Using Trade Data to Spot Counterfeiters

When most of us think about counterfeit goods we usually conjure up a familiar image of knockoff handbags and luxury watches being sold out of a trunk in some back alley. But the reality of counterfeits is that it’s a much larger problem than most of us could have imagined. The global market for counterfeit goods nets over $600 billion annually, costing U.S. companies $250 billion/year and 750,000 U.S. jobs. The rise in overseas manufacturing in recent decades, coupled with minimal penalties for offenders has led to a dramatic increase in counterfeits in the past 20 years, with counterfeits surpassing the drug trade as the world’s largest black market activity.

Counterfeiters quite literally, counterfeit anything and everything, from consumer goods like laundry detergent and extension cords, to prescription medication, and even aerospace components sold to the U.S. defense department. Aside from the obvious economic impact to the companies that are being counterfeited, counterfeits pose a serious threat to consumer safety. Because these products are not subject to safety regulations and proper testing, they are usually manufactured as cheap as possible to maximize profits. This often means leaving out or substituting expensive material and components with subpar material that can be a serious hazard to the consumer even when used correctly. Electronics might be manufactured using less copper, causing them to become a fire hazard, while toys may be made using cheaper, lead-based paint which can be harmful to children.

In 2011, U.S. Customs and Border Protection seized over $200 million in counterfeit goods at U.S. ports and border crossings. While this may sounds like an incredible feat, it represents only a small fraction of counterfeit goods entering the U.S. each year.

With so much at stake, large brand name companies often take it upon themselves to protect their brand by identifying and prosecuting these illegal organizations for copyright and trademark infringement. One such tool at their disposal is PIERS trade intelligence. Increasingly, companies have been utilizing the detailed commodity description in PIERS U.S. import data to search for their company’s brand name among all waterborne shipments. Once they have compiled a list of all the shipments containing their brand’s name they can compare this list of shippers and consignees to the company’s list of licensed manufacturers, distributors, and retailers to look for discrepancies in their supply chain. Often times these products will be shipped and documented posing as the real product to avoid detection by U.S. Customs. But while this practice may help them avoid detection by Customs, it gives legal savvy brand owners the evidence they need to prosecute these counterfeiters.

On Wednesday, June 19th, Aliet Martinez, Director of Client Development at PIERS participated on a panel discussion, Crushing the Counterfeiters at the Licensing Expo in Las Vegas to inform brand owners how they can use trade intelligence to identify counterfeiters. For more information about PIERS Trade Intelligence, please visit www.piers.com.

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One Response to “Using Trade Data to Spot Counterfeiters”

  1. Ed Weinstein Says:

    Incredible article and a detection strategy straight out of auditing. For the total value of counterfeits, I would like to know the source of the estimate and the gross value if it is available.

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