Counterfeiting in Cyberspace

By Stimson, David C. | American Journalism Review, April 1998 | Go to article overview

Counterfeiting in Cyberspace


Stimson, David C., American Journalism Review


Watching the news or reading a newspaper or business magazine in any major city worldwide you are likely to see reports on the manufacture and sale of counterfeit products, ranging from fake watches to pharmaceuticals and automotive parts. Undoubtedly, counterfeiting has become a lucrative business for individuals in the underworld. While counterfeiters continue to grow their illegal operations in traditional manufacturing and retail sectors, they also are expanding their activities into commerce on the Internet at an alarming rate. For instance, today, while surfing the Net for legitimate products and information, it is not uncommon to see counterfeit goods for sale and trademarks being openly ignored.

By far, counterfeiting is one of the fastest growing, most far-reaching economic crimes worldwide, and the Internet is becoming a venue of choice for trademark infringers. Trademark owners across industries, including the apparel, pharmaceutical, food, computer software, luxury goods and publishing industries have been the targets of serious trademark counterfeiting and infringement. Counterfeiting in these industries, as well as others, can significantly damage a company's brands, image and products or services, not only through the loss of sales, but also by involuntarily associating them with inferior and, in many cases, hazardous goods.

Recognizing the plight of trademark owners in the area of intellectual property theft, and the harsh reality of inadequate public policies and commitment to strong anti-counterfeiting enforcement worldwide, the International Trademark Association, of which I am the president, dedicated resources to conduct an investigation of trademark infringement in the footwear and apparel industries.

In October 1995, the international Trademark Association commissioned WEFA, Inc., a leading international economic model, to quantify the losses suffered by apparel and footwear trademark owners due to counterfeiting and infringement. The International Trademark Association's Economic Impact of Trademark infringement Study investigates the sales losses suffered by a sizable segment of the footwear and apparel industries in 40 countries. The study provides evidence of the magnitude of the problem and is a powerful tool in INTA's efforts to persuade governments to develop and implement strong anti-counterfeiting enforcement measures.

The growth in counterfeiting activity reflects consumers' increased desire for brand name products, the ability of counterfeiters to adapt to trends in the public's appetite and the enormous profits that can be made from the sale of counterfeit goods. Counterfeiters also have developed sophisticated, often multinational networks of manufacturing and distribution. In an effort to combat counterfeiting activity, in July 1996, President Clinton signed the Anti-counterfeiting Consumer Protection Act into law. The law, which was supported by numerous consumer and intellectual property groups, allows local, state and federal law enforcement officials to take the necessary strategic steps to combat domestic and international manufacturing and sale of counterfeit goods.

The passage of the U.S. Anti-Counterfeiting Act is an indication of the importance of cooperation between the public and private sectors. Without the strong and vocal support of private industry organizations and associations it is doubtful that Congress would have passed this legislation that so greatly strengthens the powers of both the public and private sectors to combat counterfeiting.

Piracy, trademark infringement and false advertising associated with commerce activities on the Internet are eroding the ability of small businesses and large legal corporations to protect the value and recognition of their brands in the marketplace. If there is one thing that governing bodies should realize, it is that trademark owners are eager to protect their products' names and distinguishing features in cyberspace.

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