The FANIF Q&A with Christine LaCroix, Managing Director of the Plagiarius Consultancy

February 11, 2010 § Leave a comment

Aktion Plagiarius was founded in 1977 by Professor Rido Busse after the German industrial designer discovered an imitation of one of his designs on sale at a trade fair in Frankfurt for a price that severely undercut his own.

Busse desperately sought legal recourse, but when he found the German government of the late 1970s did not sufficiently protect the originators of consumer goods, he decided that the best way to punish the imitators was to draw negative publicity to their actions. Busse designed a statue of a gnome with a golden nose as his anti-award, a play on the German saying “to earn oneself a gold nose” (or to earn much money), and created an award ceremony to “name and shame” the pirates. Roughly 30 years later, what began as an award ceremony has grown into a full-blown anti-counterfeiting consultancy.

As the organization’s managing director, Christine LaCroix oversees strategic development as well as day-to-day operations. On a given day she might be sitting at her desk counseling a company that has been the victim of plagiarism, writing an article about recent discoveries of counterfeiting, or curating over 350 examples of piracy that are housed in the museum. Another day will find her driving with the museum’s traveling exhibition to a trade show, where she will speak about fair business practice or how to fight the problem of product plagiarism.

Since she began in 2001, no two days have been the same for LaCroix, but the fight against counterfeiting is something she believes in so strongly that she is tireless in her search to find dynamic ways to get the message across to the world.

How can we continue to educate the public about the problem of counterfeiting?

We need politicians, trade associations and corporate groups to act in concert. In order to successfully fight this problem, we have to increase consumer awareness. Everyone understands the theft of property is a crime, but, intellectual property theft is too abstract for most people to understand. To explain how damaging it can be, we must make it understandable by showing it in publications, TV reports, stories, events, and seminars.

We know that a picture is worth a thousand words and the public needs to be educated with as many of these real examples as possible. They need to know about child labor, poor manufacturing conditions, long hours, neglect for safety and hygiene, and the lack of protection for factory workers against dangerous machinery and noxious chemical substances. Consumers have to understand that organized crime is heavily involved in the business of fakes. They must know that they are supporting illegal activities by buying fake products. We need to further publicize the dangers of the inferior quality of the fakes and plagiarisms—dangers that are not often visible at first sight.

What is the real cost of fakes to society?

Especially in economic hard times, when consumers are more likely to focus on price, they may be unwittingly drawn to cheap imitations that fit their budgets. However, the imitators are not concerned with quality, safety or ecology. They knowingly put the consumers’ health and lives at stake. It can be very dangerous.

Manufacturers invest in Research & Development. They invest in design and in quality controls. They do this so they can launch innovative and safe products. But to do so, they must make huge investments. But because of the abundance of cheap fakes and plagiarisms, more and more companies’ ability to recoup this money is affected and they, along with their employees, suffer. Good brand reputations are destroyed, and unfounded product liability claims are made. Jobs are lost. Piracy affects everyone.

How has counterfeiting evolved?

Counterfeiting has always existed, but it has grown enormously with globalization and the Internet. In the 1970s and 80s, counterfeiters focused on luxury products, but the trashy quality of the knockoffs was clear. Back then the majority of the counterfeiting occurred in Taiwan, China, and Korea. Nowadays, when we consider the whole production chain of a counterfeit good, from awarding of a contract through its manufacture up to the end customer, it is clear that this is a global problem. It is not isolated to a specific region.

Official organizations estimate that plagiarisms and fakes cause worldwide losses of several hundred billion Euros and several hundred thousand jobs each year. This number continues to grow. The explosion of technology accelerates this growth, namely the anonymous distribution channels on the web.

As the criminal know-how and experience increases and technology continues to make it easier to produce high quality fakes in large numbers, the number of victims will also expand.

What was once a “cottage industry” has developed into a highly sophisticated international network of manufacture, logistics and distribution.

Is counterfeiting more dangerous than it has been?

Definitely. The problem is bigger than ever. Counterfeit pharmaceuticals that contain none, too little, or too much of the active ingredients have entered the market. We have seen electronic devices sold without safety and quality controls that present the danger of short-circuiting, combustion and explosion. Poor manufacturing conditions have led to bacteria found in fake perfumes.

How do we improve penalties and enforcement?

In theory, the intellectual property laws and regulations of countries like the U.S. and Europe, and also those of many other countries, are quite good. However, the fines and penalties imposed on imitators are far too low and do not deter them. As long as the counterfeiters’ profit margins are similar to drug dealers while the penalties are much lower, the product pirates will expand their businesses. Enormous penalties are essential if we want to stop this.

What are the biggest areas of counterfeit growth?

We have seen growth in the pharmaceutical, cosmetic, food and beverage, electronic and clothing sectors. Some of the scariest growth happens in more of the day-to-day products like machine parts, vacuum pumps, pressure gauges, pneumatic devices and spare parts, among others.

Where have you seen the greatest success in your efforts?

Our major goals are the increased awareness of the public, protection of innovative companies, and the prevention of imitators.

We have received positive feedback from entrepreneurs as well as consumers for our exhibitions (museum and traveling exhibitions) as well as our lectures. People are often grateful for the information and the “first-hand-view” on counterfeiting and its impacts.

We are in close contact with justice ministries and other organizations to help expand the enforcement of the intellectual property laws. In the late 80s, we contributed to the improvement of the design patent law and the introduction of a law against product piracy that includes the possibility not only to prosecute the manufacturers of imitations but also the retailers and distributors.

Our Plagiarius awards aim to deter imitators through public exposure, or “name and shame.” Western companies are highly concerned about their reputation and the significant media coverage of the negative award can make an impact. Numerous imitators have brokered a mutual agreement with the original producers before or shortly after the Plagiarius Award Ceremony, for example they have withdrawn remainders of stock from the market, have signed forbearance declarations and/or revealed their suppliers.

How to fight the fake trade with limited resources? The Milwaukee Police Department and Nike may have an answer.

February 3, 2010 § Leave a comment

When the topic of counterfeiting is brought up in law enforcement offices across the country and around the world, one of the first questions that senior staff has to ask is whether or not they have the resources to fight the problem.

In a cheerless economy, the effort to find funding for the fight against fakes is like sending a pig out to hunt truffles in the forest with its snoot stuffed full of fabric softener sheets that were dipped in gasoline.

In this environment, you have to be smart about your resources.

What’s the better choice, do you go after the big takedowns of the distribution operations that grab headlines or do you arrest the local counterfeit vendors? A case can be made for either one. Knocking around the small vendors disrupts the money flow to the sham overlords, and the bigger busts can discourage the entire counterfeit industry.

Either way, without the funds to pursue the full spectrum of enforcement, it’s not easy to know the best course of action. But, just as the criminals are innovative, enforcement efforts are evolving too.

A recent joint effort by Nike and the Milwaukee, WI police force may have given us a workable solution.

Working together in an ongoing operation, the police department and federal agents have been performing controlled buys of fake Nike goods from local merchants using marked bills and confidential informants. Their efforts have produced several arrests and seizures .

With annual revenues of around $19 billion, you have to wonder why Nike would get involved in a smaller campaign in the first place. Is this the best uses of scarce resources?

Two factors motivated the effort. First off, Nike’s trademark is held in Wisconsin. Secondly, despite the relatively small seizures, the sale price of the fakes and a pair of legitimate sneakers (around $40 for the fakes and $120 for the real version) is close enough that a customer who could afford the real version might go with the forgeries instead. Someone who buys a faux Louis Vuitton wouldn’t necessarily pay ten times the price of a fake for the real deal.

The operation is a fine example of how law enforcement and a trademark holder can work together in the fight against fakes. And while the results might seem miniscule in the face of a $200 billion dollar counterfeit industry, this shared initiative represents two of the three prongs needed to defeat the epidemic: (i.) savvy law enforcement and (ii.) a brand committed to protecting its interests.

You, the educated citizen, are the third prong. You understand the real cost of fakes. Gail Montenegro, a spokeswoman for U.S. ICE, was quoted in the article as saying “the victims [of counterfeiting] are American businesses, trademark holders and people who make and distribute the authentic products,” was on the right track, but only got it partially right.

Never forget that the victims are not only the trademark holders, but real people whose lives are ruined by forced labor and abuse.

The problem is bigger than revenue and line items. It’s about basic human rights.

That said, we encourage you to become a passionate member of the third prong. Spread the word and join the fight.

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