Industrial Product Counterfeiting: Problems and Proposed Solutions

Background to International Counterfeiting It has been estimated that counterfeiting, the unauthorized imitation of goods or services with intent to deceive (6), was responsible for approximately 60 billion in lost sales of consumer and industrial products in the United States in 1985. In comparison, 3 billion in sales were lost in United States market in 1978 due to piracy of reputable merchandise. Currently, counterfeiting has been estimated as increasing at an incredible rate of thirty percent a year. One of the fastest growing product counterfeit segments is in industrial products. Close to five percent of the total world trade consumer industrial products is accounted for by the importation of fraudulent goods and services. The counterfeit market in the United States exists and continues to thrive due to the immense demand for copies of well‐known, reputable brands, but at a fraction of the cost of the real item. By forging goods, counterfeiters reduce their costs by denying the royalties that rightfully belong to the originator of the forged item. In another aspect, if existing technology is copied from another firm, the counterfeiting organization has virtually no research and development costs while the firm that produced the technology costs are significantly higher than those of the counterfeiter.