COUNTERFEITERS- SUPER VILLAINS OR JUST CROOKED COMPETITORS
Director, Intellectual Property, ABRO Industries, Inc.
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
-Sun Tzu, The Art of War
Before you fight an enemy, you need to have a clear understanding of who that enemy is. And, equally important, who they are not. Unfortunately, many involved in protecting brands spend almost no time understanding who the counterfeiters are. Instead, they rush into the fight with a cartoonish notion of who they are fighting (if they give it any thought at all). This hampers their ability to succeed as they misalign resources and fail to seek victory where it is achievable.
THE COUNTERFEITER AS A SUPER VILLAIN
When brands speak of counterfeiters they often do so in ways that are inaccurate. They attribute to them all the traits of a comic book super villain. They assume that anything they are doing is intentionally evil and aimed specifically at harming the brand and its customers. They act as if the infringers are Lex Luthor or the Joker – a malevolent evil-genius dedicated to crime and destruction for its own sake.
I’ve met hundreds of counterfeiters in my career, and this caricature – while emotionally satisfying to brands – is just flat out untrue.
THE MUNDANE REALITY
Counterfeiters are businesspeople. They are businesspeople that are willing to commit intellectual property crimes in order to either obtain or maximize their profit, but they are still just businesspeople. They are rational actors who are driven by the same constraints, pressures, and rewards as IP-respecting legitimate businesspeople.
I point this out not in an attempt to encourage sympathy for the enemy. After all, I am personally responsible for millions of dollars in losses and thousands of days in jail for this group – I am the last to be accused of treating them softly. Instead, I point this out because if you are not honest about your opponent, you will not succeed.
Many brand owners – operating under the false super villain assumption – assume that the only way to stop a counterfeiter is to completely destroy them. And, while doing so is very enjoyable (seriously – I am fundamentally not a nice person), it is also often impossible. As such, these brands dismiss any proposal that does not claim to offer that result. This often results in a brand taking virtually no offensive action as they see themselves as powerless in the face of these ultrapowerful destructive forces. They essentially give up the fight before the first shot is fired.
This is a mistake because it does not take total victory to win over counterfeiters. It just takes one equation.
THE VIOLATION CALCULATION
I argue that counterfeiters – as rational actors – make the following calculation when considering violating someone’s intellectual property:
Consciously or subconsciously, they are considering how much profit they can make by violating your IP compared to how much effort it will take and how much risk will be involved. If the calculation is promising, then they will proceed.
To stop counterfeiters, you just need to move one or more of these variables until the business opportunity of stealing your IP no longer makes economic sense for them.
And “makes economic sense” doesn’t have to mean “is not profitable.” Just like other businesspeople they are conscious of the opportunity cost of every action they take. So, you only need to make it less profitable than their other options. If you do, then they will not violate your IP and you win!
Now, it is true that their other options might well be violating the IP of one of your competitors. But this is not in your control. Brand owners need to accept this fact and fight the fight they have, not a mythical fight where they can magically turn a counterfeiter into a law-abiding nice person. That is not our job or an option for us. We need to focus on protecting our brand by moving one or more of those 3 variables.
Once a brand professional accepts this reality, they can then move forward to look at all the different ways the variables of Profit, Effort and Risk can be shifted. But until we let go of the super-villain mindset and accept counterfeiters as the competitors they are – crooked competitors certainly, but competitors who are rational economic actors – then our efforts are doomed.
The good news, however, is that this approach can be a catalyst for a great deal of action within an organization. If you tell a company they are fighting “economic terrorists” or “organized IP criminal gangs” (both descriptions I’ve heard used and both accurate – to a point) then it should come as no surprise that those outside our profession will often throw up their hands in surrender. But when you tell them you are opposing crooked competitors, rational economic actors that are also law breakers, and that you have a concrete formula to use when approaching the struggle – you’ll find much more support for the fight ahead!
THE BRAND PROTECTION PROFESSIONAL |SEPTEMBER 2020 | VOLUME 5 NUMBER 3
2020 COPYRIGHT MICHIGAN STATE UNIVERSITY BOARD OF TRUSTEES