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The Negative Effects of Counterfeiting

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Stephanie Villafranca FTT 450 Professor Shephard 4/30/13 The Negative Effects of Counterfeiting Abstract Counterfeiting is an illegal action. There is a study that provides strong evidence as to why counterfeit items can affect not only the lives of the designers, but the everyday consumer. It costs 250 billion dollars a year, which causes people to lose their jobs. Its profit margin is larger than any other illegal business. (Crime Inc. , 2010).

Many people think that counterfeiting only hurts the designer and affects the economy financially, but what they do not realize is that this crime can personally harm the lives of them and their family.

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In a study I had found by Sara Marcketti and Mack Shelley, 244 fashion students at Midwestern University said they would pay for counterfeit goods. That number is alarming for many reasons, one main reason being the safety of the consumer.

Based on personality traits among diverse consumers of different genders and backgrounds, young consumers who are of a wealthier class and who are self-conscience believe that branded items are of highest importance of them.

However, it may be different for a young consumer who comes from a middle class or poor household, where buying a good which is counterfeit might not matter to them. (Bilal, 2012). This is where it becomes dangerous. Counterfeit sneakers might seem harmless, but the consumers don’t realize the physical damage that is being done to their feet.

The most harmful form of counterfeit goods are fraudulent medicines. “The sale of fraudulent medicines from Asia to South-East Asia and Africa alone amounts to some 1. 6 million per year. ” (The United Nations office on Drugs and Crime, 2013). According to Marcketti and Shelley, authors of Consumer Concern, Knowledge and Attitude towards Counterfeiting is when a manufacturer creates a lookalike product, labels it as an original and passes it off as a true original. This is a worldwide phenomenon that accounts for 5%-7% of global trade. (Marcketti, Shelley, 2009).

The growth rate at this point has increased 1700% in the last 10 years (KasimTatic, 2012). The constant growth of Counterfeiting and Trademark infringement in the last decade has flourished due to online Marketplaces, such as EBay. (Saunders, Berger-Walliser, 2011) Many consumers are tricked and scammed into buying counterfeit goods, which, in turn causes the authentic designer to lose money. This affects the economy and how we spend our money. It is now clear why original trademark holders will take legal action at any point where they feel as if they are being cheated, threatened or copied. Bartow, 2011) We live in a society obsessed with materialistic items and it seems like an individual “will go to any length to obtain it. ” Counterfeiting is a never ending battle. (Wicker, 2008. ) What many consumers don’t understand is that copying the actual design verses counterfeiting are two different ends of the spectrum. Bartow states that “Counterfeiting is the act of putting someone else’s exact trademark on products that were not produced or authorized by the trademark holder. ” (Bartow, 2011).

Although there are different forms of counterfeiting such as pharmaceuticals and appliances, fashion luxury counterfeiting has been happening the longest. For 100 years (1860-1960) Haute couture dominated fashion in Europe and America (Stewart, 2005) “Bon Marche mimicked couturiers by arranging showings of their ‘‘latest creations’’ and employing, though only for their catalog covers, the same illustrators as fashion magazines did. ” (Stewart, 2005). It is easy to think of all the counterfeiting going on currently, however we don’t realize that it happened within Haute Couture over 100 years ago as well.

It is helpful and beneficial as a fashion student to learn about the emergence of counterfeiting. Counterfeiting is a violation of the Federal Trademark Law. It entails wholesale copying of trademarks as well as design features. (Bartow, 2011) According to Scott Hemphill and Jeannie Suk, “Lovers of cheap fashion knockoffs are framed by Hemphill and Suk as enemies of creativity who should be consigned to decorating their bodies and lives only with the stylistic palettes they can afford. ” Companies are allowed to file a request for an injunction under the Lanham Act when they are copied. Bartow, 2011) An interesting case is the Tiffany v. EBay case. It was the first U. S. case that “addressed the secondary liability of an online market. ” According to Saunders and Berger-Walliser, the courts dismissed all claims against EBay, saying that they cannot be held liable for the infringement and it is the trademark owner’s burden to “police its mark”. However, while some courts in France had the same mindset as the courts in the U. S. , a few French courts disagreed and felt that EBay should pay the price of counterfeiting Tiffany & Co. Saunders, Berger-Walliser, 2011). Fashion luxury counterfeiting is unfair and hurts the consumer, the designer and the economy as a whole, but when it starts infiltrating food and medicine, we have a much larger problem on our hands. According to the United Nations Office on Drugs and Crime, every year, consumers are tricked into buying counterfeit food items. “A ploy favored by criminals is to intentionally mislabel and misrepresent foods as luxury items or as originating in certain countries, allowing them to raise prices. (United Nations Office on Drugs and Crime, 2013) What is even more disturbing is that in 2008, there were reports of a chemical called melamine which was used in plastics found in babies milk formula in China. Thousands of babies became sick due to this counterfeited food item. This is just one of the many harmful ways the counterfeiting business can physically harm innocent people. (United Nations Office on Drugs and Crime, 2013) The bottom line is that it is unethical, dangerous and it kills people. Many counterfeit goods do not measure to the normal safety procedures and regulations that are set.

The main goal of counterfeit goods producers is to make money, and that is all they really care about. (Crime Inc. , 2010) It is extremely important to build awareness not only in fashion luxury counterfeiting but within the entire counterfeiting business. How can we stop this negative global phenomenon? The explosion of the availability of counterfeit goods has been caused by a combination of overseas manufacturing, internet and global sourcing. China is where most of these counterfeit goods come from. Organizations such as INTERPOL and the World Customs organization help defeat these crimes and spread awareness around he country to consumers. Don’t become a victim in the crime of counterfeiting. Look for suspicious labels, avoid purchasing medicines online and check with your doctor about any labels on medications that seem fake or not legitimate. (United Nations Office on Drugs and Crime, 2013) According to Richard Fisher, “the only solution that most companies favor is radical: log a unique physical fingerprint for every single item that comes off a production line, whether it’s a fridge or a packet of cigarettes. ” (Fisher, 2007)

The US customs and Border Protection work to prevent the entry of counterfeit goods the best they can. An x-ray technology peaks inside the containers that are on the ship. If the goods match the shipping manifest, then it’s a good sign. They check hidden compartments and if there’s even anything that looks a little suspicious, the cargo will get yanked off the ship. Although the intellectual property is useful, counterfeiters have adapted to avoid detection. They will try to send smaller shipments by mail, and they know it is impossible to get caught that way.

Also, through the internet they can pose as legitimate retailers, making counterfeit goods more accessible. (Crime Inc. , 2010). Counterfeiting is illegal, and punishable by law. Lack of trade regulation and enforcement lead to illegal activity and one of the primary activities of custom services has become to protect intellectual property rights. The intellectual property law protects Intellectual Property Rights of creators and owners by ensuring exclusive use of these creations and includes the copy right law, trade mark law, patent law, and trade secret law.

Overall, we have spread awareness about illegal activity and know when to read the signs when we are being faced with a counterfeit item. According to Grace I. Kunz and Myrna B. Garner, authors of Going Global, The FBI reported that intellectual property crime costs $200 to $250 billion a year in the U. S. business losses. (FBI, 2002). What most consumers don’t realize is that we are the ones actually promoting and advocating counterfeit items, which is so unfortunate. “Shopping for fakes is cool”, said Kunz and Garner. (Kunz & Garner, 2011). How many of us have ent to China Town in Manhattan and have bought a fake coach bag or fake juicy couture perfume? At least 85-100% of girls that were on a Mount Mercy Academy High School Senior trip to NYC in 2009 were guilty of purchasing counterfeit goods. As a witness, I am qualified to speak of the situation and have saw with my own eyes how consumers contribute to this crime. Most people think it is harmless, especially 17 and 18 year old girls on a class trip, shopping for fun and buying souvenirs for their families. It is important to educate younger adults on crimes like these because most are unaware.

The more the consumer demand for counterfeit items increase, the more difficult it becomes to put a stop to this crime. (Kunz & Garner, 2011). The thing is some consumers buy these goods knowingly, and some unknowingly. Whatever the case may be, there needs to be a more organized plan on how to teach consumers how dangerous and threatening this is to their health, their families health and the environment all together. On a more positive note, the large market for counterfeit items on a global scale has also made anticounterfeiting a big business.

An interesting fact from Global Issues in the Apparel Industry is that fortune 500 companies have spent $2-$4 million a year on anticounterfeiting. (Kunz & Garner, 2011). The counterfeiting industry is a vicious cycle. It is almost a contradictory that the larger the counterfeiting industry becomes, the more money companies spend on anticounterfeiting. Either way, designers and companies are losing out on money. It is unfortunate that it has reached this point, even though intellectual properties are working very hard to prevent and put counterfeiting to a stop. Kunz & Garner, 2011). In Beijing, fake fashion goods are a part of the everyday consumer’s life. In a study, Lowther, “a bag of 500 Diesel tags cost the equivalent of $6 in America. ” (Lowther, 2004). “Trademark might be a brand, name or a logo” but like we learned in class it can also be letters, numbers, colors, package design etc. (Elias & Stim, 2003). Although apparel companies invest millions into brand development but tags and labels only cost a few cents, represent the brand, bear a company’s trademarks, are the key components to the product, important to customer loyalty. Going Global: The Textile and Apparel Industry, 2011). The U. S. CBP, counterfeit goods cost brand owners more than $720 billion every year. 7 to 9 percent of all world trade are counterfeits. (Special report, 2003). Product counterfeiting is a large global issue that widely affects the individual firms, designers, and society as a whole. Based on statistical studies, research, witnessing, and various academic journal articles, it is obvious that counterfeiting is one of the largest issues in the Global and Apparel and Textile industry.

Counterfeiting is an illegal and harmful action. From research, we know now that constant growth of Counterfeiting and Trademark infringement in the last decade has flourished due to online Marketplaces, such as EBay. Counterfeiting is a violation of the Federal Trademark Law. It entails wholesale copying of trademarks as well as design features. The US customs and Border Protection work to prevent the entry of counterfeit goods the best they can, but is impossible to prevent every counterfeit good that tries to enter the U. S.

Counterfeiting is a never ending battle, and we need to educated the average consumer, and younger consumers on the real damage and negative effects it has on health and the environment. The more the consumer demand for counterfeit items increase, the more difficult it becomes to put a stop to this crime, and that is the real issue here. Like I said before, counterfeiting is a vicious cycle. This is destroying our economy and wasting money that could be used to help people who are truly in need of food, shelter and clothing.

In conclusion, it is disturbing to know that innocent children are dying because of dangerous chemicals found in baby formula or toxic plastic toys that children chew on are killing them. It is extremely important to build awareness not only in fashion luxury counterfeiting but within the entire counterfeiting business. How can we stop this negative global phenomenon? Luckily we have The US customs and Border Protection who work to prevent the entry of counterfeit goods the best they can. An x-ray technology peaks inside the containers that are on the ship. If the goods match the shipping manifest, then it’s a good sign.

They check hidden compartments and if there’s even anything that looks a little suspicious, the cargo will get yanked off the ship. This is a global issue that is very important to prevent, solve, and stop it all together. References Saunders, M. Kurt, Berger-Walliser, Gerlinde (2011) The Liability of Online Markets for Counterfeit Goods: A Comparative Analysis of Secondary Trademark Infringement in the United States and Europe KasimTatic, MerimaCinjarevic. (2012) FAKE LUXURY: CONSUMER PURCHASE INTENTIONS OF COUNTERFEIT LUXURY BRANDS. Wicker, Beth. (2008) The Low Down on High Fashion Fakes. Kentucky English Bulletin.

Viet-Dung Trinh, Ian Phau (2012) The Overlooked Component in the Consumption of Counterfeit Luxury Brands Studies: Materialism – A Literature Review Contemporary Management Research Marcketti, Sara B. , Shelley, Mack, C. (2009) Consumer concern, knowledge and attitude towards counterfeitapparelproducts. International Journal of Consumer Studies. Bartow, Ann. (2011) COUNTERFEITS, COPYING AND CLASS. Houston Law Review. Stewart, Mary Lynn. (2005) Copying and Copyrighting Haute Couture: Democratizing Fashion, 1900-1930s. French Historical Studies. Ahmad, Bilal, Ali Khan, Mohsin, Ahmad, Naveed, Ahmed, Waqar. 2012). Influence of Personality Traits on Consumers’ Intention to Buy the FashionCounterfeits: An Empirical Investigation with Special Reference to Young Consumers in Pakistan. Asian Journal of Business Management. Kunz, Grace, Garner, Myrna (2011). Going Global: The Textile and Apparel Industry The U. S. Federal Bureau of Investigation (2002). Going Global: The Textile and Apparel Industry Lowther, (2004). Going Global: The Textile and Apparel Industry Elias and Stim (2003). Going Global: The Textile and Apparel Industry Special Report (2003). Going Global: The Textile and Apparel Industry

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The Negative Effects of Counterfeiting. (2016, Oct 22). Retrieved from https://graduateway.com/the-negative-effects-of-counterfeiting/

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