About ten years ago, I had gone to Hong Kong to attend the IHT Luxury Conference. In one of the sessions, the head of one of the famous luxury houses (I forget which) narrated an interesting story: He had gone to China and the local chief executive of his company showed him identical samples of one of the company’s products. The catch — one sample was the genuine article, the other a fake. The company head tried really, really hard to figure out the real from the fake — and failed!

Fakes are a scourge in virtually every product category and in every country and cost the companies that are victims of such piracy crores of rupees. Sadly, they sometimes cost the consumers dearly as well, as in the case with fake medicines. And just in case you thought that fake medicines were a small problem in India, think again.

According to Wikipedia, selling of fakes or brand piracy is the act of naming a product in a manner that can result in confusion with other better known brands. According to author Robert Tönnis, “The term brand piracy is unauthorised 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 trade name or the packaging and presentation of its products.” It’s a major loss to MNE’s around the world as it causes a loss of revenue and image of the brand.

Tönnis describes the consequence of brand piracy as the consumption of fake, untested and poor quality goods by consumers. This can damage the reputation of brands and even result in damage to people’s health. In 2012, the CBP promised to protect the economy, the people of the USA and their national security “against harm from counterfeit and pirated goods.”

Examples
Examples for imitation and counterfeiting of branded products have been noted as early as 1912.

* Louis Vuitton has had to fight for its brand image after consumers lost interest in it due to the availability of cheap counterfeits.
* Forged Rolex watches can be purchased for a fraction of the original’s price in many places of the world.
* In Mexico, Cartier has had to fight the piracy of its own brand.
* Benetton, Levi Strauss & Co. have all been victims of counterfeiting in which the label has been altered of an obviously inferior product.
* Examples of Coalgate (as against Colgate) and Del Mundo (instead of Del Monte) fall into the category of counterfeiting under piracy where the product is different but the trademark looks the same.
* The music industry claims that brand piracy causes a loss of USD 4.6 billion in market share alone. It also states that 7 out of 10 CDs sold around the world are pirated.

Consequences
* Loss of revenue of billions of dollars for the original manufacturers.
* Damage to the reputation of the authentic products and their manufacturers.
* It acts as a barrier to the entry of trademark owners to those markets where their brands are pirated.
* It closes off competition as competitors first get attracted by the high price margin being enjoyed by the original and then have to wage a price war against low price counterfeiters^.

Over the last decade, the counterfeiting and piracy phenomenon has risen to very dangerous dimensions and has become one of the most devastating problems facing world business.

So what should one do against brand piracy? I know of many companies in India that conduct raids on counterfeiters in partnership with the police. I remember one such raid in the 1980s by Reckitt and Colman in Calcutta – large quantities of their popular wax floor polish, Mansion, were found; the problem — instead of wax, the counterfeiters had used mashed boiled potatoes! However, you catch some and new ones spring up somewhere else. Legal action is one other option as is the takeover or franchisee agreements with the crooks!

Piracy is a huge global problem; unfortunately, despite strict vigil, companies seem to be losing out in many cases. And what is really sad is that fakes would not flourish if the consumers didn’t go for them. Unfortunately, really nice and respectable people, many of whom I know very well, encourage piracy.

While there is obviously nothing funny about fakes and piracy, the attachment contrasts – in a lighter vein – fake brands with the real ones; some are quite hilarious!

Read the article here

Visual courtesy : Adapted from Wikipedia.