Counterfeit spikes and the holiday season

Counterfeit purchases spike before holidays such as Christmas and during designated sales periods, such as Black Friday, Cyber Monday and the January sales.

Today (29 November 2019) is Black Friday, the day of bargain-hunting frenzy that traditionally follows Thanksgiving and marks the start of the America's Christmas shopping season in America – a tradition that has since spread across the pond. 

While Black Friday, and Cyber Monday which follows, offers consumers the chance to bag a bargain as retailers slash their prices, it does not come without risks. As studies have shown, there is a higher chance of counterfeit purchases online in the run-up to the holiday period (including Black Friday and Cyber Monday), as well as in the January sales that traditionally follow Christmas’s excess.

The sales periods in particular tend to tempt consumers into making impulse purchases, enticing them with short-term discounts and adverts online and on social media. These promotions are also used by counterfeiters to market fake goods to consumers and, mixed in as they are with legitimate offers, can often mislead the unwary.

Even those that aren't misled might still proceed to purchase a heavily discounted product, so long as it looks and works like the real deal. The UK IPO’s ‘Annual IP crime and enforcement report: 2018 to 2019’, released in September, reported that: "nearly half (47.7%) of counterfeit and pirated imports to the UK over the period 2011-2013 were destined for sale in the secondary market (for consumers looking for fake products)."

Nearly half of counterfeit and pirated imports to the UK were destined for sale in the secondary market. 

In that context, the battle is as much against consumer demand for fake goods as it is against the counterfeit organisations, and it is a growing battle. At a global level, the trade in illegal counterfeit goods is continuing to rise. The Organisation for Economic Co-operation and Development (OECD) estimates that between 2017 and 2019 the value of criminal trade in counterfeits rose from US$461 billion to US$509 billion. That’s as much as 3.3% of world trade. 

Where to begin

As we previously wrote in our article ‘Anti-counterfeiting: Is it time to review your approach?’, most brand owners will know of the threat to their business of counterfeiting and piracy; the challenge comes in quantifying that threat in order to act against it, both proportionately and effectively.

Knock-offs were once immediately recognisable to prospective buyers due to the poor quality of the product – a typo in the brand name here, a design flaw there – its low price or the trading location (eg, a dodgy market stall). But, counterfeiting has become so much more sophisticated in recent years and, these days, many consumers are also being tricked into buying products at close to recommended retail price believing them to be the real deal.

The first step in any anti-counterfeiting strategy therefore should be to obtain a clear picture of the threat posed to your business and its consumers, and your goals for action. For example:

  • Which of your brands and products are being targeted?
  • Where are those knock-offs being manufactured – and by who?
  • How are they being transported and through which ports?
  • How are the counterfeit products being sold (on- and offline)?
  • What is the impact on your business’s bottom line?
  • How can you target action both locally and globally to tackle production, transportation and sale?
  • How will you measure the effectiveness of that approach?

Even by tracking social media and auction sites for a short time, you’ll be able to get an idea how many fake versions of your products are being sold.

Taking action

The reality is you won’t be able to find or stop every instance of counterfeiting; it would swallow up all your time, budget and resources. Instead, concentrate on identifying and mapping the biggest threats and the most common channels, for example:

  • Focus on manufacturing sites (typically, China, Hong Kong, India, Turkey, the UAE, or home soil) and their distribution routes (generally, major transit hubs and international trade ports).
  • Make use of takedown procedures to shutdown attempts to sell counterfeit versions of your products and auction sites and social media channels, including Pinterest and Instagram (For additional advice here, see our article ‘Brands and online platforms: protecting your products’).
  • Record trademark rights with customs in your home country and relevant overseas countries to help officials spot and detain shipments that infringe those rights.
  • Monitor factories that are manufacturing your products officially, as often these can be the source of fakes too. Ensure your agreements make it clear that unofficial copies will not be tolerated, and conduct regular spot-checks to check for breaches.
  • Liaise with local agents and involve local police and authorities where counterfeits are produced overseas. Different countries have different procedures and requirements when it comes to seizing counterfeit products, so it’s generally easier and more cost-effective to work with a specialist IP firm to coordinate such action; especially as you progress towards a factory raid or legal action.
  • Educate your consumers and prospective consumers on the risks posed to them by threats, and see if you can join forces with like-minded companies to share data and even the costs of enforcement action.

For the best chances of success, put criteria in place to guide your actions. You’ll have spent time researching, mapping and prioritising your strategy for action, so it’s important to avoid knee-jerk reactions every time you spot a fake. You have to be realistic about the likely results, too. It takes prolonged action, collaboration and consumer education to make a real dent against this type of organised crime.

For more tips and advice, speak to your Novagraaf attorney or download our white paper ‘Is your anti-counterfeiting strategy up to scratch?’.

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