In the past several years, the market for counterfeit goods has grown rampantly. Estimates of the total value of counterfeit goods sold each year range from $1.7 trillion to $4.5 trillion. Makers of luxury goods are among the hardest-hit industries, as well as those dealing in footwear, apparel, fine art, and collectables. The rise of online shopping has further thwarted companies’ ability to protect their brands. Illegitimate sellers on e-commerce marketplaces employ techniques like posting fake positive reviews and using copyrighted branding to reach consumers and sell counterfeit goods.
How much harm can a few fake purses do? you might think. The answer: a lot. Research shows that the combined cost of counterfeiting and piracy to United States businesses amounts to over $200 billion a year and leads to the loss of over 750,000 jobs. Counterfeiting chips away at brands’ intangible value, sales revenue, and ability to compete. In addition, the rise of counterfeit goods poses a real risk to public health and safety. As fake automotive parts, electrical components, personal care items, and pharmaceuticals flow through the market, consumers—knowingly or unknowingly—risk serious injury when purchasing substandard or falsely labeled products.
Helpfully, though, as the market for fake goods has expanded, so have companies’ tools to fight back against counterfeiters.
These tools include:
- NFC (near field communication) tags, which can be scanned to confirm legitimacy
- Scannable QR codes on product tags
- RFID (radio frequency identification) tags, which can be embedded in labels
- Holograms, often used on secure documents and event tickets
- Microtext, only visible under magnification
- Inks invisible to the eye, only visible with a special light source
Anti-counterfeit solutions like these often can be tailored to fit a specific product and its packaging. Determining the right technology (or combination of technologies) for a particular product depends on a variety of factors. These factors include the value of the product, whether the anti-counterfeit measure is overt (noticeable to a consumer) or covert (hidden from both consumers and counterfeiters), and whether the product has faced previous counterfeiting issues. Using these proactive measures to combat counterfeiters can help companies protect their brands and discourage the sale of fake products.
Companies have also turned to the courts for assistance in protecting their brands. For example, over the past few years, Chanel has litigated a suit against luxury consignment retailer TheRealReal, alleging, among other things, that TheRealReal marketed and sold counterfeit products while advertising those products as authentic. See Chanel, Inc. v. RealReal, Inc., 449 F. Supp. 3d 422, 429 (S.D.N.Y. 2020). Cases brought against alleged counterfeiters can result in the successful enforcement of a brand’s trademark rights. For instance, Crocs recently won a default judgment against a footwear maker accused of selling counterfeit versions of Crocs’ signature plastic clogs. See Crocs, Inc. v. Dr. Leonard’s Healthcare Corp., No. 21-cv-13583 (KSH) (MAH), 2022 WL 3754858, at *1 (D.N.J. Aug. 30, 2022). The Department of Justice has also brought criminal charges against those involved in counterfeit goods schemes. For example, a 2021 indictment revealed a $130 million scheme involving fake Ugg books, Nike Air Jordan sneakers, Timberland boots, and Beats headphones.
Catching counterfeiters is tough work and often requires a multi-layered defense strategy. By employing anti-counterfeit technology as one of the first lines of defense, companies position themselves to protect their brands’ most valuable assets.