Counterfeiting is a crime which does not get the attention it should from society at large. It is not a victimless crime, for it is nothing but theft-of the creation of the mind, of designs and symbols, and creating serious damage to the individual or company whose product is being counterfeited.
The Global Anti-Counterfeiting Group (GACG) defines counterfeiting as a crime involving the theft of someone’s trademark. In other words, it is the ‘making of an imitation, copy of forgery of a genuine document, card, product, label or package with the intention to deceive or defraud ‘.
Globalisation has resulted in a sharp increase in trade by reducing trade barriers, increasing market access to all parts of the globe and contributed, as per the International Monetary Fund to a growth in world trade by as much as 6 percent annually. Unfortunately, a corollary of this has also been a sharp increase in movement of counterfeit goods.
As per the International Chamber of Commerce (ICC) this could be more than $ 2.3 trillion. As per the estimates of the World Customs Organization (WCO) and the International Criminal Police Organization (ICPO) it could be in the range of 500 billion Euro per year.
Authentication Solution Providers Association (ASPA), and CRISIL, had in their early 2023 survey on the state of counterfeiting in India estimated that the extent of counterfeiting was as high as 25% to 30% of the market. Given the size of the Indian market, this is humongous. Counterfeiting as per the survey is most prevalent in fast-moving consumer goods (FMCG), apparel, agrochemical, pharmaceutical, automotive and consumer durable sectors.
Counterfeiting has become increasingly sophisticated. The market now offers even ‘genuine fakes’ indicating a fake product very close to the original. But all, counterfeited products (whether ‘genuine fake’ or a ‘fake fake’) are necessarily of poorer, substandard quality. That is how they are cheaper and exploit the consumer’s desire for low prices.
What this means is that they come with no guarantees and are safety (as in the case of automobile spare parts) and health (as in the case of pharma products) risks. Counterfeiting has extended far beyond only luxury products. Counterfeit pharmaceuticals like cough syrups as was the case in Nigeria and Haiti can cause death. Counterfeit cancer medicines like in the case recently detected by the Delhi police can result in unsuspecting patients suffering from cancer getting no relief from the fatal disease.
Counterfeiting impacts the genuine manufacturer of their legitimate revenue. Further a genuine manufacturer becomes liable on account of the damage which counterfeited goods can potentially cause. It robs the government exchequer of its legitimate taxes and results in creation of a parallel economy-the sale proceeds of such counterfeit products, and in fact of all crime, invariably are used for other nefarious activities. They fund other criminal activities.
Counterfeiting hurts investment and innovation. New investors are wary of an economy where counterfeiting flourish. Existing enterprises have no incentive to invest in design improvement and innovation. All this also results in loss of jobs in a formal economy. Counterfeiting particularly hurts the small and medium sectors who lack the wherewithal to counter this attack on their legitimate production and sales.
The Committee against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE) a think tank working under the aegis of FICCI, has in multiple reports brought out the details of loss of revenue, jobs and overall impact on the Indian economy. Counterfeiting is thus bad.
As the ASPA-CRISIL study reveals while a few customers willingly purchased a counterfeit product especially in the FMCG and Ready-Made Garment Apparel space where the level of harmlessness is perceived to be high, most customers ended up buying a counterfeit product unsuspectingly.
How then should a customer avoid purchasing a counterfeit product? As the International Anti-Counterfeiting Coalition (IACC) points out, a smart customer would look for the 3 P’s-Price, Packaging and Place. A counterfeit product is invariably cheaper than the genuine item. The low price should caution the customer about the genuineness of the product. The packaging is another give away -either it is poor or there is no packaging. The packaging it is which gives details of date, place or lot of manufacture.
The place where the customer buys the product is another indicator. Counterfeit products are invariably sold in the back alleys of a city; in markets which are notoriously well known as specialising in nothing but fakes. As per a 2023 report of the Advisory Committee on Enforcement of the World Intellectual Property Organization (WIPO), globally there has been an increase in online markets facilitating trade in counterfeit goods. Counterfeit manufactures prefer the online market simply because it is both less risky and less expensive; sale of a counterfeit in physical markets can attract attention of enforcement apart from the increase in costs of renting a place and other attendant expenditure.
The FICCI-CASCADE and ASPA-CRISIL studies indicate that counterfeiting is a problem in India. India is a signatory to WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) which aims to give adequate protection to intellectual property rights in international trade. The Government is thus alive to the issue and there are several enactments in place-civil, criminal and administrative, to protect both international trade and domestic industry.
The Trademarks Act, The Copyright Act, The Patents Act, The Designs Act, The Geographical Indications Act, The Drugs and Cosmetics Act, The Food and Safety and Standards Act, The Consumer Protection Act, The Indian Penal Code, The Information Technology Act, The Customs Act, all in one way or other address the issue of counterfeiting.
What the sheer number of statutory enactments also means is the large number of administrative bodies involved in its implementation- and the consequential challenge of coordination. Counterfeit cases (other than under The Customs Act) are investigated by the SHO of a police station, most of whom are hard pressed combating other serious crimes in their jurisdictions and view counterfeiting cases with mild amusement -the larger damage caused by counterfeiting escapes them.
The Department of Consumer Affairs is the nodal department concerned with consumer protection. Empowerment of consumers through awareness and education is part of their mandate- because ultimately while enforcement will play its role it is for the informed consumer to say no to counterfeits. The private sector too has a critical role to play. They need to use technology to put in place to make counterfeiting difficult. They need to work closely with the Government to raise consumer awareness and strengthen the hands of enforcement agencies.
In this background the World Anti-Counterfeiting Day which is observed on June 8 provides an excellent opportunity for raising awareness among the consumers about counterfeiting, bringing all enforcement agencies and industry players on the table to share best practices and to discuss ways and means of working closely to address the problem. Then and only then can the scourge of counterfeiting be tackled.
— The author, Najib Shah, is former Chairman, Central Board of Indirect Taxes & Customs. The views expressed are personal.
The Global Anti-Counterfeiting Group (GACG) defines counterfeiting as a crime involving the theft of someone’s trademark. In other words, it is the ‘making of an imitation, copy of forgery of a genuine document, card, product, label or package with the intention to deceive or defraud ‘.
Globalisation has resulted in a sharp increase in trade by reducing trade barriers, increasing market access to all parts of the globe and contributed, as per the International Monetary Fund to a growth in world trade by as much as 6 percent annually. Unfortunately, a corollary of this has also been a sharp increase in movement of counterfeit goods.
As per the International Chamber of Commerce (ICC) this could be more than $ 2.3 trillion. As per the estimates of the World Customs Organization (WCO) and the International Criminal Police Organization (ICPO) it could be in the range of 500 billion Euro per year.
Authentication Solution Providers Association (ASPA), and CRISIL, had in their early 2023 survey on the state of counterfeiting in India estimated that the extent of counterfeiting was as high as 25% to 30% of the market. Given the size of the Indian market, this is humongous. Counterfeiting as per the survey is most prevalent in fast-moving consumer goods (FMCG), apparel, agrochemical, pharmaceutical, automotive and consumer durable sectors.
Counterfeiting has become increasingly sophisticated. The market now offers even ‘genuine fakes’ indicating a fake product very close to the original. But all, counterfeited products (whether ‘genuine fake’ or a ‘fake fake’) are necessarily of poorer, substandard quality. That is how they are cheaper and exploit the consumer’s desire for low prices.
What this means is that they come with no guarantees and are safety (as in the case of automobile spare parts) and health (as in the case of pharma products) risks. Counterfeiting has extended far beyond only luxury products. Counterfeit pharmaceuticals like cough syrups as was the case in Nigeria and Haiti can cause death. Counterfeit cancer medicines like in the case recently detected by the Delhi police can result in unsuspecting patients suffering from cancer getting no relief from the fatal disease.
Counterfeiting impacts the genuine manufacturer of their legitimate revenue. Further a genuine manufacturer becomes liable on account of the damage which counterfeited goods can potentially cause. It robs the government exchequer of its legitimate taxes and results in creation of a parallel economy-the sale proceeds of such counterfeit products, and in fact of all crime, invariably are used for other nefarious activities. They fund other criminal activities.
Counterfeiting hurts investment and innovation. New investors are wary of an economy where counterfeiting flourish. Existing enterprises have no incentive to invest in design improvement and innovation. All this also results in loss of jobs in a formal economy. Counterfeiting particularly hurts the small and medium sectors who lack the wherewithal to counter this attack on their legitimate production and sales.
The Committee against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE) a think tank working under the aegis of FICCI, has in multiple reports brought out the details of loss of revenue, jobs and overall impact on the Indian economy. Counterfeiting is thus bad.
As the ASPA-CRISIL study reveals while a few customers willingly purchased a counterfeit product especially in the FMCG and Ready-Made Garment Apparel space where the level of harmlessness is perceived to be high, most customers ended up buying a counterfeit product unsuspectingly.
How then should a customer avoid purchasing a counterfeit product? As the International Anti-Counterfeiting Coalition (IACC) points out, a smart customer would look for the 3 P’s-Price, Packaging and Place. A counterfeit product is invariably cheaper than the genuine item. The low price should caution the customer about the genuineness of the product. The packaging is another give away -either it is poor or there is no packaging. The packaging it is which gives details of date, place or lot of manufacture.
The place where the customer buys the product is another indicator. Counterfeit products are invariably sold in the back alleys of a city; in markets which are notoriously well known as specialising in nothing but fakes. As per a 2023 report of the Advisory Committee on Enforcement of the World Intellectual Property Organization (WIPO), globally there has been an increase in online markets facilitating trade in counterfeit goods. Counterfeit manufactures prefer the online market simply because it is both less risky and less expensive; sale of a counterfeit in physical markets can attract attention of enforcement apart from the increase in costs of renting a place and other attendant expenditure.
The FICCI-CASCADE and ASPA-CRISIL studies indicate that counterfeiting is a problem in India. India is a signatory to WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) which aims to give adequate protection to intellectual property rights in international trade. The Government is thus alive to the issue and there are several enactments in place-civil, criminal and administrative, to protect both international trade and domestic industry.
The Trademarks Act, The Copyright Act, The Patents Act, The Designs Act, The Geographical Indications Act, The Drugs and Cosmetics Act, The Food and Safety and Standards Act, The Consumer Protection Act, The Indian Penal Code, The Information Technology Act, The Customs Act, all in one way or other address the issue of counterfeiting.
What the sheer number of statutory enactments also means is the large number of administrative bodies involved in its implementation- and the consequential challenge of coordination. Counterfeit cases (other than under The Customs Act) are investigated by the SHO of a police station, most of whom are hard pressed combating other serious crimes in their jurisdictions and view counterfeiting cases with mild amusement -the larger damage caused by counterfeiting escapes them.
The Department of Consumer Affairs is the nodal department concerned with consumer protection. Empowerment of consumers through awareness and education is part of their mandate- because ultimately while enforcement will play its role it is for the informed consumer to say no to counterfeits. The private sector too has a critical role to play. They need to use technology to put in place to make counterfeiting difficult. They need to work closely with the Government to raise consumer awareness and strengthen the hands of enforcement agencies.
In this background the World Anti-Counterfeiting Day which is observed on June 8 provides an excellent opportunity for raising awareness among the consumers about counterfeiting, bringing all enforcement agencies and industry players on the table to share best practices and to discuss ways and means of working closely to address the problem. Then and only then can the scourge of counterfeiting be tackled.
— The author, Najib Shah, is former Chairman, Central Board of Indirect Taxes & Customs. The views expressed are personal.
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