As the global market continues to expand, and e-trade and e-commerce overshadow our traditional brick and mortar businesses, companies and corporations need to rethink and retool their compliance posture.
Intellectual property theft, especially from source and manufacturing countries such as China, Russia and India, have increased exponentially over the past 5 to 10 years. This trend will continue with the proliferation of online stores, as small threshold importation regulations become more relaxed to accommodate e-commerce, small business growth, and virtual inventory. This not only impacts import/export methods, but also supply chain security (more on supply chain security in an upcoming blog; stay tuned).
The amount of counterfeit goods seized by U.S. Customs and Border Protection (CBP) has increased year-on-year. One might say that’s a good thing – CBP is doing its job. But is this strategy outdated, as counterfeiters also keep up with the trends? The reality is that the more CBP seizes at our ports of entry, the more counterfeiters produce to not only meet demand, but to account for increased seizures at the port. The counterfeiter realizes that most large and multi-national corporations over the years have factored in losses due to counterfeit goods as part of “the cost of doing business.” Likewise, the counterfeiters also factor in seizures as part of that same cost for them.
The difference is that the counterfeiters have nothing tangible to lose, only the merchandise or goods that were never theirs from the start. The pirated corporations, however, have everything to lose, especially small and medium sized companies. The counterfeit goods directly impact their brand reputation, profits, and ultimately, may cost them their companies’ edge on the market or, at a minimum, their competitors. These businesses will also end up paying legal fees and suffer in sales, revenue, and face potentially enormous losses in brand recognition and demand.
As we know, bad news spreads fast. In today’s digital world, bad marketing news spreads even faster, through social media and other electronic mediums, to include business websites. Breaking news on counterfeiting can now almost immediately impact sales and revenue.
Speaking of digital worlds: While CBP does a good job seizing counterfeit goods at our ports of entry and keeping our border safe, who is policing the internet for the proliferation of IPR infringers? We know the government has teams of Federal Agents on the web looking for terrorists, drug smugglers, and child molesters, but who is watching out for counterfeiters? What about the “Dark Web”? (Again, more on this in an upcoming blog.) The short answer is only the companies themselves.
The reality is, if IPR infringements are left unchecked, it will affect a business’s reputation, profits, growth and expansion, in some cases requiring litigation and causing personal loss. This is most evident in counterfeit goods that impact health and safety, such as pharmaceuticals, tools and machinery, electronic devices and electrical components. Counterfeit versions may cause injury, sometimes death, and subject that company to litigation. For example, agents have seized counterfeit toothpaste with anti-freeze as an ingredient, and a array of pharmaceuticals with no medical value.
Protecting your company’s intellectual property is more important now than ever as we expand into the next phase of global commerce with China and other countries. Companies need to re-evaluate their compliance programs and engage source countries that proliferate counterfeit goods. In IPR enforcement, a good offense is better than your best defense, because at the end of the day, the counterfeiter will make whatever is easiest and reap the greatest profits. Counterfeiters don’t care if they are stealing your brand or some other company’s brand. For the counterfeiter, it’s the path of least resistance.
So, protect your brand and protect your bottom-line.
Summit-Tek can help!