New anti-counterfeiting tech firm insists it could “kill the fake markets instantly”; critic says claim “ignores the reality on the ground” 03 Aug 17
A new anti-counterfeiting technology company, which uses QR codes to allow consumers to identify authentic products, has been making bold claims since it launched in June. A representative for the company tells World Trademark Review that it has the potential to “kill the fake markets instantly” by offering free access to its technology. However, one commentator has decried IP service companies that promise an ‘end to counterfeits’.
Italy-based Validactor officially launched worldwide in June. In simple terms, its technology allows companies to add unique QR codes to products so consumers can obtain information about them, including whether an item is authentic, expired, stolen or recalled. To encourage consumers to use the tool, it also integrates a range of other services, such as the ability to track personal goods and a social network offering. During the launch announcement, Validactor’s founder and head of development Dino Sergiano said that the company’s “easiness of implementation” and “proprietary algorithms” will effectively combat fakes, adding: “The biggest innovation we are implementing is the empowering of the biggest army in the world: customers. Each one, with their smartphones, may today be the biggest weapon available.”
In terms of engaging customers, the company’s social media presence is strong, with nearly 70,000 followers on Twitter at the time of publication (and, according to Twitter Audit, these are overwhelmingly legitimate) and 14,000 on Facebook. Sergiano has also spoken at numerous events around Europe in the past month, including at the London Unbound festival last week. However, the Validactor phone application – the software required for consumers to interact with the company’s code technology – has only been installed “100-500” times on Android (with no install data available for the iPhone app), a seemingly small amount for a product that needs a wide reach to be effective.
Nonetheless, the company is not afraid of lofty promises about how its technology could disrupt counterfeiting. In a World Trademark Review blog published last week, a Validactor representative added a comment that its software “can kill the fake markets instantly, if only there is the willingness to do so”. Founder Sergiano told us that Validactor would turn the tide where others have failed due to two factors.
The first is price. “We all have to move on a more social standpoint: fake products kill people, fake market revenues destroy economies, and we all have to fight this; therefore, we are taking a more social approach through the involvement of smaller companies and granting any of them free access to any Validactor feature,” he explained. “It is totally free, since we think that in order to ‘kill the fake markets instantly’ we need to have this technology present worldwide. Our vision is to provide free codes to as many companies as possible.” As to how the company will recoup its investment, he explains that it envisions deriving revenues from “big corporations”, adding: “Our business model sees revenues from the sale of codes and, eventually, sub-licensing of the system.”
The second factor is the belief that the offering will become truly mainstream. “Validactor is unique because any company can have it now; ubiquity and presence will kill the fake markets,” he adds. “Anti-counterfeiting measures must employ the customer base, that is the only way to fight fakes. The main error that brands are making has been - and still is - the distance that they put between themselves and the final customer. My wife, just as example, tried to verify the authenticity of a major Italian brand garment: it has been nearly impossible – it is tricky and time consuming.”
Of course, some brands are proactive in offering their customers a product authentication service; for example, Riot Games, Brother, 3M, Giuseppe Zanotti and Sennheiser have website pages dedicated to it. Others do not offer such tools and have taken the strategic decision not to acknowledge counterfeits or get into the business of authentication (Nike, for example, urges customers to report counterfeits but openly says it “won't respond to inquiries or authenticate products”). Therefore, as well as customer engagement, a challenge will be convincing such companies to offer intelligence on the platform.
Another barrier to entry could be the use of QR codes, with research suggesting that “only 19% of consumers have ever scanned a QR code”. However, Sergiano is bullish, and says that QR Codes are the right way to go. “Consumers do not normally use QRCodes because they are totally useless,” he argues. “But if you know that by scanning a product you may get points (even if you do not buy the item) or some sort of prize or reward, I think that the usage percentage will rise considerably.”
Of course, there are various anti-counterfeiting solutions that use QR codes and barcodes as a way for customers to authenticate products and interact with brands (ScanTrust and Authenticate IT are just two examples). Additionally, a number of anti-counterfeiting product providers would argue that, over time, their solution will be the magic bullet that delivers a fatal blow to the counterfeiting trade. However, The Intellectual Property Group director Dean Arnold argues that marketing statements that particular products will “kill the fake markets” are not helpful. “It's a good sales pitch, but it ignores the reality on the ground,” he states. “Counterfeiting is prolific because the supply and demand sides both benefit greatly from it. Suppliers of fake goods enjoy a very favorable risk to reward ratio, much more so than with other economic crimes. Meanwhile, there is high consumer demand from people who knowingly buy fakes."
An effective solution to end a problem as significant as counterfeiting requires entrepreneurs with pioneering ambitions. Additionally, rights holders would embrace any tool that looks likely to succeed in this battle. However, the fight against fakes is a multi-dimensional one and it remains to be seen whether there is the consumer will to shun counterfeits on the required scale, or a single solution that can succeed where others have not. For now, the end of counterfeiting remains a holy grail.
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