Counterfeits online versus counterfeits on the streets
Counterfeit product sold online versus counterfeits sold on the streets
Is it that different? And what should be done to reduce the problem??
An equation:
7 facts + 8 opinions = 1 conclusion
Fact #1
Last week in Paris I saw an image I almost forgot about.?Street vendors with their unauthorized ‘pop-up’ stores displaying LV, Gucci, Prada and Hermès handbags on a cloth. Nervously sitting crouched with their hands near the loops of their blankets, enabling them to stand-up and lift the entire pop-up store in one single move and start running for the Parisien Police en Vélo. Counterfeit is not out of fashion yet.
Fact #2
The old tradition of whistleblowers on the outlook is still effective, the waterbed effect is still visible. Cleaning the street here, shifts the problem to another part of town.
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Fact #3
Online it is pretty similar. Sellers know their listings sooner or later can and will be removed. They pick up their counterfeit stuff and put it online elsewhere. It is the merry-go-round. As long as there is demand, there will be supply.
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Fact #4
I do not like to say it, but the solution will not come from IP lawyers nor online removal SAAS providers.
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Fact #5
Protection and enforcement of IP rights costs brand owners a lot of money. In most jurisdictions brands are not able to stop counterfeit trade nor recover money from the bad actors.
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Fact #6
Brand owners choose the whack-a-mole approach with AI and machine learning SAAS vendors to optically clean the online marketplaces.?The cost of that is allocated to the price of the official products sold by the brand owner, making them more expensive, and causing the counterfeit products to become more attractive, because of the price difference.
Fact #7
Crime pays:?another equation
A standard sea container can carry approximately 56,000 counterfeit polo shirts.
A counterfeit importer/trader will be able to generate €1,838,250 net profit, ?with one container load slipping through Customs in Antwerp, Hamburg or Rotterdam The maximum penalty in The Netherlands imposed on a counterfeit trader was 14 months imprisonment of which 6 months on probation in the past decade. The chances of being caught are less than 0.1 %.
When trying to make the equivalent profit importing cocaine, that would require approximately importation of 140 kg. Which entails the risk of 12 years imprisonment. Given the priority from law enforcement to fight drugs imports, the chances of being caught trafficking drugs are bigger, and if caught the sanctions will be higher. This causes organized crime to engage more in trading counterfeit products. It is less risky to be caught, and selling counterfeit is perceived as a harmless and victimless crime by many, and by some even not considered a crime! In the event of an interception or arrest, the chances to go behind bars for a longer period of time are very limited compared to the high impact crime of drugs. This makes the counterfeiting business more and more criminal and reckless. Consumers have a right to know this.
Opinion #1
After having been involved in brand protection for over 15 years I tend to believe that we IP attorneys nor online removal SAAS providers are the solution but have become a part of an economic ecosystem.?
Opinion #2?
Although my team constantly aims at stopping counterfeiters and we endeavor ourselves to make the bad actors pay for it, that in itself is like chopping of the head of a Hydra dragon. New heads will grow in place soon enough.?We keep chopping.
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Opinion #3
A true solution can only be achieved through education taking consumer awareness to a higher level. After all: who wants to be associated with IP theft, money laundering, tax evasion or even worse,?terrorism and child labor??
In other words: would it be better to in stead of chopping of the head of the dragon to exhaust the beast.?Certainly do not feed it.?Don't buy counterfeits, buy original or don't buy at all and save your money and buy from the official seller when you saved enough money.
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Opinion # 4
Although governmental campaigns on discouragement of smoking have proven to be effective this will not be easy for warning consumers about the risks involved in buying, using or consuming counterfeited products.?
Whereas other tools are available to discourage the use of tobacco (such as taxation/excise, age limit, prohibition of commercial advertising and reduction of visible points of sale) these do not seamlessly fit for the purpose of discouraging consumers to buy counterfeited products.?A negative side effect is that more and more illegal drugs are being consumed.
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Opinion #5
Raising awareness and education remain the most crucial factor to influence the demand side of the counterfeit market. The other tool has to be better and more law enforcement. Capacity building, both in head count (officers) and improvement of the expertise inside those heads in order to foster competences of the law officers, such as (cyber) Police and Customs.?
Opinion #6?
As it stands in 2023 this seems almost a mission impossible. High(er) impact crimes like drugs and illegal weapons, human trafficking - understandably - deserve more attention from law enforcement.?Politicians do not see the undermining effect of counterfeiting to the official tax paying economy as something to win votes with. It also causes unemployment and shifts people from a regular job into illegal activities like drop shipping counterfeit. The profitability is high, the risk to be prosecuted is very limited and so are the penalties.
Opinion #7
The size of the counterfeit problem is exceeding your imagination when you think about the ease of ordering products online.
The latest data from the European Commission shows that almost?1,000,000,000 customs declarations for low-value goods were filed in 2022, since the new VAT scheme came into force in for e-commerce in 2021. The real volume of inbound small consignments is even higher. This is the phenomenon of goods bought on Alibaba, Wish, DHGate, Temu etc. We are not even mentioning the seacontainers coming in seaports in and truckloads and traincarriers coming in on the Eastern borders of the EU.?
Opinion #8
Young folks are more tolerant and willing to consume synthetic drugs, cannabis or coca?ne, because legal drugs like alcohol and tobacco have become too expensive. They do not perse bother about the fact that they keep alive the drugs industry ecosystem, which makes me pessimist about the potential for discouraging counterfeit consumption.
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Conclusion?
Buying counterfeit online is as easy as buying legal products online. Consumers have a right to?be informed about the fact that by buying counterfeit they are supporting an illegal system and as a consequence they:
It is now the European Commission and the European Parliament to define legislative and education initiatives to take the protection of our economy to a next level.