A lot of attention is paid to measures that try to thwart counterfeiting. Equally important, says Phil Huff, CEO of Brandwatch Technologies, a provider of brand security and product authentication solutions, is what a business does when a counterfeit product is discovered. (See: In Search of Counterfeiting’s Silver Bullet.)
As part of an overall strategy to address counterfeiting, Brandwatch emphasizes the importance of data collection — not just identifying authentic products, but bogus parts as well:
- Many times there is an IT aspect to our solution. Gathering information about a product as it travels throughout the supply chain is part of the overall strategy and can help the enforcement piece of the process. We don't get directly involved in pursuing enforcement; we provide the evidence that can be used as proof [of counterfeiting] if it becomes part of a court case.
In the electronics supply chain, cases have made it to court in several ways: companies targeting counterfeits as patent infringement; prosecution by state or federal government agencies; and investigation by bodies such as the International Trade Commission (ITC). Within the past year there have been two high-visibility cases of fake components sold to the US Department of Defense that were prosecuted by the government. Both resulted in guilty pleas. The US Department of Justice released details of a case against Neil Felahy. Network World , part of the IDG News Service, covered the case of VisionTech, a Florida-based distributor.
In the Felahy case, the Department of Justice notes that military-grade components are treated differently than commercial-grade components — in other words, they undergo more rigorous screening. Additionally, details are provided on how the counterfeit goods entered the supply chain:
- According to the Indictment, the defendants engaged in the interstate trafficking of counterfeit integrated circuits, in a variety of ways. First, they acquired counterfeit integrated circuits from supply sources in China, imported them into the United States, and sold them to the public via the Internet. Second, they obtained trademark-branded integrated circuits then scraped, sanded, or ground off the original markings, and caused the devices to be remarked with another trademark and other markings thereby fraudulently indicating, among other things, that the devices were of a certain brand, newer, higher quality or were of a certain grade, including military grade. Third, the defendants “harvested” dies from integrated circuits and caused them to be repackaged to appear new, including adding trademarks and other markings indicating that the devices were of a certain brand, higher quality or were of a certain grade.
Clearly, there is a high level of traceability and data-gathering in the military procurement process — which is as it should be. For the military and aerospace industries, lives are almost always at stake in the equipment they manufacture. In the two cases above, components were sold in the US to the US military, which may account for the rapid and successful prosecution.
It may not be possible or viable for commercial components to be treated the same way. Patent infringement is time-consuming and costly, and prosecuting in foreign regions is difficult because laws vary from country to country. But patent and copyright protection should not be as time-consuming or as costly as it currently appears to be.
Brandwatch says companies that aggressively defend their brands are less likely to be targeted by counterfeiters. Has your company had any experience in defending its brand? What was the outcome?