Health warning: COVID-19 and the rise of counterfeits
The market share for counterfeit goods has increased significantly over recent years, with a 2019 report by the EU Intellectual Property Office and Organisation for Economic Co-operation estimating trade in counterfeit goods to have increased from 2.5 % in 2013 to now approximately 3.3% of global trade. The report values the market of counterfeits goods to be in the region of USD $509 billion, up from $461 billion.
Counterfeit goods can be found across nearly all commercial sectors, with the UK-based Anti-Counterfeiting Group listing alcohol, fragrance, sunglasses, cigarettes, toys, pharmaceuticals, foodstuffs, household products, soap and mobile phones as the sectors most likely to fall victim.
Given the significantly increased demand for healthcare and pharmaceutical products in a post-COVID-19 world, there is a greater opportunity for counterfeiters to exploit this sector. Brand owners and law enforcement authorities need to be prepared to respond to this threat.
Taking advantage
The coronavirus pandemic has had major economic implications across the world, and many businesses have been required to adjust production output and quickly adapt their sales strategies.
That is equally true for the manufacturers, distributors and sellers of counterfeit goods who have taken an opportunistic approach to the global crisis. One key factor in the rise of counterfeit goods is the use of online platforms that counterfeiters use to target their customers.
The global reach of the online marketplaces allows them to operate from different countries, and with anonymity. A study of 1,000 US consumers carried out in March by brand and IP protection company Red Points, indicated that 58% of consumers were buying more online than they ordinarily would.
Furthermore, the trend of e-commerce sales is set to increase—73% of those surveyed by Red Points indicated their online shopping activity would grow further if the outbreak continued.
Opportunistic counterfeiters have recognised this and have quickly identified gaps in the market, exploiting some consumers’ unfamiliarity in recognising counterfeit products.
One example of this opportunistic strategy was the response by counterfeiters to the increase in demand for hand sanitiser and cleaning products. Consumers found themselves unable to access these products in physical stores, with many turning to online marketplaces for a supply.
In response to the rise in demand and clear consumer anxiety regarding the lack of availability of many hygiene products, criminals took the opportunity to supply the market with ineffective and non-compliant goods, often sold at overinflated prices. Genuine hygiene products are subject to stringent consumer safety requirements and efficacy checks.
Another key impact of the coronavirus in the field of anti-counterfeiting has been the global surge in the availability of personal protective equipment (PPE). Not all PPE on the market is able to offer requisite and adequate protection for key workers. Authorities and businesses making such purchases should therefore be vigilant in sourcing their PPE, and be aware of the threat of counterfeit products and the associated risks.
Furthermore, the development of COVID-19 testing kits and the increasing demand may mean that opportunistic counterfeiters will take advantage of the situation. Counterfeit goods are particularly concerning in the pharmaceutical sector, with the trade in fake medicine posing an ever-increasing threat to consumer and patient health.
The World Health Organisation (WHO) reported in 2018 that the global sale of counterfeit medicines was worth approximately $75 billion. The increase in online activity of counterfeiters has enabled criminal trade in fake medicines to take advantage of vulnerable people who cannot afford or get access to specific treatments.
Misplaced trust is often given to medicines purchased online, with criminals putting people’s lives in danger by purporting that their product is genuine and effective. The global pandemic and the increasing pressure to formulate a viable COVID-19 vaccine may lead to further risks.
With the ever-increasing rise in counterfeiting, and the opportunistic nature of criminals to take advantage of unwitting consumers, brand owners should take an active role in the enforcement of their rights and consumer safety.
While it is not always the case that consumers are duped into buying counterfeit goods, a combined strategy of enforcement and education is key. ‘Track and trace’ is a phrase we now associate closely with managing COVID-19, and through closely controlled supply chains, paper trails and the multi-layered marking of goods, controlled tracking and tracing can also offer brand owners increased security on their products and IP rights.
This, in combination with a strong enforcement strategy, pursuing counterfeiters who can be identified, and working closely with consumer protection and law enforcement authorities, can enable brands to protect their IP rights, maintain their reputation, and protect the health and safety of their customers.
Elizabeth Dennis is an associate at Marks & Clerk. She can be contacted at: edennis@marks-clerk.com
