Authentic.Trusted.com

The official blog of Trusted.com

Category: Counterfeits(page 1 of 2)

Tiffany’s Triumph in Costco Trademark Case

When you think about shopping for engagement rings, Costco Wholesale Corporation probably isn’t the first retailer that comes to mind. However, the warehouse club chain was desperately trying to claim a growing share of the fine jewelry market – by offering “Tiffany” diamond engagement rings. In doing so, Costco has been charged with trademark infringement and trademark counterfeiting against world-famous luxury retailer, Tiffany & Co.

A federal judge has ruled that Costco owes Tiffany & Co. a settlement of $19.4 million for selling generic diamond rings falsely marketed on in-store signage as “Tiffany.”

The ruling comes four years after Tiffany & Co. originally filed a cease and desist against Costco. Even though Costco immediately removed all “Tiffany” signage from the rings and even offered to refund customers’ money, Tiffany still pursued a suit against the retailer. Why? To defend its biggest asset: the value and cachet of its brand.

Costco argued that it used “Tiffany” as a generic term to describe the style of setting. Costco claimed “Tiffany” had become an industry-standard, generic term for the six-pronged gem mount created by Charles Tiffany in the 19th century. Further exacerbating the situation, Costco even asked for a declaratory judgment that would cancel Tiffany’s trademark rights to the name when used to describe ring settings.

“This was not a case about counterfeiting in the common understanding of that word—Costco was not selling imitation Tiffany & Co rings,” Costco said.

But the luxury jeweler did not take lightly to its trademarked and registered name being challenged. Nor should they.

Brands risk losing millions of dollars if they don’t protect their trademarks. The more famous the brand, the more valuable trademark protection becomes.

As one of the world’s best-known luxury retailers, Tiffany has built an iconic brand associated with exceptional quality, value, reputation and name recognition. The public has come to associate Tiffany engagement rings with high quality and prestige. A Tiffany engagement ring from Costco guts this perception.

Even being indirectly associated with anything cheap has the potential to make the price of jewelry plummet dramatically. If Costco had continued to use the Tiffany name, their reputation as a low-price retailer could have had a detrimental effect on the overall value of Tiffany & Co.’s jewelry.

“We brought this case because we felt a responsibility to protect the value of our customers’ purchases,” a company spokesman said. “It is critically important that the Tiffany name not be used to sell any engagement ring that is not our own.”

According to a Bain & Co. report, Tiffany “claims the largest share of the female mind in the U.S.” when it comes to name recognition in jewelry brands. Given the fact that Tiffany has struggled in recent years to command consumer attention in an oversaturated luxury market, defending their trademark and their reputation was a no brainer.

In addition to paying Tiffany, Costco can never again use the word “Tiffany” to sell products as a standalone. Bye, Felicia!

Attention Walmart.com Shoppers: Now Offering Counterfeits

In an effort to compete with Amazon, Walmart.com has significantly increased its product selection by offering items from third-party sellers. While third-party offerings provide consumers with more options, online shoppers may want to proceed with caution.

Launched in 2009, Walmart’s Marketplace allowed select retailers to list their products on Walmart.com. Recent partnerships have ballooned Walmart.com’s product selection from 10 million to more than 50 million items in the past year alone. All of which is due to an increased number of third-party marketplace sellers.

By offering a wider selection, Walmart.com has become more attractive to online shoppers. The site is now the 3rd-most-visited e-commerce site in the U.S., with 89 million unique visitors per month, according to comScore.

But with this success has come a problem that troubles open marketplace retailers like Amazon.com and eBay: the sale of counterfeit products.

The Counterfeit Report has repeatedly found and submitted complaints to Walmart, authorized by the trademark holders, for counterfeit items found on its website. Yet months later, some items remain while others are removed, but then are relisted.

As the top retailer in the U.S., most consumers would perceive Walmart as a trustworthy merchant of authentic goods. But online shoppers, who are unaware of third-party items, misplace their confidence when shopping online at Walmart.com.

Walmart Marketplace items include items from international companies, like China – the counterfeit capital of the world. These items show up right alongside Walmart’s own inventory leaving little differentiation between the store’s verified merchandise and potentially counterfeit third-party goods.

Walmart has recently been criticized for not monitoring its marketplace counterfeit problem. The Counterfeit Report, a self-described consumer advocate and watchdog, “has repeatedly found and submitted complaints to Walmart, authorized by the trademark holders, for counterfeit items found on its website. Yet months later, some items remain while others are removed, but then are relisted.”

While it’s impossible to prevent counterfeits completely in an open market, Walmart is failing to remove even reported counterfeits from their site. You’d think a nationally recognized brand like Walmart would be proactive to protect their customers from fakes. For the time being, Walmart.com shoppers may want to steer clear of the online aisles.

What’s your take? Does the risk of purchasing counterfeit products affect your willingness to shop through Walmart.com?

RELATED: Prime Issues: Keeping Counterfeits Off Amazon

Outsmarting Counterfeiters

Digital commerce poses both immense opportunities and serious threats to brands, consumers and whole economies. With 4.7 billion online consumers predicted by 2020 , it will become easier than ever for counterfeiters to exploit brands through e-commerce. Rogue websites, online auctions and the darknet provide a global, anonymous and lucrative channel for counterfeiters – one that has become difficult to control.

The risk of lost revenue, market share and consumer trust makes it essential for brands to invest in anti-counterfeiting methods. Thankfully there are arsenal of anti-counterfeiting technology to combat counterfeiters.

Domain Strategy

Oftentimes, cybercriminals will exploit popular brand domain names by using slight misspellings in the web address. This diverts customers unknowingly to rogue sites selling counterfeit goods. Fortunately, brands who use gTLDs (generic Top Level Domains), essentially a ‘.BRAND’ domain name, can safeguard customers from being diverted to fraudulent sites. By adopting a .BRAND domain name, companies create a trusted environment for their customers and make it easier for customers to find them.

RFID

Radio-frequency identification (RFID), often referred to as ‘track and trace’ technology, uses adhesive tags or chips that contain electronically stored information. The technology uses radio waves to wirelessly identify and track tags attached to objects. RFID tracking chips are often used in supply and distribution chains to help identify diversion or product tampering. However, only when they include a unique identifier, are consumers able to verify the authenticity of a product.

Worldwide security printing (barcodes, holograms, special inks, etc.) could become a $35.3 billion market by 2018.

Digital authentication

All too often, brands use outdated methods like authentication cards or holograms that are easily duplicated. The average customer can’t discern a fake card or hologram, so what use is that to the consumer? A better solution is an app or scanning technology that can identify counterfeit goods at the point of purchase – either through online verification via serial number, like Trusted.com, or by ciphered QR codes on the products themselves.

Nanotechnology

Advances in nanotechnology are the newest offerings to prevent illicit copying. Nanotechnology deals with things on a molecular scale – less than one nanometer (nm), or one billionth of a meter, in size (scale of hemoglobin and DNA).

Nanotechnology anti-counterfeiting methods create a totally unique, virtually unreproducible signature or “fingerprint” for each item. The irregularities of nano-devices make it nearly impossible to replicate and present what may be the most effective anti-counterfeit methods yet.

Prime Issues: Keeping Counterfeits Off Amazon

Much has changed since Amazon.com opened its virtual doors on the World Wide Web in July 1995. Today, the world’s largest online retailer offers 500 million products sold by 2 million sellers; many of which are third-party vendors. In fact, 50 percent of units purchased last year were sold by third-party sellers.

While many third-party sellers are legitimate enterprises like major retailers and brands and small business, Amazon basically lets anyone sell nearly anything on its platform – including Chinese manufacturers. Notorious for counterfeit products, sales from Chinese-based sellers have more than doubled on Amazon’s marketplaces in recent years.

Oftentimes, consumers are unaware that their items are from unknown and unvetted sellers overseas. Unsuspecting customers may perceive a fake item as legitimate because of the Fulfillment by Amazon (FBA) endorsement. But this designation only means that the item is being packaged and shipped by Amazons fulfillment centers. Furthermore, Amazon commingles inventory – bundling together multiple third-party sellers – so that a counterfeit item could be sent to an Amazon facility by one merchant but sold by another.

Customers aren’t the only ones complaining. The company has begun to face legal pressure from brands including Apple and Birkenstock for allegedly enabling the widespread sale of counterfeits on the platform.

As a marketplace, Amazon isn’t legally responsible for keeping counterfeit items off the site; they are only required to respond to complaints and take action when fakes are brought to the company’s attention.

While Amazon has an anti-counterfeiting policy and recently announced a meager attempt to protect trademarked merchandise, critics say Amazon has not made it a priority to manage the influx of counterfeits. In fact, there’s not a single mention of the word counterfeit in their 2016 Annual Report.

The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited.”  

With a such a vast, global selling platform, it seems impossible for Amazon to police the millions of items sold by third-party sellers. But if Amazon wants to maintain any consumer trust, they need to do much more to close their counterfeit loopholes.

RELATED: ATTENTION WALMART.COM SHOPPERS: NOW OFFERING COUNTERFEITS

Why Counterfeiters Love the Internet

On a daily basis, billions of people use the internet to buy and sell goods and services. The booming online economy has created an ideal environment for counterfeiters, whose trade has burgeoned.

The internet has revolutionized the way counterfeiters operate and remains a highly lucrative and sophisticated criminal environment. Counterfeiters are no longer sequestered to selling fake goods through rouge websites. Ecommerce marketplaces and auction sites like Amazon and eBay allow counterfeiters to sell direct to consumers through a global and largely unregulated marketplace.

1. Anonymity

For websites selling counterfeit merchandise, it’s common practice for the registrant’s name and address on a URL to be fake. Moreover, the warehouse or retail locations are often not revealed, which further conceals the identity of the seller.

2. Globalism

The internet allows counterfeiters to reach a global audience faster and with far less economic effort than the off-line world. Between email promotions, social media marketing and digital marketplaces, reaching potential buyers is easier than ever.

3. Targeting

In the early days of selling counterfeits online, items were exclusively sold through rouge websites in which the counterfeiter relied on key words and meta tags of brand names to show up in search engine results. Today, the Internet offers innumerable opportunities to attract buyers.

Social media channels enable fraudsters to easily and affordably launch global marketing campaigns. It’s easy to create an account and buy followers to look legitimate. For pennies on the dollar, targeted advertising through platforms like Facebook and Instagram ensure the items appears on interested users’ timelines.

4. Enforcement

Unfortunately, the Internet is a difficult place to enforce IP rights. Fighting IP infringements is both expensive and complicated. On top of playing whack a mole to shut down rogue websites, brands are now facing the dilemma of fighting fraudulent listings on social media, auction sites and marketplace listings.

Current regulations for auction sites and ecommerce marketplaces do not require these retailers to pre-emptively remove counterfeit listings; they are only required do so when notified by the customer or rights holder.

Why You Should Not Buy a Fake Watch

According to Forbes, 15-30% of Internet searches on watches involve people looking for replicas. But what’s the big deal with buying a knockoff watch anyway? Why you should not buy a fake watch

Quality & Reliability

Because fake watches are made as cheaply as possible, they generally have very short lifespans. Made with low quality materials and internal mechanisms, fake watches quickly fall apart and are notorious for keeping inaccurate time. What use does a watch have if it can’t tell the correct time?

Poor Investment

At first, you may feel like you saved a lot of money by paying a fraction of the price. But after a few weeks or months of wear, the watch will break or not keep time and you’ll regret your purchase. Most jewelers will refuse to repair counterfeit watches. In the end, you’ll lose the money you spent on the watch.

A fake watch has no value. Why waste your money on something without value?

Reputation-Damaging

The hard truth is that we regularly judge others on their appearance. Just by wearing a fake watch, you can cause irreversible damage your reputation. While some may excuse your purchase as an attempt to impress others, others will deduce that you are poser or downright disingenuous. Don’t run the risk of others assuming you are as fake as your replica.

Legal Aspects

Fake watches are illegal in that they illegally copy a brand’s name, logo and/or design elements. Because they are made illegally, counterfeit watches are made in unlicensed and unregulated factories. The workers, often underage and against their will, are subjected to dangerous conditions.

These illegal shops are known to be part of a wider criminal network. Proceeds support serious criminal activities including money laundering, drug trafficking, extortion, prostitution, child labor and human trafficking.

Your seemingly innocent replica has some widespread repercussions.

Revenue Loss

Counterfeit watches undermine the entire industry by diluting and redirecting the equity of watch brands into counterfeit goods. In fact, estimates by the Swiss watch industry reveal that the replica watch market costs them billions of dollars each year.

Knowing that you risk wasting money, a tarnished reputation, and supporting illegal activities, is buying a replica worth it?

How Culture Influences Counterfeit Luxury Purchases

Curtailing consumers’ desire for fake goods is crucial to winning the war on counterfeiting. Since the counterfeit market is driven by consumers’ desire for authentic luxury goods, researchers have begun to examine what motivates consumers to make luxury purchases, which can offer an understanding of why consumers buy counterfeit goods. From this, marketers can formulate targeted campaigns to weaken perceptions around the counterfeit industry.

Current research has found that consumers’ desire for counterfeit luxury goods are based on social motivations. However, these motivations tend to differ among consumers’ culture and country.

One study focusing on the purchase of genuine goods, found that Americans specifically buy such goods for hedonistic reasons of self-fulfillment while French consumers, for example, buy because they are expensive and exclusive. American consumers reported buying goods for self-fulfillment, rather than to please others.

Another study by the same author focused on different countries perceptions toward counterfeit goods.  The findings showed consistent attitudes in accordance with cultural patterns.  For instance, Americans and Europeans want high-quality goods and worry that counterfeits won’t have the quality they desire. Koreans, on the other hand, are more concerned with social perceptions and the shame associated with counterfeit goods.

With this information, advertising messages can target the cultural and social goals associated with preferences for counterfeits.

Counterfeit vs. Knockoff: What’s the Difference?

Although the phrases “counterfeit” and “knockoff” are often used synonymously, they are actually different. So, what’s the difference between counterfeit and knockoff products?

The difference between the two boils down to registered trademarks. A knockoff may resemble another product, but does not contain any identical logos or federally registered brand names. In general, knockoffs don’t necessarily violate trademark law. A counterfeit product, on the other hand, uses a brand name or logo that is identical or nearly identical to a registered trademark, which is illegal under trademark law.

A misspelling of a brand name or a logo that is different than the original manufacturer’s would be considered a knockoff, such as Dolce&Banana or Rolexe. Whereas a counterfeit product is designed to so closely resemble the original product as to be virtually identical to it. In this way, counterfeits are intended to perpetrate fraud upon consumers.

In the United States, the federal Lanham Act is the primary statute defining trademark laws. The Act prohibits a number of activities, including trademark infringement, trademark dilution, and false advertising.

While it’s generally not illegal to purchase a counterfeit product, the sale of counterfeit goods (as well as knockoffs) is subject to criminal prosecution. Trademark owners may bring civil lawsuits against individuals who produce and sell counterfeits. And it’s not just the initial seller that risks prosecution; even the resale of counterfeit items is considered counterfeit activity.

When a customer who purchased a counterfeit handbag decides to sell it, they now put themselves at risk of civil and even criminal penalties.

Consumers can easily safeguard themselves from buying counterfeit items by purchasing from a brand’s authorized dealer. And as always, if you suspect an item is not authentic, use common sense.

Share your opinion: Is it okay to buy a knockoff?

The Hidden Costs of Counterfeiting

The repercussions of counterfeiting span much farther than the significant economic losses. In an interconnected global system, the hidden costs of counterfeiting pose serious implications that affect innovation, national security and the safety.

Consumer Health & Safety

Counterfeiting isn’t something confined to designer apparel. The newest commodities for counterfeiters are perhaps the most dangerous of all— ingestibles and personal care like medicine, food and cosmetics.

Unlike legitimate products that are regulated by government agencies, counterfeits have not inspected for safety. Unregulated and toxic ingredients found in such goods pose an enormous risk to consumers’ health- causing disfigurement, illness or even death.

Without safety standards, counterfeits become safety hazards to consumers. From exploding electronics to malfunctioning jet engines, counterfeits have the potential to threaten and take lives.

Environmental Damage

Generally, counterfeit products are not manufactured to the same environmental standards as legitimate goods. Examples of environmental damage have occurred in the chemical industry, whereby products like counterfeit fertilizers have caused serious environmental damage.

Diminished Rule of Law

Corruption directly undermines governance and the rule of law. Illicit trade is a criminal enterprise without regard for standards, regulations or the law.

Crime & Terrorism

Violent criminal and terrorist groups have been known to profit from illicit trade. The fake goods industry finances organizations linked to gambling, money laundering, drug trafficking, extortion, prostitution, and human trafficking.

Diversion of Funds

With the rise of criminal entities controlling illicit trade, the government is forced to divert increasing focus and resources to law enforcement efforts.

Border Security Threats

The distribution of counterfeit goods depends on the corruption of officials, unauthorized routes, and falsified documents– the same infrastructure used by criminal transport of illegal goods, weapons and terrorists.

Job Loss

The majority of counterfeiters operate overseas in China and third world countries. The International Anticounterfeiting Coalition estimates that counterfeiting costs U.S. businesses $200-$250 billion each year. That results in the loss of more than 750,000 American jobs.

Labor Conditions

Enterprises producing illicit products are much less likely to adhere to labor and safety standards. Workers assembling counterfeit goods are underpaid and overworked— and oftentimes are children who are forced to work in horrific slave-like conditions.

Tax Revenue Loss

According to the International Chamber of Commerce, the global trade in illegitimate goods has grown to approximately $600 billion annually, which accounts for 5 to 7 percent of all global trade.

Illicit goods deprive the government of tax revenue. Because counterfeits are made offshore and sold on the black market, there are no taxes paid to our government to improve the welfare of our country.

Stifled Innovation

Counterfeiting undermines innovation. It dilutes centuries of skill and craftsmanship and redirects the equity from legitimate brands to illicit goods.

Fighting illicit goods becomes a direct cost for brands and contributes to a less conducive business environment.

Fraud and Identify Theft

Buying illicit items online can put customers at risk of identity theft and credit card fraud. Counterfeit merchants are conducting illegal operations and have been known to steal personal and/or credit card information.

Buyer Prosecution

Although law enforcement efforts in the U.S. tend to concentrate on manufacturers and retailers, consumers are still at risk of facing prosecution. Consumers caught importing or purchasing multiple fakes may be charged with trafficking that results in fines or even arrest.

 

So why does counterfeiting remain so rampant? Consumer demand. If fakes weren’t being purchased, criminals would have no incentive to make and sell them.

You can help solve the problem by not buying counterfeit goods. To ensure you’re buying authentic, always purchase from a brand’s authorized dealer.

Avoiding Fakes in the Art Market: A Buyer’s Guide

Avoiding Fakes in the Art Market: A Buyer’s Guide

For art collectors, there is no fear greater than discovering that a once-prized work is merely a worthless forgery; a nightmare that has become all too common in the art world.  Instances of art forgery now comprise a major portion of the market – with estimates that at least 50% of all works sold are forged.

Yet, novice buyers aren’t the only victims of buying fake art. Forgeries have proven to fool even the most seasoned professionals and have infiltrated galleries, auction houses, and even museums. When authentication presents such a challenge for art professionals, it’s not surprising that collectors would have trouble determining legitimacy.

With the art market considered to be the largest unregulated market, collectors must be diligent about protecting their investments. Just as home buyers request inspections prior to purchasing a house, the same due diligence should be taken for art purchases, especially when you are going to spend upwards of thousands of dollars.

So what should buyers do to ensure the authenticity of artwork? First and foremost, familiarize yourself with the artist you’re interested in: their style, use of color, materials and signature.

Secondly, try to buy from reputable auction houses, galleries, dealers or vetted art fairs, which are required to certify the works they sell as authentic.

Another crucial step is to confirm the artwork’s provenance. Provenance is the documentation that certifies authenticity. Ideally, provenance should document the history of the piece from the time of creation by the artist until the present day. Details can include a record of owners’ names; dates of ownership; and means of transfer (if inherited or purchased via a dealer or auction).

Provenance can be established through a variety of sources, including:

  • An exhibition or gallery sticker attached to the art
  • An original gallery sales receipt or receipt from the artist
  • An appraisal from a recognized authority on the artist

Also, inquire as to a Certificate of Authenticity (COA). The COA should be signed by either the artist who created the art, the publisher (for limited editions), an established dealer or artist agent, or a recognized expert on the artist.  A legitimate COA should contain specific details including the name of the artist or publisher, the work’s title, the medium (i.e. oil painting, digital print, etc.), dimensions, edition size (for limited editions), and the and contact information of the individual or company that issued the certificate.

Keep in mind that a complete provenance history, especially for older pieces, can be rare. Oftentimes, collectors wish to remain anonymous and sales are done privately, which result in gaps in provenance. Nevertheless, purchasing a piece with incomplete provenance is risky.

In the absence of provenance, other methods may be required to prove a work’s authenticity. These include technological and scientific analyses, but are typically reserved for old masterpieces since the services are quite costly.

In conclusion, it’s a far wiser decision to purchase artwork from a reputable seller that is accompanied by complete provenance.

Are you an art collector? How does lack of provenance influence your decision to buy art? Let us know in the comments below.

RELATED: THE PERILS OF ART AUTHENTICATION

Older posts