Counterfeiting has change into a billion-dollar drawback for international locations all all over the world. (Shutterstock)
Counterfeiting is a persistent drawback confronted by Canadian shoppers. In accordance with Canadian producers
and exporters, counterfeiting — or the sale of merchandise that purport to be one thing they don’t seem to be — prices Canada between $20 billion and $30 billion yearly.
Canada isn’t the one nation fighting counterfeiting — the follow is prevalent in lots of different international locations and throughout totally different industries. A 2017 World Well being Group research discovered that round 10 per cent of medicines offered in creating international locations could also be deceptively counterfeit.
Equally, the U.S. Authorities Accountability Workplace discovered that 20 of 47 objects bought from third-party sellers resembling Amazon, eBay and Sears Market have been counterfeits. Examples included counterfeit variations of 3M N95 masks on Amazon.
Given the dimensions of this ongoing situation, Canadian governments and industries should come collectively to design new methods that can shield Canadians whereas sustaining the nation’s aggressive benefit within the international market.
Contributing components
A number of numerous components contribute to the persistence of counterfeit items in Canada. The primary pertains to client behaviour, as some consumers might deliberately purchase (or fail to keep away from) counterfeit items out of shrewdness or financial necessity.
Second, by way of product high quality, fakes will be similar to the actual factor. For instance, the Canadian Mental Property Council reported {that a} counterfeit model of a selected Procter & Gamble shampoo was so near the unique even the corporate’s personal gross sales drive couldn’t inform the distinction.
Seized counterfeit footwear, together with copies of Adidas and Kanye West Yeezy Enhance trainers, are displayed at U.Ok. Border Drive places of work in London in February 2017.
(AP Photograph/Matt Dunham)
Third, Canadian legal guidelines on counterfeit items are notoriously lax, hindering efficient enforcement. Actually, the Workplace of the USA Commerce Consultant has positioned Canada on its watchlist of nations providing the weakest mental property (IP) protections.
A fourth issue stems from outsourcing manufacturing to abroad suppliers. This results in a type of counterfeiting known as the “third shift.” After a enterprise outsources manufacturing, the provider makes use of the enterprise’ IP rights to provide counterfeit merchandise in the identical manufacturing unit the unique product is made.
Canadian house product producer Umbra has been suffering from quite a few suppliers utilizing a 3rd shift to breed its merchandise.
Lastly, though some clients might depend on assessment methods to evaluate the authenticity of things they purchase on-line, these methods are removed from dependable. Counterfeit sellers have discovered methods to govern the assessment system — by buying fraudulent five-star opinions, for instance.
In gentle of those difficulties, Canada wants a rigorously thought-out method to mitigate counterfeiting.
Combating counterfeits
As a result of the supply of counterfeit merchandise is commonly the identical manufacturing unit that produces the unique product, one treatment is to supply provider factories with restricted portions of uncooked supplies. Hewlett-Packard does this by offering its suppliers with a sure variety of printheads which can be used to fabricate ink cartridges for the corporate.
One other resolution is to allocate components to totally different suppliers in order that nobody provider has all of the components wanted to construct a selected product.
A U.S. Customs and Border Safety deputy chief officer reveals how a Timberland model on a counterfeit boot is hidden at a warehouse in Kearney, N.J. in 2015.
(AP Photograph/Richard Drew)
On the identical time, many rising market governments are stepping up enforcement efforts to strengthen IP protections. In 2020, China’s State Administration for Market Regulation launched an IP enforcement plan known as Iron Fist to higher shield the IP rights of varied producers.
Equally, India’s IP technique is to “put larger emphasis on trademark enforcement.”
The Philippine authorities’s current IP laws goals to “guarantee environment friendly and expeditious adjudication of IP instances” and make “IP litigation less expensive and sooner.”
For these governments, addressing IP safety is vital to making sure producers proceed to really feel comfy outsourcing operations to their international locations. As such, Canada ought to prioritize and incentivize outsourcing to international locations that embrace IP protections.
Utilizing expertise
Companies may also use applied sciences, resembling radio-frequency identification or holograms, on their merchandise to assist clients determine counterfeits.
Not too long ago, blockchain expertise has been thought of as a promising resolution to counterfeiting. A number of blockchain-based functions have been launched with the intention of tagging merchandise with distinctive identifiers that may’t be duplicated.
Blockchain resolution supplier BlockPharma helps sufferers verify the authenticity of their medicines, whereas luxurious items large LVMH Group has partnered with blockchain agency ConsenSys and Microsoft to authenticate merchandise.
This tech-focused technique aligns with the truth that governments all over the world are more and more encouraging blockchain adoption. The U.Ok. authorities, by Innovate UK, has pledged the equal of C$24 million to fund blockchain firms and the European Union Mental Property Workplace makes use of blockchain for anti-counterfeit.
A joint method is essential
The numerous components that enhance Canada’s threat regarding counterfeits, together with weak legal guidelines and IP protections, make this a difficult coverage situation.
Nonetheless, anti-counterfeit methods and the appearance of latest applied sciences like blockchain current alternatives for Canadian policymakers and trade leaders to develop an efficient plan to fight counterfeiting.
Collectively, Canada’s enterprise and political leaders can construct client belief whereas additional constructing Canada’s international benefit.
Hubert Pun receives funding from Social Sciences and Humanities Analysis Council (SSHRC) Grants (No. 430-2022-00517 and No. 435-2022-0271)
