Adam Shipley was furious. He spent years building up his company’s brand of elite fishing gear, and now someone was selling counterfeits — even using lookalike packaging — through a half-dozen online marketplaces. At half price!
The copycats were cheap knockoffs that broke easily. Shipley knew that because hundreds of hoodwinked customers were deluging his company’s customer service department and leaving angry reviews online.
He knew he had to fight back, but he had no idea where to start. Then he remembered an old friend who worked as an investigator.
“Counterfeiting is maybe the largest category of crime in the world, one that affects a huge number of industries,” the investigator said over the phone. “Software, auto parts, toys — they can all be ripped off and sold, often without the real businesses ever finding out. ”
To strike back, companies need to invest in a brand protection strategy that helps track down illegal uses of a company’s intellectual property.
What is brand protection?
Brand protection is a systematic effort to identify cases where counterfeiters, scammers and other bad actors are using a company’s patents, copyrights or trademarks without permission. That could include …
Sales of counterfeit goods and bootlegged content
In fiscal year 2021, the U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement seized roughly $3.3 billion in fake goods — or $3.3 billion if they had been real. Apparel and accessories were the single biggest category, representing 30% of all seizures.
But counterfeiters will try to rip off products in almost any industry, from food to software to cosmetics and beyond.
Copycat sites and social profiles
Some cybercriminals will create websites that look exactly like a company’s official site, but might have URLs with a slight misspelling. When people accidentally land on these lookalike websites, they’re at risk of downloading malware or handing over sensitive information.
Something similar can happen with social media. Copycats will build a large following using profiles that look like the real company’s official social handle, usually so they can direct those audiences to marketplaces where they’re selling knockoff goods or copycat websites where they’ll be phished.
Gray market diversion
Brand protection can also uncover cases of product diversion, where merchandise is diverted to “gray markets,” i.e. channels where the brand hasn’t given permission for them to be sold, either online or in stores. Gray markets technically aren’t illegal, but they usually violate agreements between companies and their distributors or retail partners.
Brands try to crack down on gray market use because their prices are either lower than the suggested price (creating unfair competition for authorized retailers) or because they reduce the supply of goods available in the marketplace (driving up prices for consumers beyond what’s reasonable and creating unhappy customers).
Why companies need a brand protection strategy
Counterfeiters and con artists can do serious harm to your company’s hard-won reputation. If you’ve spent any time building a brand, it probably has significant value to your business. Businesses should protect their brands the same way they would any other asset.
The risks of IP theft include:
Damage to your brand
Nobody makes counterfeit goods that are better than the real thing. The bad guys are slapping your trademark on their inferior product because it’s a shortcut to selling an item that couldn’t stand on its own. Unfortunately, many consumers can’t tell the difference between legitimate and knockoff goods. So when the knockoff falls apart two days later, they don’t blame the crook who sold it to them — they blame you.
Risk to the public
Counterfeit goods usually aren’t designed up to product safety standards either. After all, it’s not the counterfeiter’s reputation on the line. It’s one thing when it’s a pair of shoes being copied, but it’s something else entirely when the bootlegs are medicine or baby forumula. As a result, consumers stand a higher risk of injury or even death from knockoff items.
Loss of sales and revenue
Every dollar that someone spends on bootleg merchandise is a dollar stolen from your pocket. And if counterfeiters and con artists devalue your brand in the public’s eyes, shoppers will decide not to do business with you, costing you even more.
Broken relationships with retailers, distributors and other business partners
Counterfeit goods (and gray market diversion) can also undermine relationships with distributors and other partners. They won’t understand why your goods are being sold dirt-cheap through another party when they thought they had an exclusive agreement with you.
If someone buys a counterfeit version of your product through an online marketplace, they probably won’t complain to the bootleg’s seller. Instead, they’ll take it up with your customer service department, which will have to find a polite way to explain they’ve been ripped off. Maybe those customers will understand. Or maybe they’ll race to the Internet and leave angry reviews about you.
Brand protection can be useful for anyone making a trademarked product, but it’s especially important for those who rely on their brand to sell their product (like Coke), companies that are reliant on their design and look (because their style can easily be stolen) and young companies that have invested a lot into the development of their product and innovations.
How does brand protection work?
There are usually three levels to a brand protection strategy: registration, monitoring and enforcement.
To protect your intellectual property, you must establish your ownership of those trademarks, copyrights and patents. Filling for these rights can be expensive and time-consuming — most law firms estimate it can take anywhere from two to three years — but it’s essential.
Otherwise, you won’t have the legal system behind you when you take action against someone who is violating your intellectual property.
The next level is monitoring — looking for instances where someone is using your IP without your consent. In the digital world, that’s become both harder and easier. Today, anyone in the world can create an account on an ecommerce site and start selling counterfeit goods. Or they can build a knockoff version of your site and use it for a phishing scam. Even when those accounts are taken offline, their operators can be up and running again very quickly.
But technology also makes it easier to spot the copycats. There are several software solutions that will scour the Internet to find people who are using your trademarks or copyrights. Some of that software employs machine-learning technology to constantly refine and expand their searches, so they can keep up with ever-adapting thieves.
And there are several strategies for fighting counterfeit goods in the physical world. For example, manufacturers have started using “microtags” — minuscule particles that can be included in a variety of products. The tags each have a unique signature, so businesses can use a special optical reader to see if an item has the tags it’s supposed to. Otherwise, it will be outed as a fake.
If counterfeiters and scammers are so slippery, what can be done to truly stop them? Quite a bit, actually. If you hire a brand protection team, they can …
- Work with online marketplaces to identify counterfeits, scrub them from those sites and shut down the related accounts.
- Identify lookalike social accounts and lobby the platforms to shut them down.
- Push website hosting services to take down sites that are using your trademarks to scam unwary website visitors.
Will the bad guys come back after you take them down? Yes … at first. But the most effective brand protection efforts are constantly identifying and knocking down their online presence. In most cases, with enough enforcement, the bad actors will look for other, less observant companies to rip off.
If a company is large enough, it could handle brand protection in-house, but brand protection is frequently hired out to security and investigation firms, and/or brand protection specialists.
The good fight never really ends
Shipley, the owner of the fishing equipment company, felt a little better after talking to the investigator.
He knew that it would be impossible to totally prevent criminals from misusing his intellectual property. But he could make life extremely hard for them and push them to the fringes.
“Like a lot of things in life, consistency is the key,” the investigator said. “Keep looking out for knockoffs and scam artists. Keep pushing the marketplaces to nuke their accounts and take away their ability to sell fakes easily. Eventually, most of the bad guys will get the message.”
- If you don’t take IP theft seriously, you’re letting one of your biggest assets, your brand, lose much of its value, and you’re allowing your customers to be ripped off and — in the case of knockoff medicines, cosmetics and other goods — exposed to the risk of physical harm.
- To protect your intellectual property, it needs to be registered with the government as a patent, copyright or trademark.
- Software solutions that isolate lookalike images and text can help find instances where counterfeit goods are being sold online. There are also physical countermeasures that can be used to show which goods are authentic.
- Through consistent monitoring and enforcement, brands can make themselves a “hard target” that’s too much trouble for scammers to bother with.
At Chesley Brown, we understand that planning for the unknown can be daunting. That’s why we’ve built a framework that enables businesses to navigate and anticipate risk before it becomes a crisis. We are here to manage risk so you don’t have to. If you or your team have questions about how to secure intellectual property our experts are here for you.
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