Anti-Counterfeit Market Analysis

Part
01
of four
Part
01

Fashion Market: Financial Loss to Counterfeit

The fashion industry, including clothing, footwear, and accessories, bears a loss of €26.3 billion ($29.46 billion) in revenue and 9.7% of sales to counterfeits.

COUNTERFEITING IN FASHION/LUXURY GOODS

  • The counterfeit fashion industry, which includes clothing, textiles, footwear, handbags, cosmetics, and watches is worth about $450 billion globally.
  • According to the Global Brand Counterfeiting Report 2018, total counterfeiting globally reached $1.2 trillion in 2017 and is bound to reach $1.82 trillion by the year 2020.
  • According to the report, "The estimated losses due to counterfeiting of high-end consumer goods amounted to $98 billion, which includes counterfeiting from offline as well as online mediums."
  • The total losses incurred by luxury brands due to the sales of counterfeits through the internet amounted to $30.3 billion.
  • According to the European Intellectual Property report, the fashion industry loses €26.3 billion ($29.46 billion) in revenue and 9.7% of sales annually to counterfeits.

INSIGHTS INTO FASHION BRANDS

LOUIS VUITTON:

  • LV budgets about €15 million annually ($16.86 million) for its fight against counterfeit products, and they have an internal legal department dedicated to the battle.
  • LV suffered losses in a counterfeit case in the European General Court, which handed down its ruling in the two parallel cases of Louis Vuitton v. Nanu-Nana, confirming the invalidity of Louis Vuitton's two checkerboard community trademarks. There were no details on the cost borne by the brand LV.

Additional Information:

  • LV also made some gains in the counterfeits cases:
  • LV v. Singga Enterprises: the awarded damages from Singga was $1.4 million.
  • LV v. eBay: In Paris, eBay was ordered to pay LV €38.6 million ($41.0 million) in damages to LV.

SALVATORE FERRAGAMO:

  • Salvatore Ferragamo, a luxury shoe brand, has lost around $17 million to counterfeiters, confiscating 12,400 illegal items.

Additional Information:

  • Salvatore Ferragamo won a counterfeit combat case against 150 website domains that were selling counterfeit Salvatore Ferragamo products, winning $60 million in compensation.
  • Salvatore Ferragamo "constantly monitors offline markets through court and out-of-court activities, focusing its efforts on China. About 62,000 counterfeit products were seized in China last year, out of the more than 268,000 counterfeit products seized around the world."

BURBERRY:

  • To guard against counterfeiting, the brand destroyed more than £28 million ($34.02 million) worth of its fashion and cosmetic products in 2017.
  • According to Times, more than £90 million ($109.45 million) worth of Burberry products have been destroyed over the past five years due to counterfeits.

Additional Information:

  • The company's 2018 annual report highlights action it has taken in combating the issues of counterfeits, which includes partnering with enforcement agencies and its digital partners to minimize the visibility of counterfeits, disrupting the flow of counterfeit products by enforcing at source level, implementation of brand protection controls trademark, copyright and design registrations globally across all appropriate categories.

HERMES

  • In 2015, $3.2 million worth of counterfeit Hermès belts were impounded at the Port of Los Angeles.

Additional Information:

  • To combat counterfeit, Hermes has been filing lawsuits against retailers. However, Hermès, by all accounts, is one of the less aggressive luxury brands, filing only a few IP infringement lawsuits in a year in the US as compared to other luxury fashion brand.

NIKE:

  • Sometime in 2018, the US Customs and Border Protection (CBP) confiscated 9,024 pairs of counterfeit Nike sneakers worth $1.7 million at the Port of New York/Newark.
  • In 2017, the United States Department of Homeland Security initiated a lawsuit against a New York resident that tried to import approximately $250 million worth of counterfeit items involving almost 30,000 pairs of counterfeit Nike-brand Air Force 1 sneakers.

Additional Information:

  • The company is actively working with law enforcement and customs officials around the world to combat the production and sale of counterfeit products.

RESEARCH STRATEGY

The research team began by searching for market research reports that share insights on the fake/counterfeit market globally and insights on various companies in the fashion industry facing losses as a result. After searching through sources like IntechOpen, ResearchGate, Research and Markets, and PR Newswire, we found two paid reports that shared insights on the overall losses in the fashion industry due to counterfeits. Additional insights on the counterfeit losses suffered by individual fashion brands were secured behind paywalls.

Additionally, news articles from various fashion and luxury forums such as Vogue, Scout CMS, The Fashion Law, and The Guardian shared information on the amount of money lost to counterfeits by brands like Burberry, Nike, Hermes, and others.

Next, to find information on the amount of money fashion brands spend/budget in combating the issues of counterfeits, we searched through the annual reports and statements of several fashion brands to identify the provisions they have made or spend on lawsuits to estimate the amount directly related to counterfeits. After going through the annual reports of fashion brands such as Burberry, LV, and Salvatore Ferragamo, we found that while these brands discussed their actions and initiatives to combat the issue, there were no relevant details on their financial provisions for lawsuits/intellect property/trademark/counterfeits. There was, however, information on the major wins these brands have had through lawsuits filed against counterfeits.

Further, we tried to find information on the amount of money fashion brands spend in combating the issues by looking for law firms/attorneys who fight counterfeit cases globally to check the amount they charge brands (fashion) for such cases to estimate the amount the brands are spending in this direction. For this, we searched through various attorneys reports and case studies to find relevant information, but most of the information available was related to their experience and skills in the counterfeit market with references to case results for past lawsuits. There was no information on their charges/fees.
Part
02
of four
Part
02

Fashion Market: Counterfeit Measures

Four most commonly used strategies/methods by fashion brands to combat counterfeits are surprise raids on wholesalers to seize counterfeits, the use of police intellectual property crime units to shut websites and prevent counterfeits from penetrating the market, the use of radio frequency identification (RFID) to fingerprint and authenticate products, and the use of hologrammed stickers on genuine products. Detailed information is in the next section.

SURPRISE RAIDS ON WHOLESALERS

  • An example of a company that has successfully used surprise raids is Lacoste. The brand once carried out surprise raids of wholesalers in Puerto Rico. This raid seized fake products that were estimated to cost over $1 million in retail value, including dress shirts and polo shirts that would have been sold to unsuspecting customers if they were left on the market.

USE OF POLICE INTELLECTUAL PROPERTY CRIME UNITS

  • Some brands commonly use police intellectual property crime units (PIPCU) to combat counterfeits. In a PIPCU investigation, a brand will supply the police with information detailing an alleged fraud. The police unit then searches for the website, collects evidence and then approaches a domain name registry such as Nominet in the UK to shut the website. PIPCU investigations have led to 19,000 fake websites being closed. The unit’s work is intended to stop counterfeit products from penetrating the market and to educate customers on how they can spot fake products. PIPCU raids premises known to hold fake products and can get offenders jailed for up to 10 years.
  • One example of a company that has used PIPCU is Ugg, a company in California that makes sheepskin boots. The company partners global law enforcement units to suspend websites, execute raids and initiate prosecutions. Ugg has taken legal action against a total of 60,000 websites selling counterfeit clothing and footwear. The Ugg website has a URL checker used by customers to confirm that the website they are on is an authorized retailer, and the products are authentic.

USE OF AN RFID TAG

  • The RFID technology ensured that the bomber jacket was featured at Fashion Week. The jacket also served as a pass to exclusive VIP events, gifts, and experiences around New York City. It was impossible for the Rochambeau bomber jacket to be replicated by a counterfeiter as the RFID technology put a fingerprint on the jackets.

USE OF HOLOGRAMMED STICKERS

  • Some fashion brands commonly use hologrammed stickers to combat counterfeit products. The hologrammed stickers are put on products and used to enter various competitions. Consumers are normally directed to peel the stickers off genuine products, mail them to the company and win prizes. The stickers are used to reward customers for buying genuine products and reporting those that were not.
  • An example of a company that has successfully used hologrammed stickers is Disney to deal with counterfeit fashion products such as t-shirts in China. The products featured hologrammed stickers that customers were instructed to use in entering competitions. Customers found stickers on genuine products and peeled them off, and mailed them to the company to win prizes including trips to Disneyland in Hong Kong. Consumers were rewarded for buying genuine products and for alerting the company to counterfeit products.
  • The strategy provided Disney with intelligence on retailers who sold counterfeit products when customers reported products that did not feature the stickers. The strategy also provided the company with “a mailing list of over 250,000 customers, all of whom now had incentives to buy genuine Disney products over counterfeits again”.

RESEARCH STRATEGY

To provide the most commonly used strategies/methods by fashion brands to combat counterfeits, our first strategy was to look for pre-compiled lists with relevant company examples and some metrics of success in reputable reports, publications, and databases. This strategy led us to sources such as World Trademark Review, Business of Fashion, Red Points, and Certilogo, which provided strategies and methods that fashion brands use to combat counterfeits.

Our second strategy was to study these lists and identify strategies that were repeated in at least two reputable sources. This strategy provided four strategies that were included in our findings.
Part
03
of four
Part
03

Fashion Market: Counterfeit Prevention Companies

Examples of companies that offer counterfeiting fight/prevention services are MarkMonitor, Authentic Vision, DH Anticounterfeit, and De La Rue.

1. MarkMonitor

  • MarkMonitor offers anti-counterfeit and brand protection to companies and businesses around the world.
  • The company's services include AntiCounterfeiting, IP Protection , Partner Compliance, AntiPiracy — Digital Media, AntiPiracy — NetResult Live Streaming, AntiFraud — Malware, AntiFraud — Phishing, and Dark Web and Cyber Intelligence.
  • MarkMonitor is a flagship brand of Clarivate Analytics, which provides solutions for the discovery, establishment, and protection of revolutionary ideas.
  • The company's pricing details are only revealed to prospecting customers. Prospecting customers can contact the global sales office on (800) 745-9229.

2. Authentic Vision

  • Authentic Vision provides anti-counterfeiting and authentication technologies designed to protect the organization’s investments in product innovation, brand value, and reputation while creating new opportunities to increase trust and engagement with consumers.
  • Authentic Vision uses patented holographic fingerprint tag, mobile authentication app, and real-time analytics capabilities to protect physical assets from counterfeiting and alert brand and product owners to potential fraudulent activity.
  • It also has anti-counterfeiting and authentication technologies that help to minimize lost revenues and mitigate liability due to counterfeits and create new opportunities to engage with consumers through loyalty programs, incentives and future experiences that bridge the digital and physical world.
  • The company's main mission is to safeguard companies and consumers and enable incredible experiences that bridge the digital and physical worlds, built on a transparent ecosystem of partners inspired to create innovative solutions around our technology.
  • The company's pricing details are only revealed to prospecting customers. Prospecting customers can fill out an online form to initiate a chat with a sales person.

3. DH Anticounterfeit

  • DH Anticounterfeit™ facilitates brand protection teams’ work, making them more productive using an intelligent case management system with strategic insight.
  • In cooperation with Sony Mobile since 2007 and contributed to by-brand protection managers from more IP intensive industries, DH Anticounterfeit offers the world’s leading Brand Protection management system specialized on anti-counterfeit.
  • The company is a spin off of DH Solutions AB, Sweden and has a long history and experience in IT solutions. The company's services and products cover a wide variety of practice areas, including System Development, Web Development, System Technology, Operational Service, and IT Education.
  • The company owns CaseMate, a web-based case management system designed for IP owners and brand protection teams. This powerful tool supports and speeds up daily administrative operations, as well as help top management take strategically important decisions.
  • The company's pricing details are only revealed to prospecting customers. Customers can fill an online form to get in touch with a sales person who walks them through the entire process.

4. De La Rue

  • De La Rue offers product authentication to businesses, customers ad governments.
  • It enables governments and businesses to understand and control movement of authentic goods.
  • The company enables governments and businesses to have comprehensive understanding of international legislation and best-in-class working standards to support the construction of their high-excise roadmaps.
  • De La Rue also helps companies and governments establish the foundations for compliance with international legislation.
  • Prices can be obtained by contacting the company.

RESEARCH STRATEGY

All the companies reveal the prices of their products only to prospecting customers who approach them. Therefore, we analyzed various esteemed third-party sources to obtain details on pricing for the respective companies. We examined company profile databases, review websites, research analysis domains, and media sources such as Glassdoor, Owler, G2 Crowd, Grand View Research, Forrester, Gartner, IBISWorld, Euromonitor, Million Insights, and Allied Market Research, BusinessWire, PRNewswire, and PR Web. We also checked the companies' official websites to find their annual reports to locate the required pricing details. But, the companies are private in nature and do not file annual reports.
Part
04
of four
Part
04

Fashion Market: Ali Express

AliExpress, through the Alibaba Group, developed strong policies to fight against counterfeiting. Examples of these policies are the AliProtect system, the Three-Strikes-and-You’re-Out enforcement policy, and the Alibaba Anti-Counterfeiting Alliance.


ALI EXPRESS — COUNTERFEITING

OVERALL
HOW ALIEXPRESS CONTRIBUTED OR IS CONTRIBUTING TO COUNTERFEITING
  • In 2010, the AliProtect system was implemented with the intention of helping people to report and remove suspected counterfeits on Alibaba and AliExpress platforms.
  • In 2014, AliExpress announced through an Alibaba post that they were hardening their fight against counterfeiting.
  • From that moment on, they've installed the Three-Strikes-and-You’re-Out enforcement policy, where repeated infringements are punished with a definitive banish from the website.
  • In 2016, there was a scandal in the International Anti-Counterfeiting Coalition (IACC). Brands such as Michael Kors and Gucci left the coalition afterward. Alibaba’s membership then was suspended, and the company said though Jennifer Kuperman, its head of international corporate affairs, that Alibaba is fighting to solve the counterfeiting problem and would continue to do so even after the suspension.
  • In January 2017, Alibaba created the Alibaba Anti-Counterfeiting Alliance, AACA. The AACA has 105 brands in it and includes worldly known companies such as "Adidas, P&G, Mars, Adobe, Danone, Hasbro, Samsung, and L’Oreal."
  • The Alliance uses the internet and technology to fight against counterfeiting with efficiency and transparency.
  • In 2018, the first Counterfeit and Piracy Watch List was published, and AliExpress wasn't among the e-commerce platforms facilitating counterfeiting even if it offers a "significant volume of allegedly counterfeit goods."
  • This represents that the platform is open to cooperate, and to remove pirated and counterfeit content, also being signatories of the "Memorandum of Understanding on the sale of counterfeit goods via the internet."
  • In 2019, a Chinese law hardened the fines up to $296 for people selling counterfeiting products.
  • Because of Alibaba's and AliExpress's anti-counterfeiting policies, those sellers had to move to social platforms like WeChat to keep selling fake products.
HOW TO REMOVE COUNTERFEIT ITEMS FROM ALIEXPRESS
  • There are four steps to remove a counterfeit product that is posted on AliExpress. First, it's necessary to register with Alibaba. Second, the complete Intellectual Property must be registered on their website. Then, a complaint must be registered. The last procedure is to wait for a response.
  • The owner of the listing has three days to respond to the complaint. If there isn't a challenge, the product is removed from Ali Express.
  • Also, users who frequently complain about counterfeiting lists can join the Good Faith Program, which speeds up the process in the future. The Good Faith Program is beneficial because these users complaints are processed on a priority basis.
Sources
Sources

From Part 01
From Part 02
Quotes
  • "RFID is a tech similar to the NFC capability on your smartphone, and uses radio frequency to send a signal to a device close by, for identification and tracking. "
Quotes
  • "In one instance, surprise raids of wholesalers located in Puerto Rico collected fakes with an estimated retail value of more than $1 million. Hundreds of polo shirts, dress shirts, hats and other merchandise, that would have otherwise been sold were found and taken off the market."
Quotes
  • "Using trade show seizures to deter online counterfeiting. One way in which manufacturers and distributors of counterfeit goods expand their distribution and maximise the sale of their products is by attending trade shows. ... when counterfeiters which sell online expose themselves at trade shows, it provides a unique opportunity to obtain evidence and jurisdiction over them."
Quotes
  • "Thus far, PIPCU investigations have led to the shuttering of 19,000 fake websites. "
  • "One advocate of PIPCU's work is Ugg, the Californian maker of sheepskin boots, who works with law enforcement globally to carry out raids, suspend websites and initiate prosecutions, according to brand protection manager Alistair Campbell. Globally, the company has taken legal action against 60,000 websites selling replica footwear and clothing, Campbell says."
Quotes
  • "RFId system is ideal since each RFID tag generated has a 22-character alphanumeric code that is unique and not reproducible. "
From Part 03
Quotes
  • "We envision a global online community where brand owners can finally realize their rightful revenues and reputations — and where the tools needed to take action are always just a click away. MarkMonitor leads the online brand establishment and protection industry with dedicated solutions that deliver better returns on your investment."
Quotes
  • "In this day and age, there are many things to be proud of. We’ve come a long way. We see a new generation grow up, with strong values and a completely different view of the world. A generation that grew up in this age of information where values such as Equality, Ecology, Justice and Diversity have come close to their hearts. They force us to change. They force the market to change. We suddenly hear big corporations talk about responsibilities. Economic and environmental as well as social responsibilities. They speak up. The only way to spread the word and make a change is to speak up. All of us fighting counterfeits are contributing to a better world. Protecting your brand is all about taking responsibility. Responsibility for your company and staff, your customers and consumers, the environment and for people less fortunate than the rest of us. However, we are not very good at speaking up. We should."
Quotes
  • "The total value of counterfeit and pirated goods in 2015 was estimated to be US$1.77 trillion. The consequences of illicit trade are far reaching and damaging for society; stunting socio-economic growth, risking citizens’ health, fueling criminal activity and damaging brand reputations. To combat illicit trade the authenticity of products needs to be guaranteed from source to consumption."
Quotes
  • "Authentic Vision provides anti-counterfeiting and authentication technologies designed to protect your organization’s investments in product innovation, brand value, and reputation while creating new opportunities to increase trust and engagement with consumers. Our patented holographic fingerprint tag, mobile authentication app, and real-time analytics capabilities protect physical assets from counterfeiting and alert brand and product owners to potential fraudulent activity. Our anti-counterfeiting and authentication technologies help to minimize lost revenues and mitigate liability due to counterfeits and create new opportunities to engage with consumers through loyalty programs, incentives and future experiences that bridge the digital and physical"
Quotes
  • "DH Anticounterfeit™ facilitates brand protection teams’ work, making them more productive using an intelligent case management system with strategic insight."
Quotes
  • "Fill in the inquiry form on this page with your contact details and our team will get in touch to schedule a convenient time and walk you through our software DEMO. Should you have any particular requests for your demo kindly brief us in the message section below"