Counterfeits Infiltrate The Military, Government Takes Charge

At a press conference last month, U.S. Senate Armed Services Committee Chairman Carl Levin reported that counterfeits had infiltrated the Pentagon’s supply chain. According to TTIINC.com, this includes microprocessors for fighter jets and microcircuits for Missile Defense Agency hardware. A new bill was proposed to target “malicious offenders– those who already are guilty of trafficking in counterfeit goods and know that they are selling military counterfeits.” It is supported by three major groups: the U.S. Chamber of Commerce, the National Association of Manufacturers, and the Semiconductor Industry Association.

In response to counterfeits the Interagency Task Force on Electronics Stewardship released a report detailing the necessary steps the government needs to take in order to monitor the management of electronics more carefully. These four goals are listed in the report:

1. Build Incentives for Design of Greener Electronics, and Enhance Science, Research and Technology Development in the United States (e.g., launch prize competitions to stimulate innovations in green product design, recycling solutions, and other phases of the electronics lifecycle).
2. Ensure that the Federal Government Leads by Example (e.g., encourage electronics manufacturers to expand their product take-back programs, and use certified recyclers as a minimum standard in those programs, by expanding the use of manufacturer take-back agreements in Federal electronics purchase, rental and service contracts).
3. Reduce Harm from US Exports of E-Waste and Improve Safe Handling of Used Electronics in Developing Countries (e.g., support ratification of the Basel Convention on the Control of Trans-boundary Movements of Hazardous Wastes and their Disposal and provide technical assistance and establish partnerships with developing countries to better manage used electronic equipment).
4. Increase Safe and Effective Management and Handling of Used Electronics in the United States (e.g., launch voluntary partnerships with the electronics industry and provide guidance to electronics recycling employers).

These are all great goals as well as necessary steps in order to improve the management of electronics and stop counterfeits from getting into the supply chain. Bloomberg even joined with several top agencies last month in “Operation Chain Reaction” to intercept counterfeit military parts sold to the government. Counterfeit electronics are dangerous. Whether it be fake batteries, curling irons, cell phones or computer chips, they all can be faulty and some have the potential to explode. Make sure you purchase products from reputable retailers and trusted websites.

The CFDA and eBay Agree, “You Can’t Fake Fashion”

On Monday the CFDA and eBay launched the anti-counterfeiting campaign, “You Can’t Fake Fashion.” The two are collaborating to raise awareness against counterfeit goods and celebrate original design within the fashion industry. eBay and the CFDA produced a collection of 50 exclusive totes customized directly by America’s foremost designers and sold exclusively on eBay. All proceeds benefited the CFDA Foundation.

The one of a kind bags sold for $150 and were sold out in a matter of hours. Designers included Phillip Lim, Anna Sui, Calvin Klein, Catherine Malandrino, Coach, Diane Von Furstenberg, Donna Karan, Judith Leiber, Narciso Rodriguez, Peter Som, Rachel Roy, Rodarte, Tory Burch and Vivienne Tam just to name a few. We know BryanBoy snagged the Peter Som original.

Here is a great video of all the participating designers talking about counterfeiting; how it impacts the economy as well as fashion:

This is a great awareness campaign for American designers. The CFDA has been making great strides against counterfeiting recently. We look forward to seeing what’s next!

The Backlash Against Fining New Yorkers

New York City has been very vocal about the new bill introduced by Councilwoman Margaret Chin that could fine shoppers up to $1,000 if they are caught buying a fake. The bill even includes possible jail time. Although there has been some backlash from the public, The Huffington Post reported that Chin has no intention of backing down. The idea behind the bill was to stop the demand for counterfeit designer goods, but many feel it is wrong to punish consumers. amNY also ran an article about how the bill has potentially started a “class war.” One man was quoted saying, “People who can’t afford high-status items are made to feel inferior, and no one wants to feel bad.”

We have seen a law like this before that has been put into place successfully. France is known for its zero tolerance law against fakes, fining violators up to €300,000 and threatening imprisonment. Here are examples of a few advertisements that the French Customs and Comité Colbert have put together to warn consumers about what they are in for if they buy a fake:

Our followers on Facebook and Twitter have also been speaking about the issue. Here is what they had to say:

Rashida M. – “I think it’s better to attack the people manufacturing the goods rather than the buyers some may not be aware of the goods are fraudulent… Seems un american to me…”

Erin S. – “We need more of that everywhere. I see so many fakes being carried around by women, it’s simply awful.”

@intetvalentos – “It’s not really the buyers that we should blame, it’s those people who create the demand for fake stuff. As long as it’s available in the market, people will buy it.”

@BAFFLEDblog “Stealing is stealing & infringing on someone’s rights is never OK. Fashion or not-there must be punishments to deter all crimes”

What are your thoughts on the issue?

Google Responds To Counterfeit Ads

Last week, in response to the Google Ad controversy, Google addressed the issue of counterfeit paid search advertisements on their blog. As something we recently covered on our own blog and a topic many of you have approached us about, we wanted to share their information with you.

According to Google Public Policy blog, Google seems to have stepped up their game in taking down ads promoting counterfeits. Google calls tracking down these bad ads a “cat-and-mouse game” because there are over 190 million advertisers using Google AdWords in over 190 countries. Google recognizes that these types of ads are not only bad for brands, but bad for THEIR brand. One blogger commented to us that after noticing GoogleAds on their blog promoting counterfeits, they discontinued the service.

The blog outlines Google’s most recent efforts to combat counterfeits:

• We’ll act on reliable AdWords counterfeit complaints within 24 hours. In 2009, we announced a new complaint form to make it fast and easy for brand owners to notify us of misuse. For brand owners who use this form responsibly, we’ll reduce our average response time to 24 hours or less.

• We will improve our AdSense anti-counterfeit reviews. We have always prohibited our AdSense partners from placing Google ads on sites that include or link to sales of counterfeit goods. We will work more closely with brand owners to identify infringers and, when appropriate, expel them from the AdSense programme.

• We’ve introduced a new help center page for reporting counterfeits. That way, we aim to make it easier for users and brand owners to find forms to report abuse.

We’re glad to see Google taking action and investing in stopping counterfeiters from placing ads on Google AdWords. As a consumer and an online shopper, the best way we can help Google and stop criminals is to report these types of advertisements to the Google team and hope they do their part.

What do you think? In reading their new approach, is Google is doing enough to tackle counterfeit ads?

Korea Launches Anti-Counterfeiting Campaign To Stop “Super Fakes”

Although many of you know that China is a major source of counterfeit goods, Korea is also a huge manufacturer of fake products. Known for their skill in creating perfect imitations of luxury designer products, Korea is also becoming known as the creators of “super fakes.” Widely available in Korea, these “super fakes” are boldly near designer boutiques as well as copycat websites. There is little wonder why Korea’s “super fakes” are becoming a hot item.

An article published in the Korea Times last month addressed growing a stereotype. In Korea some feel that purchasing counterfeits could actually bring free advertising for luxury brands and show the level of the brand’s success. Some may feel that when a product is counterfeited they have “made it” so to speak, but in reality, purchasing a counterfeit does absolutely nothing to help the brand, or the economy for that matter.

This year, the Intellectual Property Centre of the European Union Chamber of Commerce in Korea (EUCCK IP Centre) developed and published a series of anti-counterfeiting materials to distribute throughout Korea. This awareness campaign was put into practice to stop the stereotypes about counterfeiting, show Koreans that it is a punishable crime and make the general public aware of the criminal acts they are supporting when they purchase a fake.

Apparently anyone can walk down one of the main streets in Korea and find someone to sell them a “super fake,” even in broad daylight. So how do these counterfeiters get away with such an illegal act? Korea is very lenient with regards to punishing them and when they get to court, the maximum sentence is only one year in prison. The EUCCK works to track down the culprits online, but it is difficult. “You have these advertising links flashing up on legitimate websites, and it will take you to other websites, whose servers are often based outside of Korea. That causes problems for taking enforcement action against them,” Tom Duke, director of the European Chamber of Commerce in Korea (EUCCK) IP Centre, told The Korea Times.

Although it just launched this past August, we are hoping that the EUCCK IP Centre campaign will see some positive results over the next year and slow down the counterfeit market in Korea.

The UK’s Real Deal campaign aims to rid its markets of counterfeiters

It’s a difficult truth to swallow, but anyone interested in buying a fake really won’t have a lot of trouble making a purchase.

There was a time when shopping trips for knockoffs involved shady deals in dingy rooms, when fakes were bought in a cloud of exhaust and cigarette smoke in the back of a van that had windows tinted with duct tape.

It won’t take Old Golds and diesel-scented air fresheners to recreate that type of experience. It’s still an option. But because a simple Internet connection provides access to a vast marketplace of authentic and counterfeit goods, alike, most transactions involving fakes are done in the digital space.

What was once accomplished by hurried black market exchanges is now done in slippers and Snuggies.

If it weren’t easy enough, in some areas of the country sham goods are actually being sold in major retail stores. Back in 2006, Fendi brought a lawsuit against Wal-mart for selling fake versions of its purses. Burberry recently sued The TJX Companies (operator of TJ Maxx, Marshalls, and Homegoods stores) for a similar offense.

Whether or not these retailers were aware of the phonies on their shelves remains to be seen and there’s a chance it may have been an innocent mistake. But the only sure way to prevent these knock-offs from appearing in stores or on websites is to kill the demand for them. It begins and ends with the consumer.

As much as we’d like it to, the demand isn’t likely to go away in the near future, but a bright spot has recently appeared on the anticounterfeiting horizon and we believe it will make a significant contribution to the fight against fakes.

Known as the Real Deal campaign, this initiative calls for an end to the sale of counterfeits in Britain’s markets – in the States we know them as flea markets, green markets or open-air markets. It represents the combined effort of national and local agencies working alongside market organizers and vendors to push out the counterfeiters.

It’s a grassroots call to arms that continues to gain momentum. With over 40 organizations already committed to the charter, the Real Deal campaign has been steadily gaining momentum since it began in July 2009. In time, counterfeiters around the world will feel its effect.

You might be skeptical about this last claim. It’s natural to wonder how improved enforcement in micro-markets can possibly put a dent in a global epidemic that’s responsible for over a trillion dollars in sales each year. At the end of the day, it’s the consumers who are the first and last line of defense against counterfeiting.

And while the efforts of law enforcement agencies are crucial and greatly appreciated, it’s a job they’d rather not have, in fact, we all wish there wasn’t a problem that required their attention.

That’s why the customers are so important to the fight. Newly enlightened shoppers who might have bought a fake are less likely to because they learned about the human rights abuse tied to counterfeiting. And they are not just turning away from fakes themselves, they’re spreading the word.

Communication and education are the pillars of our fight. One cannot successfully stand without the other.

The Real Deal is exactly what this fight needs. It improves dialogue between agencies and individuals, as well as the organizers and consumers.

So while the current availability of sham goods is frustrating, efforts like this campaign give us further hope.

Take note counterfeiters: with all these parties are working together, you ought to start looking for those rocks you crawled out from under. Seems like it’s going to get stormy for you.

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

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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