Insight: Countering counterfeiters

Rachel Jones, Head Dragon at SnapDragon, shares tools and techniques for protecting toy IP rights to combat the tide of fakes sold online

Written by Rhys Thomas

Posted 04.06.2019 | Retail

Insight: Countering counterfeiters thumbnail

When it comes to your brand, imitation is certainly not the most sincere form of flattery. The OECD estimates that trade in fake goods is worth USD$486bn, making up nearly 2.5% of world trade. The sad truth is that with the continued rise of the internet, more and more of us are bound to find products sold online which infringe our Intellectual Property.

Shockingly, European Union statistics have shown that counterfeit toys are one of the most commonly seized items by EU customs. Many pass-through customs and enter the EU market, ending up in stores, at fairs and car-boot sales. Many more are available online, easily found on websites and well-known online marketplaces.
Loss of revenue is a major challenge for any toy business targeted by counterfeiters and can have potentially devastating implications, particularly for smaller companies with little flexible income. Counterfeits destroy brand reputations and harmful fakes present a real danger to consumers.
However, something can be done to help every toy brand facing these problems.

Billions could be lost every year to counterfeit toy sales online
What is brand protection?
Put simply, brand protection is about protecting your Intellectual Property (IP), such as your trademarks, design rights, patents and copyright. Effective brand protection prevents criminals from illegally making and selling a ‘copycat’ version of your product.
Counterfeiters can manufacture convincing knock-offs for a fraction of what it costs to produce the real thing – having paid no attention to the safety and quality attributes of the original product. Costs may have been cut using unregulated materials, toxic chemicals in dyes and worse. These products are then marketed online and sold at lower than retail prices and undercutting the authentic brand’s RRP.
These actions not only put consumers at risk, but can harm a company’s reputation and cause untold financial damage - that I know having battled fakes myself, and it took a long time to get back on track.
Online counterfeit retail sales are growing at an annual rate of 20% meaning that the volume of fake goods sold online will soon surpass those sold by physical vendors. This is proof that online brand protection is more important now than ever before. Any brand operating globally must have an appropriate brand protection strategy in place. Here are some practical steps you can take to protect your brand and your consumers:
Implement ‘secret Ingredients’
This trick can help those in the know, like your trusted network, to identify a fake that looks very close to the real deal. Using navy rather than black thread around a particular part of the product, for example, which will go unnoticed by those trying to rip you off yet to your factory is unquestioned, and merely part of the manufacturing spec. Security thread that is only visible under special lighting and holographic images can also be useful. Updating your packaging regularly is sensible.
Share these product orientated secrets with your trusted distribution network and with the Customs Authorities. By registering for free with the EU Enforcement Database, and equivalents in various other territories, you ensure Customs Officials keep their eyes open for fake goods crossing borders.
Consider China
Manufacturing in China offers many advantages, and many factories are far superior to what you might expect. However, counterfeiting in China is a problem. If you choose to manufacture in China, visit and develop a relationship with your factory. Factories working directly with brands are much less likely to rip you off. Consider a non-disclosure, non-use, non-circumvention (NNN) agreement. This can be more effectively enforced in China, and is better than a standard UK or US NDA. Ensure this is signed before sharing any information about your product to keep your IP as safe and secure as possible.
Think about your IP
It is vital to file trademarks that are valid in the countries where you plan to sell and make your product, preferably before any information about it appears online. Most trademark attorneys offer a very cost-effective service around trademark registration and it’s even possible to file your own for a few hundred pounds. Registered trademarks are your first line of defence when copied online, and come highly recommended as being among the most cost-effective pieces of registered intellectual property available.
You may also be able to file Design Rights for your product. These protect the shape and configuration of a product and can be extremely valuable in proving ownership of a concept. They are slightly more expensive than trademarks but likely to be worth their weight in gold if you have to use them to protect your product and your business.
Fighting fakes online can feel like a never-ending problem. This is where online brand protection can help. There are many companies out there, like SnapDragon, that can assist in monitoring online platforms as well as reporting and removing infringing listings. These companies take the weight off your shoulders, leaving you to focus on other mission critical aspects of your business.
Visit SnapDragon to learn more about safeguarding and managing IP
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