Counterfeit

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Counterfeit t-shirts at a flea market in Turkey. Counterfeit designer shirts.jpg
Counterfeit t-shirts at a flea market in Turkey.
Counterfeit Brazilian banknotes Realfalso.jpg
Counterfeit Brazilian banknotes
U.S. CBP Office of Field Operations agent checking the authenticity of a travel document at an international airport using a stereo microscope CBP checking authenticity of a travel document.jpg
U.S. CBP Office of Field Operations agent checking the authenticity of a travel document at an international airport using a stereo microscope

To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value than the real thing. Counterfeit products are fakes or unauthorized replicas of the real product. Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product. The word counterfeit frequently describes both the forgeries of currency and documents as well as the imitations of items such as clothing, handbags, shoes, pharmaceuticals, automobile parts, unapproved aircraft parts (which have caused many accidents), watches, electronics and electronic parts, software, works of art, toys, and movies. [1]

Contents

Counterfeit products tend to have fake company logos and brands, which results in patent or trademark infringement in the case of goods. They also have a reputation for being lower quality, sometimes not working at all, and sometimes containing toxic substances such as lead. This has resulted in the deaths of hundreds of thousands of people, due to automobile and aviation accidents, poisoning, or ceasing to take essential compounds (e.g., in the case a person takes non-working medicine).[ citation needed ]

The counterfeiting of money, mostly paper money, is usually attacked aggressively by governments worldwide.

Forgery of money or government bonds

Counterfeit money is currency that is produced without the legal sanction of the state or government; this is against the law of all countries. The United States Secret Service, mostly known for its guarding-of-officials task, was initially organized primarily to combat the counterfeiting of U.S. dollars in the wake of the American Civil War. Both sides had printed counterfeit notes in attempts to destabilize the other's economy, [2] [3] an example of economic warfare.

Counterfeit government bonds are public debt instruments that are produced without legal sanction, with the intention of "cashing them in" for authentic currency or using them as collateral to secure loans or lines of credit through legitimate channels.

Counterfeiting of documents

Forgery is the process of making or adapting documents with the intention to deceive. It is a form of fraud, and is often a key technique in the execution of identity theft. Uttering and publishing is a term in United States law for the forgery of non-official documents, such as a trucking company's time and weight logs.

Questioned document examination is a scientific process for investigating many aspects of various documents, and is often used to examine the provenance and verity of a suspected forgery. Security printing is a printing industry specialty, focused on creating legal documents which are difficult to forge.

Counterfeit goods

Bulk bag of counterfeit Viagra CBP with bag of seized counterfeit Viagra.jpg
Bulk bag of counterfeit Viagra

The spread of counterfeit goods, including consumer goods (commonly called "knock-offs" or "rip-offs") and parts within the manufacturing supply chain, has become global in recent years and the range of goods subject to infringement has increased significantly. Apparel and accessories accounted for over 50 percent of the counterfeit goods seized by U.S Customs and Border Control. According to the study of Counterfeiting Intelligence Bureau (CIB) of the International Chamber of Commerce (ICC), counterfeit goods make up 5 to 7% of world trade; however, these figures cannot be substantiated due to the secretive nature of the industry. [4]

A report by the Organisation for Economic Co-operation and Development indicates that up to US$200 Billion of international trade could have been in counterfeit and illegally copied goods in 2005. [5] In November 2009, the OECD updated these estimates, concluding that the share of counterfeit and illegitimate goods in world trade had increased from 1.85% in 2000 to 1.95% in 2007. That represents an increase to US$250 billion worldwide. [6]

A Sharpie marker, next to a counterfeit "Shoupie" marker SharpieVsShoupie.JPG
A Sharpie marker, next to a counterfeit "Shoupie" marker

In a detailed breakdown of the counterfeit goods industry, the total loss faced by countries around the world is $600 billion, with the United States facing the most economic impact. [7] When calculating counterfeit products, current estimates place the global losses at $400 billion. [8] On November 29, 2010, the Department of Homeland Security seized and shut down 82 websites as part of a U.S. crackdown of websites that sell counterfeit goods, and was timed to coincide with "Cyber Monday," the start of the holiday online shopping season. [9]

Counterfeit LG brand and products, such as televisions, monitors, air conditioners, etc. LGjeonja, 'doghan jjagtung daeeung' naseossda.jpg
Counterfeit LG brand and products, such as televisions, monitors, air conditioners, etc.

Some see the rise in counterfeiting of goods as being related to globalisation. As more and more companies, in an effort to increase profits, move manufacturing to the cheaper labour markets of the third world, areas with weaker labour laws or environmental regulations, they give the means of production to foreign workers. These new managers of production have little or no loyalty to the original corporation. They see that profits are being made by the global brand for doing little (other than advertising) and see the possibilities of removing the middle men (i.e. the parent corporation) and marketing directly to the consumer. This can result in counterfeit products being virtually indistinguishable from original products, as they are being produced in the same company, and in damage to the parent corporation due to copyright infringement. [10]

Certain consumer goods, especially very expensive or desirable brands or those that are easy to reproduce cheaply, have become frequent and common targets of counterfeiting. The counterfeiters either attempt to deceive the consumer into thinking they are purchasing a legitimate item, or convince the consumer that they could deceive others with the imitation. An item which makes no attempt to deceive, such as a copy of a DVD with missing or different cover art or a book without a cover, is often called a "bootleg" or a "pirated copy" instead.

Counterfeiting has also been issued to "cash in" on the ever growing record collecting market. One major example is bootleggers have cloned copies of Elvis Presley's early singles for Sun Records since original copies starting changing hands amongst music fans for hundreds (and then, thousands) of dollars. Some who produce these even do so with the wrong material. For example the song "Heartbreak Hotel" which was never released on Sun, as by the time Elvis first heard it, prior to ever recording it, he had moved from Sun to RCA Victor. Rare releases by The Beatles such as their album with the butcher cover, fan-club only released Christmas records and early demonstration discs issued by EMI are also examples of product reproduced by counterfeiters due to their high value to collectors.

An authentic Intel flash memory IC (right) and a counterfeit replica (left). Although the packaging of these ICs are the same, the X-ray images reveal that the inside structure of the fake one is different. An authentic flash memory IC and its counterfeit replica.png
An authentic Intel flash memory IC (right) and a counterfeit replica (left). Although the packaging of these ICs are the same, the X-ray images reveal that the inside structure of the fake one is different.

Many counterfeit goods are produced and manufactured in China, making it the counterfeit capital of the world: the counterfeiting industry accounts for 8% of China's GDP. [12] [13] Counterfeit goods are also made in Russia, North Korea, Taiwan, Bulgaria, and Turkey. Turkey is responsible for 3.3% of word’s counterfeit goods, according to OCDE. Some counterfeits are produced in the same factory that produce the original, authentic product, using inferior materials.[ citation needed ] A United States Senate Committee on Armed Services report regarding counterfeit electronic parts in the defense supply chain, highlighted in an investigation commenced in March 2011, [14] found that 1800 cases of suspected counterfeit components were in use within over 1 million individual products". [15] A 2012 follow-up report found that counterfeit parts came "overwhelmingly from China". [16]

Another trend in counterfeiting, especially seen in consumer electronics, is the manufacture of entirely new products using poor quality materials or, more often, incorporating desirable features not present in a brand's authentic product line and then including prominent and fake brand names and logotypes to profit from brand recognition or brand image. An example would be imitation "Nokia" and "iPhone" cellular phones with features like dual SIM slots or analog TV, which are unavailable in authentic originals, [17] [18] or visually-identical clones of high-end smartphones using inferior components [19] and the Android operating system, often with user interfaces made to resemble the devices they imitate. [20] Another example would be imitation "iPod" MP3 players whose batteries are removable and replaceable, whereas in authentic originals the batteries are permanently installed. [21] [22]

In the United States, a federal crackdown on counterfeit imports is driving an increase in domestic output of fake merchandise, according to investigators and industry executives. Raids carried out in New York City resulted in the seizure of an estimated $200 Million in counterfeit apparel, bearing the logos of brands such as "The North Face", "Polo", "Izod Lacoste", "Rocawear", "Seven for all Mankind", and "Fubu". One of the largest seizures was a joint operation in Arizona, Texas and California that seized seventy-seven containers of fake "Nike Air Jordan" shoes and a container of "Abercrombie & Fitch" clothing, valued at $69.5 million. Another current method of attacking counterfeits is at the retail level. Fendi sued the Sam's Club division of Walmart for selling fake "Fendi" bags and leather goods in five states. Sam's Club agreed to pay Fendi a confidential amount to settle the dispute and dismiss the action. In the case Tiffany v. eBay , Tiffany & Co. sued auction site eBay for allowing the sale of counterfeit items, but lost on all claims.

A number of companies involved in the development of anti-counterfeiting and brand protection solutions have come together to form special industry-wide and global organisations dedicated to combating the so-called "brand pirates" such as the International Hologram Manufacturers Association. Other companies and organisations have established web-based communities that provide a framework for crowd-sourced solutions to counterfeiting. One such free community, Collectors Proof, [23] enables manufacturers and users alike to associate unique identification numbers to virtually any item so that each new owner can update its chain of custody. Because quality counterfeit items are often difficult to distinguish from authentic goods, this approach enables potential customers to access an item's current and previous owners its provenance  prior to purchase.

To combat counterfeiting, companies may have the various parts of an item manufactured in independent factories and then limit the supply of certain distinguishing parts to the factory that performs the final assembly to the exact number required for the number of items to be assembled (or as near to that number as is practicable) or may require the factory to account for every part used and to return any unused, faulty or damaged parts. To help distinguish the originals from the counterfeits, the copyright holder may also employ the use of serial numbers or holograms etc., which may be attached to the product in another factory.[ citation needed ]

Counterfeit culture

Counterfeit culture is the thriving markets surrounding fake streetwear. Most commonly, these markets originate out of areas where the inability to buy popular streetwear brands has fueled more sophisticated markets for counterfeit goods. These markets have spawned the emergence of a tribe of widely available copycat brands.

In countries like North Korea and Russia where trade sanctions were imposed in the past to prevent the importation of popular brands, demand was stimulated for available counterfeit alternatives. The economic standing of a country or region also contributed to the demand for these products as the average consumer can’t afford luxury prices but will gain the same social impact purchasing a knock-off that’s of almost indistinguishable quality to the original product.

Luxury streetwear is out of reach for many people, not just because of international sanctions and low wages, but because exclusivity is built into its business model. Social and cultural forces are driving the unique fashion scene. In particular, social media has a huge influence on over these markets giving people images of things they can’t own and further fueling the desire to obtains certain “hyped” items by any means accessible.

Designers have even begun to acknowledge the trend of counterfeit culture by referencing fake or knock-off goods in their designs. This brought counterfeit culture into the realm of mainstream culture and has essentially shifted global acceptance towards becoming more lenient of these products as an appropriate alternative.

Anti-counterfeiting technologies

Anti-counterfeiting technologies are added to products or their packaging to allow consumers or inspectors to check whether a product is authentic. The EUIPO Observatory on Infringements of Intellectual Property Rights has developed an anti-counterfeiting technology guide, [24] to address the lack of information on technology solutions available on the market and help companies improve their protection against counterfeiting. [25] [26] In this guide, the main anti-counterfeiting technologies currently on the market are described, and classified into five main categories: [27]

The International Standard Organization has also published standards related to the implementation of anti-counterfeiting solutions, including ISO 12931 [28] and ISO 22381.

See also

Related Research Articles

Authentication Act of proving an assertion, often the identity of a computer system user

Authentication is the act of proving an assertion, such as the identity of a computer system user. In contrast with identification, the act of indicating a person or thing's identity, authentication is the process of verifying that identity. It might involve validating personal identity documents, verifying the authenticity of a website with a digital certificate, determining the age of an artifact by carbon dating, or ensuring that a product or document is not counterfeit.

A grey market or dark market is the trade of a commodity through distribution channels that are not authorized by the original manufacturer or trade mark proprietor. Grey market products are products traded outside the authorized manufacturer's channel.

A taggant is any chemical or physical marker added to materials to allow various forms of testing. Physical taggants can take many different forms but are typically microscopic in size, included at low levels, and simple to detect. They can be utilized to differentiate authentic product from counterfeits, provide identifying information for traceability purposes, determine mixing homogeneity and cross-contamination, and to detect dilution of proprietary products. Taggants are known to be widely used in the animal feed industry, plastics, inks, sheet and flexible explosives, and pharmaceuticals.

Amazon China, formerly known as Joyo.com, is an online shopping website. Joyo.com was founded in early 2000 by the Chinese entrepreneur Lei Jun in Beijing, China. The company primarily sold books and other media goods, shipping to customers nationwide. Joyo.com was renamed to “Amazon China” when sold to Amazon Inc in 2004 for US$75 Million. Amazon China closed its domestic business in China in June 2019, offering only products from sellers located overseas.

Replica Exact reproduction

A replica is an exact copy of an object, made out of the same raw materials, whether a molecule, a work of art, or a commercial product. The term is also used for copies that closely resemble the original, without claiming to be identical. Sometimes replicas are of a smaller size than their originals.

The Trademark Counterfeiting Act of 1984 is a United States federal law that amended the federal criminal code to make it a federal offense to violate the Lanham Act by the intentional use of a counterfeit trademark or the unauthorized use of a counterfeit trademark. The act established penalties of up to five years imprisonment and/or a $250,000 fine for selling or attempting to sell counterfeit goods or services. It increased such penalties for a second or subsequent conviction under the Act.

Brand piracy

Brand piracy is the act of naming a product in a manner which can result in confusion with other better known brands. According to author Robert Tönnis The term brand piracy is unauthorized usage of protected brand names, labels, designs or description of trade. Annika Kristin states "brand Piracy is considered to be the premeditated use of registered trademark, its name, its tradename or the packaging and presentation of its products". It is a major loss to MNE's around the world as it causes a loss of revenue and image of the brand.

Counterfeit watch

A counterfeit watch is an unauthorised copy of an authentic watch. High-end luxury watches such as Rolex, Patek Philippe and Richard Mille are frequently counterfeited and sold on city streets and online. With technological advancements, many non-luxury and inexpensive quartz watches are also commonly counterfeited.

Museum of Counterfeit Goods

The Tilleke & Gibbins Museum of Counterfeit Goods is a museum focused on intellectual property infringement in Yan Nawa District, Bangkok, Thailand. It is operated by Tilleke & Gibbins, a law firm with offices in Thailand and Vietnam. In the firm's Bangkok office on the 26th floor of Supalai Grand Tower, the museum is home to a variety of counterfeit and infringed goods that the firm has accumulated in its work.

The Prioritizing Resources and Organization for Intellectual Property Act of 2008 is a United States law that increases both civil and criminal penalties for trademark, patent and copyright infringement. The law also establishes a new executive branch office, the Office of the United States Intellectual Property Enforcement Representative (USIPER).

Copyright infringement Usage of a copyrighted work without the authors permission

Copyright infringement is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, such as the right to reproduce, distribute, display or perform the protected work, or to make derivative works. The copyright holder is typically the work's creator, or a publisher or other business to whom copyright has been assigned. Copyright holders routinely invoke legal and technological measures to prevent and penalize copyright infringement.

<i>Shanzhai</i> Chinese term for counterfeit goods

Shanzhai is a Chinese term literally meaning "mountain fortress" or "mountain camp", whose contemporary use usually encompasses counterfeit, imitation, or parody products and events and the subculture surrounding them. Shanzhai products can include counterfeit consumer and electronic goods, which can involve the imitation and trademark infringement of brands and companies. The term's modern usage grew around 2008 when counterfeit smartphones reached their greatest domestic use. Today, some relate the term with grassroots innovation and creativity rather than with falsehood or imitation.

A counterfeit medication or a counterfeit drug is a medication or pharmaceutical item which is produced and sold with the intent to deceptively represent its origin, authenticity, or effectiveness. A counterfeit drug may contain inappropriate quantities of active ingredients, or none, may be improperly processed within the body, may contain ingredients that are not on the label, or may be supplied with inaccurate or fake packaging and labeling. Counterfeit drugs are related to pharma fraud. Drug manufacturers and distributors are increasingly investing in countermeasures, such as traceability and authentication technologies, to try to minimise the impact of counterfeit drugs. Antibiotics with insufficient quantities of an active ingredient add to the problem of antibiotic resistance.

Counterfeit consumer goods are goods, often of inferior quality, made or sold under another's brand name without the brand owner's authorization. Sellers of such goods may infringe on either the trademark, patent or copyright of the brand owner by passing off its goods as made by the brand owner. Counterfeit products made up 5 to 7% of world trade in 2013, and in 2014 cost an estimated 2.5 million jobs worldwide, with up to 750,000 jobs lost in the U.S. About 5% of goods imported into the European Union in 2013 were fakes, according to the OECD.

Brand protection is the process and set of actions that a right holder undertakes to prevent third parties from using its intellectual property without permission, as this may cause loss of revenue and, usually more importantly, destroys brand equity, reputation and trust. Brand protection seeks primarily to ensure that trademarks, patents, and copyrights are respected, though other intellectual property rights such as industrial design rights or trade dress can be involved. Counterfeiting is the umbrella term to designate infringements to intellectual property, with the exception of the term piracy which is sometimes (colloquially) used to refer to copyright infringement.

Counterfeit electronic components are electronic parts whose origin or quality is deliberately misrepresented. Counterfeiting of electronic components can infringe the legitimate producer's trademark rights. Because counterfeit parts often have inferior specifications and/or quality, they may represent a hazard if incorporated into critical systems such as aircraft navigation, life support, military equipment, or space vehicles.

<i>Tiffany (NJ) Inc. v. eBay Inc.</i> American legal case

Tiffany (NJ) Inc. v. eBay Inc. 600 F.3d 93, is a United States Court of Appeals for the Second Circuit case in which plaintiff Tiffany & Co. filed the complaint, first in 2004, alleging that eBay constituted direct and contributory trademark infringement, trademark dilution, and false advertising since it facilitated and advertised counterfeit Tiffany jewelries on its online market. On July 14, 2008, the District Court for S. D. N. Y. decided in favor of eBay on all claims. Tiffany appealed these decisions to the Second Circuit. The court affirmed the judgment of the district court with respect to the claims of trademark infringement and dilution. The false advertising claim was returned to the district court for further processing, which was then ruled in favor of eBay.

Operation In Our Sites

Operation In Our Sites is an ongoing effort by the U.S. government's National Intellectual Property Rights Coordination Center to detect and hinder intellectual property violations on the Internet. Pursuant to this operation, governmental agencies arrest suspects affiliated with the targeted websites and seize their assets including websites' domain names. Web users intending to access targeted websites are directed to the server operated by the U.S. government, and greeted with a graphic bearing the seals of the United States Department of Justice (DOJ), the National Intellectual Property Rights Coordination Center (NIPRCC), and U.S. Immigration and Customs Enforcement (ICE).

Legal fake is a phenomenon in the fashion industry wherein a third company precedes the original brand company in the registration of the trademark, running its own business, from production to sales, in another country. By exploiting the products, creativity, marketing and advertising strategies of the original brand, the company misleads consumers, who are not aware of the fake goods. Thus, its typical traits lay upon the question of intellectual property, trademark registration laws among different countries, advertising strategies and consumer behaviour.

China Price is known as the term for all products Made in China, Simplified Chinese: 中国价格; Traditional Chinese: 中國價格; Pinyin: Zhōngguó Jiàgé. Writer Alexandra Harney coined the term as the title of her book, The China Price. The book analyzes and shares the author's views on how products from China affect consumers globally and our living environment. The Made in China label is considered one of the most recognizable labels nowadays because the country is the largest exporter globally, and the price of its products is much lower than products from the US and Europe, Japan, Etc. The products Made in China are mostly related to daily household items, including clothes, dishes, plastic items, children's toys, electronic appliances, Etc. Besides, the term China Price also reflects the concern of the domestic US and European manufacturers that much cheaper imports are discounting their products, but it also highlights the cost benefits for US consumers. Besides, world competitors and policymakers say that China has an excellent ability to move from one export market to another for various reasons, such as low labor costs, inadequate regulations on worker health and safety, lax policies on the environment. In addition, China Price is known for its low-quality imitations, which are manufactured or sold under the brand names of major brands worldwide without the permission of the brand owners.

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