The BBC recently reported on an unexpected action taken by Burberry. The company destroyed more than £25 million worth of its own unsold goods. The intent was to stop them being stolen or sold cheaply and thus protect Burberry’s own brand equity.
The cost of fake
This reminded me of a report I came across towards the end of last year by the Organisation for Economic Co-operation and Development (OECD) discussing trade in counterfeit products in the UK. The report was eye-opening.
Imports of fake goods accounted for as much as £9.3 billion in 2013 – the most recent statistics available. Global trade in fake goods that steal from UK intellectual property owners amounted to £13.4 billion and the volume of lost sales to IP owners was believed to be £8.6 billion.
The report suggested that four percent of all UK imports were fake or counterfeit. The UK economy suffers disproportionately in comparison to the rest of the world which has an average of a little over two percent. This is perhaps not surprising. Goods most prone to faking include leather items, watches, clothes, perfume, and jewelry – areas where the UK has a track record of creating iconic brands. Highly recognisable and popular brands such as Burberry, Paul Smith, Bremont and Jo Malone have all been victims of counterfeiting.
The International Trademark Association (INTA) partnered with Business Action to Stop Counterfeiting and Piracy to release a report in 2017 on the impact of global counterfeiting. The report estimated the value of international and domestic trade in counterfeit and pirated goods at $1.13 trillion. In 2022, the total estimated value of counterfeit and pirated goods including digital piracy is projected to reach $1.90–$2.81 trillion.
Some of the global brands facing the most counterfeiting include Levis, Disney, Tiffany, and Nike. The value of these iconic products is in the names associated with them and their long history of quality. The issue all these brands face is the relative ease with which their products and brands can be copied. Anyone with a computer can copy and replicate a brand, place it on inferior goods and sell goods. It is increasingly difficult to differentiate real from fake.
One of the reasons to have a robust trademarking policy is to have the legal status to address counterfeiting. This is one area where technology can excel at supporting brands. Monitoring for brand infringement online is fast and effective.
Counterfeiting may be getting easier but so is monitoring for infringements. A combination of regular policing of brands online and offline, combined with swift action from authorities to close down counterfeiting operations helps IP owners reduce the burden of counterfeit goods and protect the quality of their brands.