By Adam Smith
September 02 2010
On Monday, UK brand owners and law enforcement officers raided a counterfeit market at a racecourse, seizing hundreds of fake goods. On Tuesday, they opened the newspaper to a report entitled "Fake goods are fine, says EU study". By Thursday, the story had spread into other newspapers, blogs and websites.
But most of the coverage stretches the opinions held in the research, entitled "Jailhouse Frocks: locating the public interest in policing counterfeit luxury fashion goods" and published in the British Journal of Criminology. In fact, the author, David Wall, is keen to point out that the article was not funded by Brussels, but merely drew on some of his previous EU-commissioned work (which apparently sank without a trace). Moreover, Wall believes that no one should buy counterfeit goods. Nevertheless, his research angers brand owners and invites a debate about the responsibilities of brand owners and governments towards IP enforcement. It is a progression from a recurring argument (also covered by Wall) about whether counterfeits harm or promote brands (see this US study here).
Amid the media scuffle, the UK Intellectual Property Office (IPO) reacted quickly to journalists' claims that Wall's article supports counterfeiting, noting that counterfeiting poses a "major threat" to the UK economy. In a statement sent to WTR, the IPO goes on to assert: "Organised crime is heavily involved in the trade of counterfeit goods, including luxury items. These gangs are dealing in drugs, guns and people trafficking, along with counterfeit goods."
According to Wall, this is the kind of claim questioned by his article. "Just to say it's linked to organised crime isn't good enough," he says. "Where is the evidence? My article argues that we must deconstruct counterfeiting into its different elements and work out who is involved." Wall is convinced that this is what brand owners need to do in order to make any progress in the fight against fakes.
But this thesis also leads Wall into tricky territory with brand owners as he begins to delineate different types of counterfeit goods. "Safety-critical counterfeit goods," he argues, present "a clear danger to both individuals and society that demands immediate attention in the public interest. The case to support the public policing of counterfeit luxury fashion goods, however, is quite different by comparison, as it chiefly focuses upon the economic losses incurred by the brand owners." He therefore believes that there is a "stronger argument for allocating some public resources to protect the public from dangerously produced counterfeit goods".
Brand owners are not convinced with this section of Wall's analysis. "To say you can extract certain products from the enforcement process and focus on others is ridiculous," says Ruth Orchard, director general of the Anti-Counterfeiting Group, which represents over 200 big-brand members. "They're all linked: the people who produce counterfeit pharmaceuticals and electronics also fake handbags and other luxury items."
That said, other commentators note that law enforcement agencies have had to prioritise for years. "Of course the police won't devote resources to a street seller and his fake shirts versus a much graver crime happening further up the same road," says Stuart Adams, deputy chief executive at Rouse.
But the question Wall returns to is that which hangs over the connection between all these crimes. He points out that brand owners rely on problematic data. For example, brand owners often calculate losses related to counterfeiting by assuming that the number of counterfeits is equal to the number of genuine items that would have been sold. These sorts of statistics are regularly thrown back at brand owners - indeed there is already a great deal of material pointing holes in brand owners' claims - and this leads Wall back to his proposal for more research. "Brand owners haven't gone to the necessary level of detail so far because it costs a lot of money and is not an easy task," he says.
It may even be that brand owners do themselves and their cause a disservice by relying on problematic data. "There is nowhere near as much data as there could be," admits Adams, "but we're dealing with something for which it is extremely difficult to find evidence." It seems that Wall advises brand owners at least to try.
Brand owners will no doubt give this proposal some serious thought. Instead of pumping money into public awareness campaigns, perhaps funding more academic or investigative research could at least serve to uncover the kind of data that would make their case much stronger. After all, law enforcement agencies will be more inclined to view the problem in the round - that is, counterfeiting as a multi-product type business linked to other crimes - if they receive solid evidence for this.
This will also strengthen the links between government and industry which, according to Wall's research, are already strained. He finds that "the various public agencies involved in anti-counterfeiting initiatives (interviewed for this research) regularly reported that brand owners are almost reluctant to comply, if at all, in the identification of counterfeit goods that have been seized and carry their brand".
For those brand owners who have vigorous relationships with public bodies, this finding will be disappointing. Orchard points out that there are many reasons why industry cannot always aid customs. "Brand owners have finite resources," she says. "And there will be times when it's physically not possible to be there to identify the counterfeit product, or where they make the decision not to come, for example, if it's a very small consignment." As Adams puts it, "Zero tolerance is a very costly policy."
More worryingly, Wall told WTR that the non-compliant brand owners could taint the view held by customs officers of the more cooperative brand owners. Adams refutes this. "I work with customs a lot," he says. "They're very professional: they understand that they are dealing with a variety of brand owners and they do not generalise. One brand owner will not spoil it for the rest."
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