Counterfeiting gains momentum

September 2008 Security Services & Risk Management

SICPA hosted a breakfast recently in association with the CGCSA Crime Prevention Programme, highlighting risk management strategies for brand protection, illicit trade and anti-counterfeiting. Presenting was SICPA South Africa's MD, Howard Carter, who addressed the topic under the banner of 'Inventing the better mousetrap'.

SICPA is a global provider of security solutions and security inks. It has technologies protecting many of the world's currencies, as well as billions of branded consumer products. It is a Swiss multinational with an infrastructure of over 1000 employees involved in security activities on all continents and is a technical advisor to governments, agencies, multinationals and institutions.

Setting the scene, Carter noted that Ralph Waldo Emmerson once wrote that if you invented a better mousetrap, the world would beat a path to your doorstep. However, he warned brand protection is not simply about inventing a better product; but rather about creating the appropriate environment in which the rights of the brand owner may be protected. "Likewise, the threat of counterfeiting is a potential commercial risk and should be managed as part of a risk management process," he said.

It is critical for manufacturers to take counterfeiting more seriously than ever before as counterfeiting, illicit trade and product diversion are becoming common and are no longer isolated, localised or even regional problems. There has been a major increase in counterfeit products and smuggling in all countries over the past five years.

The 2007 OECD Report on the Economic Impact of Counterfeiting & Piracy has identified a number of common experiences:

* Almost anything can be counterfeited.

* Health and safety is at risk.

* Infiltration of legitimate supply chains.

* Distribution and logistics can be complex.

* Inconsistent enforcement of laws.

* Cost of remedies is increasing.

* Government revenues are at risk (eg, from taxation).

Carter pointed out a number of potential causes for the growth in counterfeiting, including the increased availability of high-quality copying technologies that are both easy to use and very good at copying. Moreover, the increase in globalisation has also made a broader market available for counterfeit goods, some territories with easier legal barriers to entry than others.

And while the Internet has revolutionised many of the ways in which we work and socialise, it has also been a benefit for criminals because it allows any information to be replicated anywhere. Plans and details of legal goods can therefore easily be copied and distributed around the world in seconds.

And all this is falling more under the control of organised criminals which have realised the enormous profits to be made in counterfeit goods and have little concern for issues like quality and safety.

So what do legitimate brand owners do to protect their products from counterfeiters? Carter recommends developing brand protection strategies. An effective brand protection strategy involves three steps.

There are also other legal remedies for the protection of intellectual property, such as the Counterfeit Goods Act of 1997, Trade Marks Act, the Designs Act and the Merchandise Marks Act. However, these are tools that the product owners must use to protect themselves. The onus is on the legitimate owner to drive the enforcement of these laws to keep their intellectual property secure.

For more information contact Howard Carter, SICPA South Africa, +27 (0)11 201 4500, [email protected]

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