Guest editorial: Counterfeiting in the 21st century

The guest editorial for JIPLP's April 2015 special issue on counterfeiting is by Marius Schneider and James Bikoff.

Counterfeiting in the 21st century

Although examples of product counterfeiting can be traced back to Roman times, it was in the 1970s and 1980s that the growth of product counterfeiting accelerated, first with luxury products and then with products in other sectors such as automotive and aircraft parts as well as pharmaceuticals.

Products were generally shipped from manufacturing countries in the Far East to ports in the United States and Europe where they entered commerce and were distributed through street vendors and wholesalers/retailers to the general public

Increased penalties, both criminal and civil, against product counterfeiting were enacted in the United States in 1984, followed several years later by deterrent legislation in Europe.

With the advent of the internet in the 1990s counterfeiters were able to take advantage of technological advances so that from the beginning of the 21st century we have seen a significant change in the pattern of counterfeit manufacturing and distribution. Instead of container shipments to major ports, counterfeit distribution today relies more on small shipments through the post or by courier to individual purchasers, making the likelihood of detecting and stopping such shipments very difficult.

Counterfeiters try to stay a step ahead of laws and detection methods and take advantage of new technologies to develop their products and distribution methods. Since they do not develop new products or advertise them, they are able to maximize their profits at very low risk. Online stores are easy to set up. If an infringing website is taken down by right holders or by law-enforcement authorities, it can easily be duplicated simply by taking advantage of the almost limitless domain names available. Internet orders of fake goods are mainly delivered by post, which is quick, inexpensive and suitable for small quantities. For the authorities and right holders, the massive flow of packages containing infringing goods poses a serious challenge, because of their sheer quantity as well as their ability to blend into the mass of postal packages, which makes them more difficult to detect by Customs.

Since counterfeiters do not play by the rules and are often linked with criminal enterprises internationally, legitimate businesses and civil/criminal enforcement authorities have to constantly adapt and update their legal remedies with creative solutions. The comparison Geraldina Mattsson makes between the coyote and the road runner is amusing but accurate as her article focuses the counterfeit enforcement problems car manufacturers face.

In the copyright sector, illegal music-sharing platforms have been so successful that the industry has developed the business model into a legitimate business. Pirated copies of music, movies, video games and books have proliferated, with remedies being hard to obtain in many countries where the pirates operate with impunity. The copyright industries have had to rely to a large extent on the Custom services in many countries and international enforcement agencies to seize domain names and stop infringing websites as is illustrated by the articles contributed to this journal by Amanda Denton and the US Immigration and Customs Enforcement, better known as ICE.

Lawmakers, rights holders and courts have come up with new solutions for the postal and courier traffic of small quantities of counterfeit goods and, as Marius Schneider and Christophe Maillefer explain, further reform should be encouraged in the European Union when it comes to trafficking in fake “holiday souvenirs”.

A substantial part of the counterfeiting problem stems from the far east and particularly China. More than 80% of counterfeit products seeking entry into the United States and Europe come from China and Hong Kong. Despite the passage of laws to improve remedies against counterfeiting in China, the large-scale problem continues to exist, which makes it important for right holders to work with government authorities and counsel in China in order to deal with online sales platforms, as Michele Ferrante explains in his article.

Trade associations and Chambers of Commerce can assist in the battle of counterfeiting through their position papers and studies. A recent study by the ECTA Anti-Counterfeiting Committee on dangerous counterfeits, analyzed by Jim Bikoff in his article, illustrates the need for legislative reforms when it comes to counterfeit products that can harm consumers. This article hopefully will stimulate and foster best practices and harmonization among nations to stop the scourge of unsafe counterfeit products, including pharmaceuticals, aircraft and auto-parts, toys and defence/military products.

Africa has its own problems and a look at potential solutions is provided by Vanessa Ferguson and Marius Schneider. The battle in these countries is fought with less sophisticated legal techniques than elsewhere in the world but counterfeiters find these markets extremely lucrative and fight to ensure that their distribution networks are not interrupted. Unfortunately a number of courageous Customs and police officers in these countries have given their lives as they engaged in the battle to stop counterfeiting.

Not only does counterfeiting in the 21st-century violate laws and deprive businesses of profits, it also poses serious health and safety risks for consumers and deprives governments of tax revenues and workers of jobs. It is also frequently engaged in by organized crime families because of the high profit/low risk nature of counterfeiting.

Besides a coordinated international effort to stop the activities of counterfeiters, education of consumers is essential so that they will avoid the purchase of counterfeit and pirated products.