Better to stay with nothing – Stop-gap brand-protection strategies accelerates counterfeiting

  1. stop-gap anti-counterfeit measures are counter productive

Effective anti-counterfeit measures are highly contextual decision. Specific measures or technologies suited for one use-case might fail for other or rather end-up increasing counterfeiting. First step for legal, packaging, sales and marketing folks those are common stakeholders in anti-counterfeit strategy should be about defining context. Strategy depends on product category, user-segment, end-user behavior, nature of supply-chain, connivance of insider with counterfeiters, IP enforcement among others.

In the digital world, security technologies are in-sync with product-trend whereas in physical world security technologies are lagging much behind compared to advancement in packaging technologies.

However, brand-protection team can easily derive context by reflecting their thoughts on below provided set of questions:

  • Whether counterfeiting is being done by external parties alone or in connivance with insiders or your own authorized vendor is leaking information?
  • Whether your brand is priced at premium compared to competing brands and hence chances of insiders conniving is even higher?
  • Since small token rewards on successful authentication is not an effective incentive, can your packaging feature enable marketing campaign wherein select end-customers can be given bigger award for detecting duplicate while ensuring zero-hassle authentication using instant, precise and automated  manner without requiring any special gadget
  • Can you credibly track ground action of market investigative agencies OR how do you ensure they are not hands-in-glove with counterfeiter or orchestrating some seizure and arrest to continue the contract?
  • Whether problem is limited to counterfeit alone or this is also about re-fill, warranty on fakes, reverse logistics and/or tampering?
  • Even when you are able to do seizure of items being claimed to be fake, how often you are able to prove fake as fake given product/packaging has similar overt/covert/serial number/hologram and especially when suspects are aligned with authorized partner of your distribution system and can produce genuine documents ?
  • Whether nature of product is such that end-consumers do not worry about genuineness and then brand protection is more dependent on credible action by sales-force and market-investigation.
  • Do you have reliable control system to detect if your own packaging team and packaging vendors are leaking information to counterfeiters and then making case for new security-feature in next iteration ?
  • Whether your packaging vendor is able to extend any professional liability insurance if their anti-counterfeit technology is duplicated in very short time?
  • Are you getting so many false authentications on online tracking portals but not sure whether it is worth initiating ground action?
  • What kind of legal charges can you put against offenders in addition to traditional trademark/copyright or even more deterrent patent-infringement ?
  • Why are you unable to engage end-customers – Is this because they believe security measures on packaging is merely an eyewash and posturing rather than serious initiative and becomes discouraging?
  • Are the stop-gap measures encouraging counterfeiters with an opportunity to continuously appear genuine with the advancement of packaging technology, enabling quick reproduction of stop-gap security measures?

If above questions are challenging, it is time to think differently!

Snapshot of a real decision making process by brand-protection team:

In this case, brand-protection team was finalizing expensive deal with one of difficult-to-negotiate packaging-vendor offering exclusive printing technology and fancy embossing on cardboard packaging those were indeed difficult to counterfeit. When vendor was asked to submit to professional liability insurance against possible duplication, the vendor quickly agreed to lower the cost of deal to half without bearing any liability.

Another brand protection team had core issue of geographical diversion without any issue of anti-counterfeit but was discussing deal for expensive covert feature. It was suggested only to adopt number-system provided they do not have counterfeit issue. In another case, brand protection team was finalizing contract with market investigative agencies wherein it was consulted that first put smart features in packaging those can help tracking ground-action of market-investigation personnel otherwise eventually they may connive and brand-owner will end-up struggling again. For warranty enabled spares, brand-owners was exploring NFC rather than more expensive non-clonable NFC. When asked about core issue/requirement, answer given was counterfeiting, ordinary tracking and authentication in reverse-logistics. It was again asked whether your use-case really needs intelligent sensors to collecting supply chain data, answer was in negative. Consultation provided was to go for QR code based tracking and non clonable & visual-feature that is instantly authenticate-able technology wherein QR code was exposing tracking data only upon successful authentication of original asset as such not to leak tracking data from duplicated version. It was explained real use-case of NFC is for intelligent tracking and if used for pointed use-case of authentication it can be replaced by defective look-alike without any visual evidence and accountability. Only non-clonable, passive and instantly tangibly authenticable technology will serve the purpose to prevent your own distributors from sending fake item tagged with intentionally planted look-alike defective NFC on pretext of non scan-ability to claim original in reverse logistics.

While we can continue with similar examples, but we hope to have planted the thought about effective anti-counterfeit decision making and strategy. Brand-protection team should not mix problem of counterfeiting with problem of geographical diversion. Never go for technology those can be authenticated without having physical access to product/packaging otherwise you will end-up having false alarms. Dependence on technologies those require human judgement is enabler for counterfeiters in medium-to-long term. Be cognizant of fact that it is quite often that your own team and vendor can connive and leak information. Market investigative agencies are good as long as ground action can be tracked in real-time otherwise they can be mastermind for counterfeiters. Capability of tangible & instant authentication to prove fake as fake is essential otherwise brand-owner weakness will be exploited by your own authorized supply-chain partner. Look for something that can enable legal prosecution against suspects for charges more deterrent than just trademark/copyrights.

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