Targeting bogus goods

Technology gives merchants a fighting chance.

Sometimes it's easy for Stacy Papachristos to spot a fake, such as a video of a classic WrestleMania match for sale online when World Wrestling Entertainment never released such a product.

The source? Counterfeiters and trademark infringers using the Internet to hawk products. "They'll be selling some of our older footage on DVDs, and it's footage I know we haven't produced on DVD," says Papachristos, who is associate counsel for intellectual property at WWE in Stamford, Conn.

Companies such as Tiffany, Oakley and Montblanc know the drill well. Counterfeiters have long created knockoffs of luxury goods from companies such as these. Auto parts makers, sporting goods suppliers and pharmaceutical manufacturers also are all too familiar with counterfeiters.

It's a problem that has grown since fraudsters began using auction sites and online marketplaces to sell counterfeit goods efficiently and in large volumes. The International Chamber of Commerce estimates that counterfeit goods account for 5% to 7% of world trade. In the IT industry, manufacturers lose about $100 billion to counterfeiters annually, according to research from KPMG and the nonprofit Alliance for Gray Market and Counterfeit Abatement (AGMA).

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Sometimes it's easy for Stacy Papachristos to spot a fake, such as a video of a classic WrestleMania match for sale online when World Wrestling Entertainment never released such a product.

The source? Counterfeiters and trademark infringers using the Internet to hawk products. "They'll be selling some of our older footage on DVDs, and it's footage I know we haven't produced on DVD," says Papachristos, who is associate counsel for intellectual property at WWE in Stamford, Conn.

Companies such as Tiffany, Oakley and Montblanc know the drill well. Counterfeiters have long created knockoffs of luxury goods from companies such as these. Auto parts makers, sporting goods suppliers and pharmaceutical manufacturers also are all too familiar with counterfeiters.

It's a problem that has grown since fraudsters began using auction sites and online marketplaces to sell counterfeit goods efficiently and in large volumes. The International Chamber of Commerce estimates that counterfeit goods account for 5% to 7% of world trade. In the IT industry, manufacturers lose about $100 billion to counterfeiters annually, according to research from KPMG and the nonprofit Alliance for Gray Market and Counterfeit Abatement (AGMA).

Fortunately for businesses, as counterfeit-related damages have multiplied, so too have the tools to fight back. Brandimensions, Cyveillance, GenuOne and MarkMonitor are among software makers with products that monitor for inappropriate or fraudulent use of a corporate name or identity on the Internet, including Web sites, domain names, chat rooms and auctions. (See related story about GenuOne customer Mitchell & Ness Nostalgia Company.)

In addition, vendors such as 3M, GenuOne and Texas Instruments offer security labels, some outfitted with RFID tags, others designed with photo-luminescent dyes embedded into labels and coatings, for example. These technologies can help companies better track and authenticate components and finished goods as they move through the supply chain, as well as make it harder to tamper with or copy packaging.

"E-commerce is playing a big role in counterfeit. The counterfeiters obviously want to get as close to the consumer as possible, and they don't want to have to rely on resellers and distributors," says Nick Tidd, president of AGMA.

A group of IT vendors formed AGMA to share ideas for tackling gray market issues. (Gray market activity refers to sales of authentic goods through an unauthorized channel.) The group has expanded its focus to include counterfeit IT gear.

"Counterfeit came on the radar screen about two and a half years ago. A number of our members found that their return rates were starting to increase, and that the quality of those returns was starting to become suspect," Tidd says.

Those are two indicators that can alert vendors to a counterfeiting problem - something not many IT buyers first suspect, Tidd says. Consumers don't tend to think that IT gear, in its complexity, can be counterfeited, he says.