from counterfeit and copycat products. Regular training will ensure that your brand is at the forefront of their mind when reviewing shipments.
- report counterfeits to the relevant online platforms – some platforms can be reluctant to intervene and argue that they are simply a hosting platform. Brands need to work with the relevant platform to reach an understanding and unite to stop counterfeit and copycat products. This may take some time.
- listen to consumers – it is amazing how well your consumers know your products. They may be the first to notify you of a counterfeit or copycat product due to poor quality
It may be the case that there is room for investment opportunities. For example, counterfeit or copycat products in a certain territory where legitimate products are not sold may suggest that there is a need for those legitimate products. By reviewing and investigating the matter, you may also identify your future business partner in that marketplace.
How can technology be used to help ‘fight the fight’?
Technology is key in winning the battle against counterfeiting and copycatting.
In terms of products themselves, technology can be used on the products and/or packaging to make it harder to replicate the real product and reduce the risk of counterfeiting. By telling consumers what these unique features are, it will help them differentiate authentic products from fake products. However, brands will need to consider the cost versus the value of the product as to whether this is viable.
In terms of strategy, brands should use technology to connect the dots and see patterns to identify potential networks of counterfeiters and copycat products.
Being tech focused, Kemp Little created DupeKiller, a proprietary, ground-breaking patent pending AI tool which is trained to know what your designs look like, whether it be an entire product or part of it. Therefore, you can focus on specific areas that may be copied. Once trained, it searches the internet for copies of your products, even if they don’t carry your brand. These results are then filtered from a list of millions to a list of real infringements. It’s the ultimate tool for protecting your unique designs online.
Counterfeiting and copycatting is a global problem and so brands must have holistic, global strategies, which utilise technology where possible.
The fight is likely to be a long one, but it must be fought.
Share this blog
- Adtech & martech
- Artificial intelligence
- EBA outsourcing
- Cloud computing
- Complex & sensitive investigations
- Cryptocurrencies & blockchain
- Data analytics & big data
- Data breaches
- Data rights
- Digital commerce
- Digital content risk
- Digital health
- Digital media
- Digital infrastructure & telecoms
- Emerging businesses
- Financial services
- KLick DPO
- KLick Trade Mark
- Open banking
- Software & services