Negative Effects of Counterfeiting – Brands Must Know!

In this article, we’ll discuss counterfeiting, its harmful effects, and ways brands can protect themselves and their products from it. 

What is Counterfeiting?

The theft of intellectual property is at the core of counterfeiting, a criminal offense. A trademark, for example, helps you recognize the products of companies of all sizes. In order to identify the source or origin of a specific product or service, trademarks may be used in several different ways.

Counterfeit goods are items that are made using intellectual property that belongs to another company without the owner’s permission. In order to steal a company’s good name and goodwill, counterfeiters create or sell knockoffs of its intellectual property.

Counterfeiting is considered a criminal offense because it involves false imitations (or forgeries) of well-known brands.

By counterfeiting, both the reputation of a brand and the trust of its customers are damaged. Customers and companies alike suffer from the resulting lack of faith in well-known brands’ real products.

Defining the problem

Counterfeit goods aren’t just a short-term problem, but a growing global industry. A $30 billion trade problem in the 1980s has now become a $600 billion problem. This amount might soon surpass the GDP of most countries, according to an analysis.

In the COVID era, eCommerce created the perfect market channel for counterfeit goods since it is easy to shut down websites that sell counterfeit products at the request of brands, but counterfeiters can set up another shop the following day.

A recent study predicts that global eCommerce payment transactions will reach $7.5 trillion in 2026, up from $4.9 trillion in 2021, which represents a 55 percent increase. By the end of 2022, counterfeiting is expected to reach $2.3 trillion.

Among the most heavily targeted industries by the company are consumer products, tobacco, aerospace components, electronics, pharmaceuticals, automotive parts, industrial components, fashion, food, and just about every other manufacturing industry.

Why is counterfeiting illegal?

Counterfeit items are illegal in most countries and can be punished by civil or criminal fines. In general, brand owners can sue counterfeiters for damages and seek injunctions (or court orders) to prevent counterfeiters from making and selling counterfeit items. In several countries, people and companies found guilty of selling counterfeit products may face penalties and prison sentences.

Piracy: It is the act of downloading or copying another person’s work without paying for that right and without their consent.

Patent Infringement: When someone uses or steals the intellectual property rights of another, that is patent infringement.

Trade Secret Infringement: A trade secret can be infringed by a third party who profits from the use of a critical piece of knowledge. A trade secret theft usually occurs in conjunction with a patent violation.

What effect does counterfeiting have on a brand?

Due to counterfeiting, consumers are less likely to trust legitimate products promoted and sold under those brands’ names. If someone buys a counterfeit product believing it to be the authentic product and it turns out to be defective, the brand would be held responsible.

In contrast, counterfeiting negatively impacts the retail industry by depriving legitimate businesses of sales opportunities. The slowing or stopping of production of authentic goods, has a negative impact on manufacturing, resulting in the loss of income or job opportunities for those employed.

Internet marketplaces are among the most common methods of detecting suspected intellectual property infringements. It has the potential to damage your brand in several ways if left unchecked:

  • It could lead to lost revenue. Infringing IP postings have diverted business away from marketplaces, resulting in lower sales.
  • Relationships with partners are affected. Cheap counterfeit products cause unfair competition for your authorized distributors, which results in lower profits for you.
  • This harms your brand reputation. Distorted user perception jeopardizes consumer health and safety.

A brand safety solution can help brands address this serious issue by combating counterfeiting. We identify and eliminate digital infringements and counterfeiting to prevent revenue loss and brand abuse.

The Next Steps

Counterfeiting is not a victimless crime, but it does have a wide range of negative consequences. counterfeit items are commonly made with inferior materials and under less stringent manufacturing restrictions in order to keep production costs and sale prices low.

In order to earn a good reputation in the eyes of customers, reputable manufacturers invest a lot of money in product development and research. It can be devastating for small firms and entrepreneurs when counterfeiters attempt to exploit the reputation of another company illegally. The increased costs customers pay as a result of unfair competition are directly related to lower salaries and fewer employment opportunities.

Since counterfeiters circumvent the law in many ways, they don’t pay the fees and taxes that real producers and exporters pay. As a result, it poses major threats to the health and safety of civilians, the economy, and even national security.

Connect with us to get the best solution to combat counterfeiting and know how to keep your brand safe in uncertain environments.


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