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How can brands protect themselves against counterfeiting?

SnapDragon is an online ‘brand guardian’ helping businesses fight counterfeit products. Founder and CEO Rachel Jones looks at safeguarding your brand

With the rise of the internet, it has become increasingly difficult for brands to protect their products from criminal counterfeiters eager to make big money from stolen ideas. Shockingly, the OECD estimates that trade in fake goods is worth $486 billion (£400 billion), making up nearly 2.5% of world trade.

In recent years, knock-off bikes have swamped online stores. The growing number of businesses outsourcing manufacturing to China has fuelled this surge, luring in customers with unbelievable price tags. Brands, such as Contador, have spotted fakes of their specialised products on Chinese websites such as DHGate and AliExpress for as little as an eighth of their own price.

Fakes are bad for business, of course. But they are also bad for consumers. In the cycling trade, the difference between a bicycle that has been carefully developed, rigorously tested and approved by consumer safety bodies, and those that have simply had a stolen logo painted on the body, can be life and death.

And it’s not just bikes. Counterfeit helmets crowd the virtual shelves, with the composite roll cages – so important for ensuring strength – omitted to save costs. In a test conducted by Specialized Bicycles in California, a counterfeit helmet broke in half when it hit a curb.

When it comes to your brand, imitation is certainly not the most sincere form of flattery. Having a rock-solid brand protection strategy in place is absolutely vital.

So, what is brand protection?
Put simply, brand protection is about protecting your Intellectual Property (IP), such as your trademarks, design rights, patents and even your images. Effective brand protection prevents criminals from illegally making and selling a ‘copycat’ version of your product – preventing your consumers from getting hurt.

Even with high-tech equipment, 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 being marketed online and sold at lower than the retail price, undercutting the authentic brand’s RRP.

Why is it important?
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.

The financial implications of counterfeits can be catastrophic. This I know having battled fakes myself, and it took a long time to get back on track.

Fakes destroy brand reputations. When a consumer purchases a substandard product, not realising it is a fake, the instant assumption is that the brand is at fault. Social media is a powerful tool and, however unwittingly, the damage is done.

Sadly, counterfeits don’t just put your business and your consumers at risk. Counterfeiting is far from being a victimless crime. Many are made in appalling conditions, exploiting cheap and underage labour, and profits fund drug trafficking and people smuggling, amongst other things.

What should I do if I find a counterfeit product online?
Fortunately, there are now a number of low-cost strategies which, when applied in concert, provide a robust and advisable approach to protecting a brand online.

Firstly, don’t panic if you come across a counterfeit of your product online. But if you do not already have one, you must implement a brand protection strategy straight away.

The next thing to do is to buy a sample. If you have a sample of an infringing product in your hands, you can do a proper comparison with your own. Compare and contrast. Try to find three differences, which will enable you to alert trusted distributors and retailers, as well as your customers. If the products are incredibly similar, look for packaging errors, spelling mistakes, differences in finishing, smells, the inclusion of silica gel packets – anything that could indicate it’s a fake.

Some manufacturers like to highlight all the variations between genuine and fake publicly on their website. While some variations are sensible to mention, we would recommend that not all are brought to the attention of the eagle-eyed counterfeiter. Chances are they will be monitoring your website.

If it’s all too similar for comfort, think about things you can incorporate into future manufacturing runs. Small edits which a less than scrupulous counterfeiter won’t notice – oddities with thread or extra bumps on moulds for example – along with security labelling or tagging if you can.

Once the differences are known, create a comparison chart and share it with all the customs and border agencies with which your brand is registered. Get onto the EUIPO website and fill in the Application for Action form. This information is shared across the EU and will help to identify infringing items coming into the territories in which you have registered. If anything is found, you are alerted immediately. The same can also be done out with the EU, in Australia and the US, for example.

Additionally, it is vital that you quickly gather your trademarks and proof of copyright of any images being used without permission online. Report the infringing links and sellers through the portal’s reporting mechanism. All the major e-commerce platforms have an official reporting process, some easier than others. You just need to prove the IP is yours by uploading your trademark, proof of copyright and other documents. You may also need to upload company information to support your claim, such as your Certificate of Incorporation.

Finally, monitor online platforms regularly for the links you have reported to ensure they have been removed, and for any new infringements, remember not to only search in English.

What steps can I take to protect my brand from online copycats?
There are a number of simple steps that can be taken to add an extra layer of protection to your brand, all of which come at little or no cost.

First of all, it is vital to file trademarks that are valid in the countries where you plan to make and sell 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 amongst 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 again 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.

Find a way to incorporate ‘secret ingredients’ into your products. This trick can help those in the know, like your trusted network, to identify a fake that looks very close to the real deal. For example, using navy rather than black thread around a particular part of the product will go unnoticed by those trying to rip you off, yet to your factory, it is unquestioned as it is merely part of the manufacturing specification. Security thread, that is only visible under special lighting and holographic images can also be useful. Updating your packaging regularly is a sensible idea.

Share these product orientated secrets sensibly with your trusted distribution network and with the Customs Authorities. By registering with the EU Enforcement Database, which is free – and equivalents in other territories you ensure customs officials keep their eyes open for fake goods crossing borders – protecting your business and your customers.

It’s always wise to learn as much as you can about intellectual property (IP) infringement issues. Counterfeiters are constantly finding new ways to manufacture and sell their fakes, so you need to keep ahead of the game. Research all the latest scams and keep up to date with any new legislation. But most importantly, know and understand your IP rights and how to enforce them if necessary.

Finally, if you choose to manufacture in China, ensure you are properly protected. China offers many advantages and many of its 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 Non-Disclosure Agreement (NDA). Ensure this is signed before sharing any information about your product to keep your IP as safe and secure as possible

Counterfeiting is a growing industry, especially in markets that are thriving, such as the cycling sector. Keep in mind that the more popular your product becomes, the more at risk you are of being targeted. If you are vigilant and alert, you will be successful in defending your brand, reputation, revenue and most importantly, your consumers.

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