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.

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The FANIF Q&A with Inspector Brian O’Neill, Commanding Officer of the Organized Crime Investigation Division

November 30, 2009 § Leave a comment

Inspector Brian O’Neill stands on the front line of the fight against the fakes. As the Commanding Officer of the NYPD’s Organized Crime Investigation Unit, a post that he has held for 7 years, he directs the city’s anti-counterfeiting efforts. A Bronx native and graduate of Cardinal Spellman High School, Inspector O’Neill began his police career in 1980 as a patrolman out of the 48th Precinct in Tremont.

Since his early days in narcotics, O’Neill has earned a steady stream of promotions: Sergeant (1985), Lieutenant (1989), Captain (1994), Deputy Inspector(2003). He was promoted to his current post of Inspector in 2007. As commanding officer of the OCIU, he is responsible for the day-to-day operations of the department’s fight against the fake trade, as well as shaping future investigative and enforcement programs. He has helped grow a division that was called the ‘t-shirt squad’ when it was formed in 1994, the first police unit of its kind in the country, into a dynamic crime fighting unit tasked with defending against an ever-morphing epidemic that costs the city a billion dollars each year.

Let’s talk about education, what do you believe we can do in this area?

We have to keep getting the word out. The profit made from counterfeiting is funding organized criminal groups, and that is bad for everyone. Terrorist groups are the beneficiaries of this money. Child labor continues to be exploited by counterfeiters. This is a significant issue. When you combine these facts with the economic impact counterfeiting has on the city, the NY comptroller has said in the past that the city loses $1 billion a year, which is a staggering number. The importance of the problem is undeniable. We have to tell people about it.

Getting the word out to the consumers who buy fakes, by whatever means necessary, is one of the best ways to fight the counterfeiters. The people who are buying these items need to hear about the reality of their purchase.

What is the real cost of fakes to society?

It funds criminal organizations. It pays for terrorist groups. Tax dollars that could be put to other social programs are spent in the fight. The cost is huge.

How can we increase the visibility of this epidemic?

Corporations need to discuss it more within themselves and with the public. Increased advertising that addresses the problem would also help.

By making government reports that document the problem more visible, like the comptroller’s report, we can educate the public about the size of this problem. When public figures like Ray Kelly, NYC’s Police commissioner and Mayor Bloomberg have spoken, it helps significantly.

How has counterfeiting evolved?

It is constantly evolving. Back in 1994, when the NYPD realized the economic impact this crime could have on the city, we saw that it was growing and had to confront it. The first unit that was assembled to tackle the problem was focused exclusively on trademark infringement. It was nicknamed the ‘t-shirt squad,’ because the emblems, like the Nike swoosh, were being printed, slapped on t-shirts, and sold illegally.

Now, virtually everything is counterfeited: shoes, belts, bags, electronics, auto parts, etc. Auto parts are scary when you think about brake pads. We’ve seen fake Bluetooth devices. Then there are the fake batteries. What happens when they end up in a fire detector?

The way we’ve addressed the problem has changed over time: we started with one unit and now we’ve brought many more into the fight. We have intelligence officers who notify us of counterfeit sales. We use asset forfeiture laws to go after companies that sell. We’ve really expanded.

Even the industry helps by training patrol officers to recognize the false items sold by peddlers.

We have to address all levels from individual street sellers to large-scale distributors, but we want to stay focused on the big outfits: the importers and the manufacturers.

Is counterfeiting more dangerous then it has been?

We have never seen so many items being counterfeited, and they can all be potentially dangerous to everyday life. It’s amazing. Like in most criminal enterprises, if these people put their minds to good purposes, the results would be equally significant. They just chose the wrong path.

How do we improve penalties and enforcement?

We need to make law enforcement, prosecutors, and judges recognize the impact these crimes have, so that they are treated in a proper manner. Again, awareness is the key.

What are the biggest areas of counterfeit growth?

Handbags are always big. And, as an example of intellectual property pirating, we’ve always seen a lot of growth in reproduced DVDs.

Where have you seen the greatest success in enforcement?

We’ve done more seizures with clothing items than in any other area. There was one seizure that netted 19 tractor trailers of fake clothing. Success can also be measured in the police department’s role as a deterrent. We made a sizable seizure of auto parts and made some arrests and since that one incident, we haven’t seen any others like it. Word got out.

How do we need to adjust our message to meet the evolving problem?

It’s the same message, but I think we need to adjust the volume: everybody has to be aware of what they are buying and from whom. They need to be more cognizant of the products they purchase and the effects of buying fakes.

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