Abstract

Product counterfeiting, generally defined as the unauthorized copying of patented inventions, copyrighted works or trademarks, is a severe problem in the United States. Counterfeiting is growing at an increasing rate, costs American businesses an estimated $8–20 billion annually and results in domestic job losses ranging from 130,000 to as high as 750,000. Economic harm is not the only ill of counterfeiting. The usually inferior quality of counterfeit goods poses a substantial safety risk to the unsuspecting consumer. Individual firms may suffer losses in court, as it is not always possible to prove the difference between the legitimate product and the counterfeit. Companies are also injured by the damage to their reputations, as the consumer of the bogus product associates the unsatisfactory product with the supposed manufacturer. In the United States, product‐counterfeiting protection is provided through the 1984 Trademark Counterfeiting Act that amended the Lanham Act. It provides for penal sanctions, monetary fines, treble damage awards and the seizure of counterfeit goods. While this new law has helped to reduce the amount of counterfeit products sold in the United States, certain restrictions such as a ban on publicity until after court proceedings have hampered company attempts to crack down on counterfeiters. Internationally, there is no coordinated effort to monitor and prohibit counterfeiting, and in many countries no legal impediments to counterfeiting exist. American films must take a proactive approach to maintaining the integrity of their products and brand names. A “counterfeit protection task force” should be chaired by an executive whose primary duty is to monitor products and trademarks for potential counterfeiters, and personnel throughout the company should be involved in the task force. The susceptibility of products to counterfeiting should be analyzed by research and development teams in coordination with marketing. Internal control systems utilizing new technologies such as Light Signature certificates and labels, invisible ink for bar codes, laser‐etched glyphs, and Polarproofing can be applied to products to aid in counterfeit detection. Marketing must constantly monitor the firm's channels of distribution to ensure that only authentic merchandise is sold by channel members, who must be educated about counterfeit detection and made aware of their legal obligations and risks. The legal team should consider patents, trademarks and copyrights and determine which aspects of the product and its promotion to register to give maximum protection available under the law; and the firm should be completely prepared to go into legal battle if a counterfeit product is detected. An investigating team consisting of internal personnel or private investigators must constantly monitor the product environment for counterfeit goods. Private investigators are the main source of counterfeit detection and can be used by manufacturers to continuously sample product offerings at the retail level. The personnel department needs to educate all employees about product counterfeiting and the importance of protecting trademarks. A lobby team is needed to work toward the enactment of new legislation and take part in manufacturers' groups which can have a unified impact on foreign governments. Important events concerned with counterfeit prevention occur all along the product life cycle and vary by country. The structure of, and commitment to, the counterfeit prevention task force need to be adopted long before product introduction. With product introduction, the promotion team needs to implement its public education program. As sales enter the growth stage, the likelihood of counterfeiting increases as products become more visible and desirable. Frequent and far‐reaching investigations are needed to test the environment for counterfeit goods, followed by immediate action if counterfeits are detected. Once markets are contaminated, various media and lobbying steps are necessary to reestablish a “repaired environment.“