How to Take Counterfeits Offline

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How to Take Counterfeits Offline

By Philip Viggiani, Risk Manager, IP Risk Control - 09/06/2016
On June 20, 2016, officials seized more than $1 million worth of counterfeit apparel and accessories from a small warehouse in Nassau County. Police consider this the largest counterfeit bust in American history.

More than 3,000 boxes of counterfeit "brand name" goods were ready to ship. The clothing items and the tags — all counterfeit — would arrive at the shop in separate shipments from overseas, meaning the operation was less likely to lose its entire inventory if seized by border officials.

Revenues lost from global counterfeiting account for an estimated $1.7 trillion dollars annually, with apparel making up roughly $12 billion of that amount.

It's a relentless battle by brand owners to stop — or at least slow — the endless river of counterfeit goods that robs them of revenue. Without a clearly defined strategy, brand owners will continue to leak profits.

How do you stop this illegal trade from eroding your brand?

Get "eyes on the ground" and get them soon. If your company is not constantly monitoring the Internet to search out, expose and take down infringing fakes, you're fighting a losing battle.

The landscape
This insidious industry hides in plain sight. Legitimate auction sites, rogue sites, even "trusted" sites such as eBay and Alibaba sell obviously counterfeit merchandise. Hundreds of millions of dollars' worth of merchandise are sold annually. And not every buyer is naÏve about what they're buying. Some shoppers aren't able to afford the brand and will happily pay 25 percent to 50 percent less for an item they suspect is a "knock-off."

E-commerce stores pop up by the hundreds every day. Rogue sites sell as much merchandise as they can in a short period of time and then disappear. Having reliable Internet monitoring to combat counterfeiting of your brand is no longer an option; it's mandatory.

Counterfeiters steal your logos, often right off your own site. They steal your advertising creative. They steal your design creative. In short, they are stealing your business right out from under you.

Some brand owners believe this to be "okay." After all, the buyers of this counterfeit merchandise were never your target buyer anyway. And when they show off their so-called "bargain," they are mentioning your brand name, giving the brand exposure.

But that's wrong thinking. Not only does counterfeiting cost your business money, it costs the economy. Legitimate jobs disappear. Money flows to illegal enterprises often linked to organized crime.

The impact is devastating.

Never underestimate the power of denial
I've been in this brand protection/anti-counterfeit game for nearly 14 years, and over that time one constant remains: if you have a real product, you absolutely can be guaranteed it's being copied somewhere by someone, and available to everyone. Ignoring that fact, waiting for it to go away, or checking Google just won't cut it.

Just because you don't look at it doesn't make it disappear.

Every company in the global monitoring business knows this: the price of having proper online brand protection eyes on the net always — not most of the time — but always pays for itself, usually many times over.

Where do you start? Fight technology with technology
Counterfeits can pop up anywhere online. From e-commerce sites to spam email, the options appear limitless. As a brand owner, where do you start plugging the leaks? There are dozens of places you could begin, and you can't stop them all. But you can deflect the counterfeiting and diversion problem away from your brand by being laser focused on the math. For every one counterfeit sale on the Internet you lose twice. That doesn't even include the constant brand erosion.

Start with the low hanging fruit. Just knowing the magnitude of the problem gives you an understanding of where to go next. View the auction sites. Look for your logos, your trademarks and your styles. The results may surprise you. You'll see "your" designs that don't resemble anything you've created.

Contact the auction site owner. Have your trademarks, logos, and world marks ready to submit to the jurisdiction involved. Request removal/takedown of the product and let the seller know you intend to enforce your rights through the legal system.

Then go on to the next site and start the process again.

This does work. It takes time, is costly and can seem daunting and frustrating. But many sellers threatened with legal action comply quickly. Of course, the effectiveness of this strategy is in the details.

Next go after the promotional "heavy hitters." Counterfeiters use many of the same marketing and promotion channels as you do. Once you discover them, you may be overwhelmed with the amount of product available for sale. Even when the seller is exposed, the logistics of enforcement and removal is challenging.

At this point it may indeed be time to take a serious look at interviewing several Internet monitoring services to balance the workload, the urgency and the corporate checkbook.

Here's a checklist that may be effective in determining the best Internet monitoring company for your needs and budget.
  • Does the primary search platform combine the proper search terms or wordlists to find relevant pages across the Internet while keeping the noise (bad data) from the search?
  • Does the reporting capability allow comprehensive customizable tools to give you a 360-degree view of the online threat?
  • Can the platform protect the rights of your channel partners and resellers by removing  grey market goods and imports?
  • Will the database allow both ease of  removals and aggregate "intelligence" for future reporting?
  • Can your personnel do online auction queries in "real time?" Very few do!
  • Most important, does the Internet monitoring company have long-standing relationships with all the major auction sites globally?
Reputable Internet monitoring services know the cost of controlling and containing the online pillaging of your brand more than pays for itself. The real ROI comes with continuously ferreting out the peripheral sites that aren't so obvious but have a multi-pronged global reach that by the very nature of their quantity is eroding significant revenues of the rightful company.

In almost all cases any monthly costs to maintain 24/7 pressure on the infringing sites and sellers should eventually deflect the serious counterfeiters to other brands that have less ferocity and determination to protect their brand integrity.

You may never eradicate counterfeits of your brand, but with a strong program, consistent action and an attitude like Dory's "just keep swimming" mantra, you'll make headway and keep your losses at a minimum.

If your brand is large enough, you may have an entire department to handle the ongoing issue of counterfeit merchandise hitting the streets. If you don't have a fraud protection program, investigate using an Internet monitoring service to do the work for you.

Philip Viggiani is a certified risk management professional with more than 13 years' experience handling counterfeit, fraud and IP-related solutions. He is a former contributor to Apparel magazine and risk manager at IP Risk Control, and can be reached at [email protected]