The discovery of a limited number of counterfeit products can present brand owners with a difficult commercial decision. If the quantities involved appear small, the cost of investigating the source of the goods or pursuing enforcement action may seem disproportionate to the immediate loss.
In some cases, that assessment will be correct. Not every instance of counterfeiting warrants litigation, prosecution or an extensive investigation. The difficulty lies in determining whether the products that have been identified represent an isolated incident or the visible part of a more established supply chain.
A small seizure can reveal considerably more than the value of the goods involved. It may provide information about suppliers, importers, distributors, wholesalers or retailers and help establish how counterfeit products are entering and moving through the market. Packaging, invoices, shipping information, contact details and the identity of those involved can all contribute to a broader understanding of the activity.
Allowing an incident to pass without investigation can therefore mean losing more than the opportunity to remove a few counterfeit products from circulation. It may also mean losing intelligence that could assist a brand owner in identifying the source of the goods or preventing further distribution.
There is also a reputational dimension to consider. Consumers purchasing counterfeit goods may not know that the products are not genuine. Where those goods are of poor quality, fail to perform as expected or present a safety risk, the resulting dissatisfaction may be associated with the legitimate brand rather than the counterfeiter.
For businesses that have invested substantially in building confidence in their products, reputation and quality controls, that distinction is important. The financial value of the counterfeit stock identified at a particular point in time may consequently provide only a limited indication of the potential exposure.
Counterfeit activity can also become more difficult to address once distribution networks have had time to develop. Sellers who are able to trade repeatedly without intervention may become more established, while additional suppliers and distribution channels can emerge. An issue involving a relatively small quantity of goods may then develop into one requiring significantly greater investigative and enforcement resources.
This does not mean that brand owners should pursue every matter in the same way. Effective anti-counterfeiting strategies depend on proportionate decisions based on the circumstances. Relevant considerations may include the quantity and nature of the goods, the identity of the parties involved, the potential size of the supply network, any risk to consumers, the importance of the affected market and the likely cost and value of further action.
The response may range from monitoring and intelligence gathering to seizure, administrative measures, civil proceedings or criminal enforcement. The appropriate course will depend on both the immediate incident and the wider risks to the brand.
What is important is that the decision is not based solely on the value of the counterfeit goods already identified.
Enforcement costs are generally visible and relatively easy to quantify. The consequences of inaction can be less obvious. They may include continued counterfeit trade, weakened consumer confidence, the loss of useful intelligence and the eventual cost of addressing a supply network that has been allowed to become more firmly established.
A limited counterfeit incident does not always require extensive enforcement. It does, however, justify proper assessment. Acting while the problem remains contained may ultimately be considerably more effective, and less costly, than attempting to address it once the market and supply chain have expanded.
How KISCH IP can assist
Counterfeit matters often require an assessment that goes beyond the value or quantity of the goods immediately identified. KISCH IP can assist brand owners in reviewing the circumstances, assessing the potential scale of the activity and determining an appropriate and proportionate response.
This may include considering available intelligence, identifying possible distribution channels and parties involved, evaluating the risks to the brand and advising on suitable enforcement options.
If you have identified suspected counterfeit products in the market, our team can assist in assessing the position and helping you determine the most appropriate next steps.
