What is Counterfeiting / Intellectual Property (IP) Theft?
Counterfeiting is a crime involving the theft of someone’s trademark. Businesses – both small and large – use trademarks to help consumers like you identify their products. A trademark is most often a word, phrase or symbol that identifies the source or origin of a particular good or service sold in commerce.
A counterfeit is an item that uses someone else’s trademark without their permission. By making or selling a counterfeit, criminals seek to profit unfairly from the trademark owner’s reputation.
Counterfeiting is a fraudulent imitation (a forgery) of a trusted brand and product, and it is a serious crime. Under U.S. federal law, for example, criminal counterfeiting offenses can be punished by life in prison and up to $30,000,000 in fines. Counterfeiting can also be prosecuted as a felony in most states in the U.S.
Counterfeiting damages a company’s reputation and consumer confidence in the global market. It affects businesses and consumers alike by sowing mistrust in genuine products made by reputable brands.
Different types of Intellectual Property Violations
Counterfeit Goods & IP: The International AntiCounterfeiting Coalition (IACC) and the intellectual property community work together to combat counterfeiting, i.e, copying someone’s trademark or brand.
There are different terms used to describe the infringement or theft of intellectual property rights. Here are some other types of fraudulent copying you might have heard of:
- Piracy – When someone steals an artist’s, author’s, or musician’s copyrights, generally by downloading or copying their work without paying and without permission. More details are available on the Recording Industry Association of America (RIAA) website.
- Patent Infringement – When someone uses or steals someone else’s patent rights. Read more on the U.S. Patent and Trademark Office (USPTO) website.
- Trade Secret Infringement – Trade secret infringement involves a third party utilizing key information (a trade secret) to economically benefit. Usually, trade secret infringement goes hand in hand with patent infringement. Read more on the US patent and Trademark Office website.
Just how big is the counterfeiting goods problem?
Counterfeiting is big business.
In Fiscal Year 2020, the Department of Homeland Security seized over 26,000 shipments of counterfeit goods valued at over $1.3 billion at U.S. borders. The IACC helps law enforcement agencies through training programs that educate law enforcement personnel on counterfeiting trends and identifying counterfeit products. Retail buyers and consumers can also join the fight to stop knockoff goods from being sold by being savvy shoppers and making informed decisions about where to find genuine goods and avoid fakes.
Globally, the trafficking of counterfeit goods is much larger and growing. That growth is driven in part by consumer demand. Actively purchasing and engaging with counterfeit items can not only backfire on you if you are buying a defective or dangerous product, but it can also contribute to human rights abuses and organized crime across the globe.
What types of goods can be counterfeited?
Counterfeit goods span multiple industries, including apparel, accessories, music, software, medications, cigarettes, automobile and airplane parts, consumer goods, toys, electronics, and more.
Why should you care about counterfeit products?
Counterfeiting is not a victimless crime. Counterfeiters often prey on consumer desire for low prices. Purchasing counterfeit products may seem like a cheap option in place of the real thing, but that low price comes at a high cost to yourself and others:
- It’s Dangerous: Counterfeit goods are often made using cheap, substandard, and dangerous components that put consumers’ public health and safety at risk.
- It Could Cost You: Purchasing from counterfeit websites puts you at risk for identity theft and credit card fraud when you provide a counterfeit merchant with your information. Downloading or streaming from illegal websites could put you at risk for malware – which can steal your personal or credit card information.
- It’s Illegal: Counterfeiting is illegal, and purchasing counterfeit products supports unlawful activity.
- It Costs Your City: Counterfeiters do not pay taxes, meaning less money for your city’s schools, hospitals, parks, and other social programs.
- It Supports Child Labor: Counterfeiters do not pay their employees fair wages or benefits, have poor working conditions, and often use forced or child labor.
- It Supports Organized Crime: The profits from counterfeiting sales have been linked to funding organized crime, drug trafficking, and even terrorist activity.
- It Hurts Legitimate Companies, Especially Small Business: Legitimate manufacturers devote significant resources to researching and developing products and building a reputation for quality among consumers. Counterfeiters, in turn, seek to profit unfairly off of another company’s good name, and it’s often fatal to small businesses and entrepreneurs. The lost sales and profits that result from this unfair competition translate directly into lower wages and lost jobs, as well as higher prices for consumers.
How can you avoid purchasing fakes or knockoffs?
Look for the “3 P’s”
- PRICE: If the price looks too good to be true, it probably is.
- PACKAGING: If the product is being sold without its packaging, or the packaging appears to be of low quality or includes printing errors (for example, blurry pictures, typos, spelling, or grammatical errors) it is probably counterfeit.
- PLACE: Consider where the product is being sold:
- In-Store: Ask yourself if you would typically expect to find the product sold in this type of environment. Deal only with legitimate, established merchants.
- Online: Counterfeiters often steal pictures and formatting from real websites to make their websites look legit, so don’t be fooled by a professional-looking website. Check out the fine print in the product descriptions, FAQs, “Contact Us” pages, or their social media. The site is probably fake if you find typos, grammatical and spelling errors, or incomplete information. The IACC supports companies in combating online counterfeiting with tools like RogueBlock®, IACC-Amazon Program, and the IACC MarketSafe Program.