how to effectively deal with counterfeits

HOW TO EFFECTIVELY DEAL WITH COUNTERFEITSeptember 2015

LELLA BRAUNERHEAD OF ANTI-COUNTERFEITING

2

ABOUT YELLOW BRAND PROTECTION• A global online anti-counterfeiting specialist, working discreetly for many of the world’s most recognized

brands.

• Broadest search capability in the industry - covering all key online sales channels: Websites & Domains, Social Media, Mobile Apps, and over 650+ Online Market Places

• Particular strength in China – dedicated “Team China” with strong local relationships & ave. 24hr takedowns on Alibaba

• Highest online enforcement rates in the industry, regularly exceeding 95% success. Over 3m listings enforced. “We Stop at Zero”.

• Online investigation services, identifying ‘key offenders’ and gathering evidence. Strong ties with law enforcement, physical investigation firms, law firms and other stakeholders

• Actively lobbying Alibaba Group and Facebook/Instagram to improve IPR protection for our clients.

BACKGROUND – COUNTERFEITING ONLINE

4

COUNTERFEITING

• Deliberate attempt to deceive consumers by copying and marketing goods bearing well-known trade marks

• Counterfeits are illegal copies that can have a serious impact on the health and safety of the consumer

• $1.77 Trillion - Projected Value of Global Trade in Counterfeit and Pirated Goods in 2015

• Trademark, design, patent and copyright infringements are all examples of Intellectual Properties being abused in order to mislead buyers

• China and Turkey are often mentioned – however few are aware of the Netherlands being an active counterfeit country

And other Intellectual Property crimes

5

• Most knockoffs are of luxury goods carrying a well known trademark. Today nearly every consumer and industrial product is subject to counterfeiting

• Imitation is a form of flattery. Counterfeiting deceives the consumer and tarnishes the reputation of the genuine manufacturer and brand value can be destroyed

• Fakes are recognised by low price and poor quality. Counterfeiters are getting better and better at copying the quality. Prices are often just under retail price in order to mislead the buyer

MYTHS AND FACTSFacts about counterfeiting needs to be updated

6

• Fakes of heparin, a blood-thinning drug, killed 149 Americans in 2007 and 2008

• During a meningitis epidemic in Niger in 1995, more than 50,000 people were inoculated with fake vaccines resulting in 2500 deaths

• A man from Wallasey, UK was killed when a charging e-cigarette exploded in his home

• A boy of seven was electrocuted by a counterfeit Gameboy charger while on holiday in Thailand.

FATAL FAKECounterfeits can be extremely dangerous

7

COUNTERFEIT ONLINE

• Easy to fool consumers into thinking they are buying genuine goods at discounted prices

• The volume of pirated and counterfeit goods sold online will soon surpass counterfeit sales on the physical markets

• Sellers can be anonymous and as easily as they appeared, they disappear

Globalisation in mix with new communication tools makes it more complex

8

ONLINE SALE CHANNELS

• Webstores/Domains – where most infringing and counterfeit activity originated

• Marketplaces - have become a key battle-ground for many brands. Vast quantities are being sold through these sites

• Social Media – the new frontier. Most brands are unaware of the trend in selling fakes through social media profiles

• Apps – an upcoming channel: Some brands are more affected than others

The internet is endless – where does the action take place?

9

• Higher and higher prices and better qualities

• Not only luxoury goods – today we can see C-level brands acting strongly

• Using new channels such as Social media and Apps

• O2O – online to off-line

• Africa on the rise

TRENDSA fast moving environment

10

• Almost 70% of all counterfeit products originate from China - the counterfeiting industry accounts for 8% of China's GDP

• $1.61 Billion is the total value of IPR-infringing goods seized, originating from China (including Hong Kong) – but the estimated total value is close to $25 Billion each year

• IP laws are territorial, meaning that IP is enforceable in China only upon valid domestic registration

CHINA AND COUNTERFEITINGImpossible to talk about fakes without mentioning China

MARKETPLACES

12

• The No. 1 online sale channel among counterfeiters

• There’s 150+ Chinese markeplaces

• More than 50% of them are B2B sites offering vast quantities

• More than 50% of them have global buyers

• The Alibaba Group sites are the most famous ones (Taobao, Alibaba, Aliexpress, 1688 and Tmall)

CHINESE MARKETPLACESSome of the top sites

13

• Purely Natural Royal Viagra Enlargement Pills

• Minimum order: 10 boxes

• Price: 1.5 -3.8 USD

• Supply Ability: 100 000 pieces per week

• 9 bottles per box

• Location: Guangdong

Even though it is supposed to be against site policies to offer drugs, it’s still thereCHEAP MEDICINE

14

• Ad captured from Alibaba – one of the biggest online marketplaces

• MOQ – 500 pieces

• Supply ability 100 000 pieces per month

• Place of origin: Guangdong

• 50 pieces in a carton

A Rolex watchTHE CLASSIC COUNTERFEIT/REPLICA

STRATEGIES/SOLUTIONS

16

• Counterfeits are dangerous and could potentially ruin your brand and hurt sales

• Counterfeiters don’t care about the environment nor how old the workers are and they are often joint to big criminal networks

• It is easy to feel lost and loose faith – but it is absolutely possible to get back in control of your brand

AIM HIGH AND KEEP A ZERO-VISION

TAKECONTRO

L

Why you should be taking actions

17

THE RISE AND FALLNo volumes are too large - it's about technology, structure and resources

• Chart of a brand with less problems and one of a brand badly affected – it is possible to gain the same results within the same period of time

• Generally it takes 9 -12 months to stabilise the volume. Most of the sellers will drop the brand and pick on someone else

18

• Find the best way of tracking the infringers – learn how they behave and where the action takes place

• Determine your focus. What markets? Which channels?

TRACKFind the infringers

19

ANALYZETake the time to analyze your findings

• Make sure you analyse you findings carefully – it may be illegal to report incorrectly

• See if you can find a pattern – and make sure to always follow up on the biggest offenders

20

ENFORCEIt is your right to do so

• Enforce all findings in order to strangle sales and to spread the word that your company do not tolerate the abuse

• The best approach is to be friendly and less aggressive as a first step – you might have to explain to the sellers what they are doing wrong

• All the bigger marketplaces have well (more or less) functioning IP protect systems. Take your time to learn how they work – cause they can help you in your anti-counterfeit work

21

• To fully succeed you need to make sure you have the right trademark, design and patent registrations. Chinese in particular

• Good knowledge of the online marketplaces various IP protect systems and language skills

• Constructive tone with the seller(s), make sure they understand you. On special occasions - preferably by phone

• Dense frequency of monitoring. Choke sales

MAKE SURE YOU PROTECT YOUR BRANDThis is what you need to know

CURIOSITIES

23

• A total of 22 fake Apple stores have been uncovered in one Chinese city

• Wanda Square in Shenyang has a cornucopia of shops bearing familiar names - all with incredible knock-off prices

• In Kunming – the furniture shop “11 Furniture” has copied the whole interior of an IKEA store

WHY COPY ONLY THE PRODUCTS?The extent of how far they can take it

24

• Synthetic eggs are cheaper and quicker to make - with the proper equipment and materials, one person could produce 1,500 fake eggs per day

• Full of chemicals; glucolactone, benzoic asic, alum and calcium chloride to mention a few

• Side effetcs and harms; metabolism disorder, harmful to brain and nerve cell. May cause liver dieses and affect the ability to produce blood

CRAZY FAKESFake chicken eggs

St. James House13 Kensington SquareLondon W8 5HDUnited Kingdom+44 (0)20 8144 6440sales@yellowbp.com

EUROPE ASIA AFRICAStreet Name 12312345 City NameChina+86 012 3456 7890china@yellowbp.com

Presidential FloorMövenpick AmbassadorIndependence Avenue, RidgeAccra, Ghana+233 (0)506 437 117africa@yellowbp.com

Norrgatan 10432 38 VarbergSweden+46 (0)340 69 56 02sweden@yellowbp.com