How much money and prestige does your brand lose to counterfeiting? Do you even know?
Here’s the thing: No one really knows. That’s the nature of counterfeiting. It’s a black market, and we can only know for certain the value of counterfeit products that are actually intercepted. What fraction of the total counterfeit market do the known examples represent? All we can do is make educated guesses.
But that doesn’t mean you shouldn’t be trying to understand the scope of the problem. In fact, you should be doing everything you can to discover as much as you can about how your products are being counterfeited, where the fakes are coming from, where they’re going, and how much it’s costing you in money and brand equity — all with a view to stopping it.
IT’S NOT JUST STREET VENDORS SELLING CHEAP WATCHES
The problem is much bigger than most people imagine.
Among counterfeit products, pharmaceutical and personal care products have been the most widely studied, because they have such high profit margins and can be so damaging to the wellbeing of consumers and to the reputation of legitimate manufacturers.
According to one estimate, “Counterfeit drugs provide approximately $75 billion in revenue annually to illegal operators and have caused more than 100,000 deaths worldwide,” reports the June 2014 American Health & Drug Benefits article “The Health and Economic Effects of Counterfeit Drugs” (http://bit.ly/1TBKcSd).
Other commonly counterfeited products that can pose a serious hazard include baby formula, toys, car and airplane parts, and electronics. And, of course, any counterfeited product can do substantial economic damage. Whether it is cigarettes, packaged foods and beverages, clothing, jewelry, purses or media, all counterfeits detract from the profitability of legitimate manufacturers, undermine consumer confidence, harm governments through reduced tax and duty collections, and support a criminal underground.
Counterfeit products originate in all countries, from developing locations to ultra-modern industrialized entities with modern manufacturing capabilities. Distribution is worldwide, and legitimate retailers are often victims. Online retailing in particular is susceptible, as distance selling and third-party fulfillment make it easy to represent the genuine product on a website, collect payment electronically and deliver a fake.
ANTI-COUNTERFEITING BEGINS WITH BRAND AUTHENTICATION
Of course, legitimate retailers want to do everything they can to keep counterfeit products off their physical and digital shelves, but the anti-counterfeiting tools at their disposal are limited. Brands, in their own self-interest, need to do everything they can to help prevent fake products from reaching the retailer in the first place, and provide tools to help retailers recognize counterfeits that do show up at the loading dock.
Several packaging-based methods have been used for authenticating products, with varying degrees of cost, availability and success.
For example, identifying barcodes are inexpensive to print on packages, though very easy for a counterfeiter to reproduce. Holograms and watermarks are more difficult, but, with the incentive of millions of dollars in fraudulent sales, criminals have made the investments necessary to successfully fake these methods. Color-shifting inks are extremely difficult to reproduce — which is why they’re increasingly being used in currency — but they’re also virtually unavailable to manufacturers of packaged goods.
The challenge for brands is to adopt anti-counterfeiting measures that are extremely difficult to detect or reproduce, easy for supply-chain and retail partners to validate, and also affordable to implement either alone or in combination.
SMART BRANDS AND SMART TECHNOLOGIES CAN THWART THE BAD GUYS
Because secure packaging is an important part of our business, we have a portfolio of security technologies and customer-specific techniques that we cannot talk about publicly. In fact, our security operations are isolated from the rest of our printing and converting business, with physical and informational access only possible by our security specialists with the right credentials and a need to know. Nothing is more crucial to the anti-counterfeiting project than scrupulous security hygiene.
However, there are two innovative techniques we can talk about that illustrate the characteristics brands should be looking for in a packaging security system. These techniques are available to any brand, relatively easy and affordable to implement, and highly secure.
One technique involves micro-text printing. An extremely fine- resolution lasing method is used to create text on a gravure cylinder that’s too small for the unaided eye to detect and can easily be hidden within the overall package design.
For example, a single character of fine print on the package that’s already difficult to read at 1mm high might reveal, under microscopic examination, that it’s actually composed of dozens of smaller letters on the order of tens of microns high. Microscopic line images are also possible and can be hidden within larger text or another image.
These features can be placed anywhere on the package, and the micro-text can be changed and/or moved to a different location in subsequent printings. To copy the micro-text, counterfeiters would have to know that it exists and where to look for it. Plus, they would need access to extremely sophisticated, proprietary pico-laser engraving equipment that’s simply not available on the market and impossible for a counterfeiter to engineer independently.
However, the specialized gravure cylinder can be incorporated cost-effectively into a normal printing line, and the micro-text can easily be verified by anyone who knows where to look with suitable magnifying equipment.
2. HIDDEN IMAGES
Another approach is to include a hidden image within a design element. An image that is completely invisible to the naked eye can be included within the package design, and people who need to verify the authenticity of the product can be supplied with a special decoder. Typically about the size of a credit card, this semi-transparent decoder is embossed with a special line structure designed to reveal the hidden image. The user simply places the decoder over the package to reveal the image.
The hidden image can be created as part of the normal printing process, and the decoder is simple and affordable for a security provider to produce. But the combination provides very strong security.
The image is not visible to the naked eye, and, similar to two-factor authentication, a counterfeiter would need to know the image exists in the first place and also have access to the correct decoder in order to discover what it is. Even with that knowledge, the hidden image is nearly impossible to scan at the required resolution and essentially impossible to reproduce with the line structures and detail that would be required to “fool” the decoder.
As difficult as the system is to copy, however, product authentication couldn’t be easier: Just place the decoder over the package and check for the hidden image. Simple validation is essential for any package security system to be fully effective.
SECURITY NEEDS TO EXTEND BEYOND THE PACKAGE
Micro-text and hidden images are two examples of effective and affordable security, but your anti-counterfeiting efforts shouldn’t begin and end with package authentication. As the International Trademark Association recommends in “Protecting a Trademark: Counterfeiting” (http://bit.ly/1evRFzc):
“You can take various legal, technological and business steps to prevent, or at least minimize, counterfeiting. These include (1) registering your trademarks in countries where you sell, manufacture, ship or store products; (2) recording your trademarks with national customs where possible; (3) monitoring and auditing your company’s supply chains; (4) adding authentication devices to genuine products; (5) setting up a corporate brand protection program and training employees about anti-counterfeiting measures; (6) monitoring brick-and-mortar and online stores; (7) taking legal action in civil court; (8) providing training for local law enforcement personnel on your company’s brand protection program; and (9) assisting and supporting law enforcement in the seizure of counterfeit goods and the arrest and prosecution of counterfeiters. Brand owners should also work closely with legitimate online and brick-and-mortar retailers to prevent inadvertent sales of counterfeit products.
In the event that counterfeiting has become a problem for your company, consult with counsel regarding strategies to confront the issue. Your options will depend greatly upon which country or countries are involved.”
It’s all good advice, and it all ultimately depends on the ability to identify counterfeits in the marketplace. Though the search for fakes may range far and wide, it begins with securing the product package.