Counterfeit Products Can Harm Your Business

Counterfeits are unauthorized copies of products usually bearing another’s brand name and likeness. Manufacturers and sellers illegally make and sell copies to profit from another company’s reputation. As a business litigation lawyer can share, counterfeits typically are of lesser quality and may be so bad they’re dangerous to use.

Recent Seizure Of $18 Million In Fake Gibson Guitars

One recent example of counterfeiters getting caught involved Gibson guitars, according to the Associated Press. Gibson was founded 130 years ago and makes acoustic and electric guitars, amplifiers, parts, and accessories.  A guitar from one of their product lines could cost up to $10,000. The company, based in Nashville, Tennessee, is the top seller of premium electric guitars in the US. All of its guitars are made domestically.

US Customs and Border Protection agents recently seized more than 3,000 counterfeit Gibson electric guitars at the Los Angeles-Long Beach Seaport. The shipment originated in Asia. If they were genuine Gibsons, their estimated value would be about $18 million. When they were seized wasn’t released.

Those involved in making and selling counterfeits face civil lawsuits by impacted companies as our friends at Focus Law LA can attest. Violating intellectual property law could also result in federal criminal charges, which could result in a $250,000 fine and a 10-year prison sentence.

How Do Counterfeit Products Impact My Business?

If you make or sell products, counterfeits can negatively affect you in many ways, including the following:

• Counterfeits usually sell at less than the product’s market price. This illegal competition drags down prices, so your margins suffer
• You lose market share due to this cheaper supply of products
• Money spent on research, development, marketing, and branding your products helps those stealing sales from you
• Customers unhappy with rip-off products may blame you for the problems, harming your reputation, brand, and level of customer trust (especially if complaints are told to others on social media)
• You’ll need to spend resources on tracking down counterfeit products and those selling them to protect your business, which won’t be spent on improving your company
• Those who wrongly think they bought your product may return it for a refund or seek warranty coverage
• Someone injured by a counterfeit product may sue your company for compensation

Counterfeits may be a hidden threat to your business, lurking beyond your attention, but if you’re successful enough, selling copies may be worth criminals’ attention.

What Can My Business Do About Fake Products?

The International Trademark Association has these suggestions:

• Register your logo, brand, and trademarks in countries where you manufacture, ship, sell, or store your products
• Record trademarks with national customs organizations
• Monitor and try to control your supply chain
• Add authentication details to your products a counterfeiter would be unaware of
• Set up a brand protection program and train employees on anticounterfeiting measures
• Monitor what online and brick-and-mortar stores are selling, including your products and illegal copies
• Take legal action against counterfeiters
• Educate law enforcement personnel on your brand and products so they know the difference between your products and copies
• Help law enforcement agencies seize counterfeit goods and cooperate with counterfeiters’ arrests and prosecution

Start a discussion with your attorney if you have questions about counterfeiting and what you can do to stop it.