Study Shows Counterfeit Buyers Frequently Buy Real Products Later

from the acta-what-now? dept

As the negotiations over the ACTA treaty continue in secret, one of the more frustrating aspects is how defenders of ACTA repeatedly conflate "counterfeit goods" with "copyright infringement." Witness Senator Evan Bayh's nonsensical response to being asked about ACTA, where it becomes clear quite quickly that he's unfamiliar with the most basic information on the subject. He switches back and forth between counterfeiting and copyright as if they're the same thing, and seems to think that any treaty on the matter must be good.

But, an even more annoying part of all this is the use of fear mongering over "counterfeit goods" as some huge problem that has to be solved, when the evidence increasingly suggests otherwise. The copyright lobbyists are using the cover of some mythical massive counterfeiting problem to push for unnecessary and potentially dangerous copyright law changes, but even the counterfeiting claims are suspect. In the past, we've noted that both the GAO and the OECD have noted that the "problem" of counterfeiting has been massively inflated by lobbyists.

And, a new study suggests that even the counterfeit goods that do get sold aren't really a huge problem to the original manufacturers (thanks to Dave Barnes for sending this in) -- if there a problem at all. In a study that was actually carried out by a former brand manager at LVMH, it was discovered that people don't view counterfeit goods as a substitute to the real goods. People aren't being tricked -- they know they're buying counterfeits, and others know that they have counterfeit goods as well:
"Consumers are a lot smarter than we may give them credit for -- just because you've got a nice fake doesn't mean you're going to get away with it."
But, even more importantly, it looks like counterfeit products often act as a stepping stone to get people to go forward and buy the original version:
"The counterfeit actually served as a placebo for brand attachment," she said. "People were becoming increasingly attached to the real brand even though they never possessed it at all."

Forty-six percent of the counterfeit-bag owners bought the authentic products within two and a half years, she said. Shoppers were willing to pay $786 for a real luxury bag....
So, for all the reports of "harm" done by counterfeit products, here's a study suggesting that it actually helps build brand loyalty, and appears to often lead to the counterfeit buyer later buying a massively expensive real offering in a relatively short time frame. As some are noting, this suggests that the counterfeit goods act as advertising for the real goods. These are the sorts of things that would probably be useful to discuss with those negotiating ACTA. If only those discussions weren't all happening behind closed doors due to "national security" issues.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 8:50am

    Gee, this one is too easy Mike.

    First, Counterfeit goods are what copyright infringement use to be, you know, the street corner vendor selling the latest movies for $1 a copy. It is still a huge issue in many markets (even New York) where you can buy knock off copies of movies, music, and just about anything else. Pretty much every flea market in the world has some knock off movies or music around.

    This quote is also interesting:

    Forty-six percent of the counterfeit-bag owners bought the authentic products within two and a half years, she said. Shoppers were willing to pay $786 for a real luxury bag

    The question: What percentage of them wanted the real thing to start with? I am guessing something like, what, 46%? Many of the people buying the fakes are doing so as status symbols, and would have bought the real thing if they had the money to start with. The fake wasn't bought and then they discovered how nice they really are, they wanted the real thing all along.

    Another story missing too much information, except the information to support your point of view. At least you are low on the moral outrage score this time out, just high on slant.

     

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  2.  
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    Shawn (profile), Dec 7th, 2009 @ 9:00am

    subliminal message

    ((from now on whenever AC uses the words 'moral outrage' your brain will register the words 'chocolate pudding'))

     

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  3.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 9:02am

    Re: subliminal message

    Really? Mine registers troll pudding.

     

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  4.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 9:03am

    Re:

    Congratulations, even your completely uneducated guess says that...

    ...counterfeit goods do exactly 0% harm to the original producer.

    Congratulations, you trolled yourself. It's quite an accomplishment.

     

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  5.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 9:04am

    Re: Re: subliminal message

    and mine registers "head in the sand" about you guys.

     

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  6.  
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    Comboman (profile), Dec 7th, 2009 @ 9:46am

    ACTA doesn't address real counterfeiting problems

    There are real safety problems with counterfeit goods like counterfeit toothpaste and baby formula from China containing melamine, counterfeit (and not counterfeit) toys with lead paint or electrical/electronic goods with a fake UL Approval seal; however from what I've read, ACTA does absolutely nothing to address these issues. It's all to protect industry, not to protect consumers.

     

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  7.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 9:46am

    Re: Re:

    Nope, because you didn't think about the 56% who bought the fake goods with no intention of buying the real thing. They dilute the brand and lower the perceived value of the products.

     

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  8.  
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    Marcus Carab (profile), Dec 7th, 2009 @ 9:46am

    Re:

    Were you hired to come and grade all of today's posts? Because I feel like I have just read the same damn comment five times.

    You know what's funny? You've actually raised one or two somewhat interesting questions along the line, but nobody is really interested in entering a discussion with you because you are so aggressive and insulting in all your comments, so instead anything intelligent you say gets ignored. See how that works?

     

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  9.  
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    Marcus Carab (profile), Dec 7th, 2009 @ 9:51am

    Re: Re: Re:

    Actually, that's entirely not true. There is a huge argument to say they do the very opposite of lowering the perceived value - they boost it massively by saying it's so good it's even worth faking.

    Do you really think fake Louis Vuitton bags make the real ones *less* valuable? I've heard plenty of fashionistas critiquing people's fake bags and pointing out who has real ones before - it becomes more of a status symbol. Imitation, as they say, is the sincerest form of flattery, and with a luxury brand having imitators can be extremely helpful to building that loyalty and mystique around your product.

    What's hilarious is that you say that the 56% had no intention of buying the real thing as if that's a bad thing. If they weren't going to get the real thing anyway, why not let them walk around advertising your product anyway? All the world sees is a person saying "I desperately wish I could get a real one!"

     

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  10.  
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    Richard (profile), Dec 7th, 2009 @ 9:57am

    Fundamental Difference

    A counterfeit is an inferior copy of a physical item presented as the original.
    It is usually trademark infringement - but NOT copyright infringement.
    It disadvantages the buyer since they pay over the odds for an inferior product.
    Hence it is fair to represent anti-counterfeiting measures as being in the public interest.

    If, however, the buyer knows that they have a cheap rip off then arguably no harm is done to anyone.

    Copyright infringement (in the digital age) usually involves making an exact copy of the original. It is NOT a fake and not a loss to the buyer - except insofar as (with software) he loses out on support, after sales etc. It is pretty close to being mutually exclusive with counterfeiting.

    Conflating the two is an unforgiveable abuse of logic - regardless of your opinion of either "offense".

    The only possible excuse is harking back to the days of analogue piracy when pirate tapes (VHS or audio) were of inferior quality.

    These days I suspect only "movie theatre camcordings" manage to fall into both categories simultaneously - but personally I don't think that they are a real problem. The movie industry uses the pirate camcorder myth as an excuse to bang on about piracy in front of its customers - with mainly counterproductive effects. (Since the warnings started appearing on the screen I have decided not to go to the cinema again - except out of regard for another family member's wishes).

     

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  11.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 9:58am

    Who cares? If I have something, don't yank it away and tell me what a big big favor you're doing me.

    "Look, we know you're a brand, but we're doing you a huge service by doing what we want, anyway. You should learn to like it!"

    I'll come over and rearrange your bookshelves. I'll put your CDs in my system for organization, you'll thank me later. I'll let my cousin stay in the attic of your home -- you're not using it anyway, and word of mouth will generate valuable interest once you decide to sell your home.

     

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  12.  
    identicon
    Flyfish, Dec 7th, 2009 @ 10:02am

    No doubt there are studies that show a large percentage of Coke buyers have also bought Pepsi (counterfeit coke)

    So what?

     

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  13.  
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    duane (profile), Dec 7th, 2009 @ 10:24am

    Re:

    Don't be deliberately obtuse. I don't want you in my house. I don't want others in my house. If I decide to sell my home my CD collection isn't going to help.

    On the other hand, purse makers, jeans makers, shoe makers & other makers want you to buy their stuff. If they want this to happen, then they do have to put up with consumers buying and using the product in ways they don't like or not buying their product at all.

    Now let's look at that last option. If you represent a certain shoe maker with a distinctive logo and you know X customer is going to buy a shoe and it's not going to be yours, would you rather that person buy a competitor's shoe or a cheap knock-off of your shoe?

    If he buys the competitor's shoe maybe he comes to like the shoe and decides that is his new brand. Maybe he never buys your shoes again and what's more tells all his friends how great your competitor's shoes are and maybe they actually listen to him and start buying your competitor's shoes too. Or maybe he just wears your competitor's shoes all the time and since he is cool, others see his shoes and want a pair.

    Or maybe he buys a knockoff of your shoe and wears those instead. Obviously these shoes are not going to be great shoes and eventually X is going to realize to get the quality of shoe he wants, he's got to buy the real thing. In the meantime, X is still talking up your shoe to his friends and even if he's complaining about the price, that is just a spur to some types to buy two pairs -- one in white and one in black.

    Which scenario is better for the shoe maker?

     

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  14.  
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    Michael Lockyear (profile), Dec 7th, 2009 @ 10:44am

    This is not just about handbags. Counterfeit drugs kill people. Counterfeit electrical products, like circuit breakers, etc are potentially deadly.

    Although it is probably not that difficult to identify a poorly made pair of sneakers or a handbag, it may be very difficult for the average person to recognize a counterfeit power-supply, glucose testing strip, insulin pen needle, tires, or baby formula.

    Sometimes we don't even have a choice in the matter ...counterfeit aircraft parts, or elevator parts, or even counterfeit reinforcing steel are all available.

    Suggesting that counterfeit products are not really a bad thing is like suggesting a doctor with a fake medical degree is not really a bad thing. Come-on...get real!

     

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  15.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 10:57am

    Re: Re: Re:

    Oh, good thing you have facts to back up that baseless claim. Because, obviously, the only things that are counterfeited are Joe's Plain T-shirts and Bob's Toilet Water.

     

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  16.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 11:02am

    Re:

    Approved drugs kill people too.

     

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  17.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 11:02am

    Re:

    >>Suggesting that counterfeit products are not really a
    >>bad thing is like suggesting a doctor with a fake medical
    >>degree is not really a bad thing. Come-on...get real!

    Horrible strawman. No one gets hurt when someone buys a fake bag. Come-on...get real!

    The problem is that everyone is so set on price that quality is out the window. In fact, WalMart's manufacturer of $4 prescription drugs has been found to have high variability of the "useful" drugs within capsules. This has caused them to be banned in the US by the FDA several times.

    If you want any product, here are your choices:
    Cheap, Good, Fast. Pick Two.

     

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  18.  
    icon
    zcat (profile), Dec 7th, 2009 @ 11:10am

    Re:

    For every one person killed by 'counterfeit' drugs, I will bet there are dozen killed by trusting completely legal but utterly worthless 'homeopathic medicine' (http://www.dailymail.co.uk/news/article-395568/Dont-rely-homeopathy-beat-malaria-doctors-warn.html) and a million killed by the lack of access to cheap generic drugs denied to them by treaties such as TRIPS. http://www.africanaidsaction.org/ (sorry about the attack site warning, I think they got hacked recently. Seems clean now though)

    Seriously, over three million aids-related deaths a year in Africa, almost entirely due to a lack of affordable. antiviral medication.. Find me solid references for just three 'counterfeit' drugs-related deaths this year and I'll retract my million-to-one estimate.

     

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  19.  
    icon
    duane (profile), Dec 7th, 2009 @ 11:12am

    Re:

    Actually I'm suggesting not all counterfeits are bad things and yes this is about handbags. With the exception of the very recent past, the only counterfeit stuff you've heard about is knock-off purses and clothing. Plus most of the examples you're pointing out are instances of the actual products being adulterated, not counterfeited. Different issue altogether and one that is well-legislated already.

    More to the point, the article is suggesting that copyright infringement is not counterfeiting and that certain folks love to confuse the two because some counterfeiting can be quite nasty and its a lot harder to show how infringement hurts anyone.

     

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  20.  
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    ranon (profile), Dec 7th, 2009 @ 11:20am

    It doesn't add up

    Forty-six percent of the counterfeit-bag owners bought the authentic products within two and a half years

    If the above statement is true, sales of say a Gucci Bag today, would be 46% that of the counterfeit bags two and a half years ago.

    It looks and smells very wrong.

     

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  21.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 11:30am

    Re: It doesn't add up

    And all math teachers around the globe just let out a collective sigh.

     

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  22.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 11:34am

    I would say Mike should avoid "studies" in general. It lends little credibility in the general tone of Tech Dirt to put up studies as any study done in the history of mankind seems to be filled with a million holes and weird data collection methods that don't tell the real story. Perhaps articles showing how the studies you wish were true and the studies we all know to be false can be mashed together in one big "This is BS as this other one is BS and they all just contradict each other all the time."

     

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  23.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 12:43pm

    Re: Re: Re: subliminal message

    Copyright will be rendered obsolete in the near future. Good luck.

     

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  24.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 12:46pm

    Re: Re:

    The one where the stealers and thieves get kicked off of the interent. Duh.

     

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  25.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 2:12pm

    Re:

    Most "studies" are done by starting with the answer and asking questions that will get you that result.

    Mike is a real sucker for these things, because every other one tend to come out and support his point of view. It's like drugs to him, I think, he needs to have a study every other day to remain sane, and to get reassurance that he is on the right track.

    3 out of 4 dentists agree.

    Limited time offer!

    A true techduh(tm pending) concept.

     

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  26.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 2:33pm

    Re: Re:

    Is there a website that traffics in studies that show the opposite of what is being claimed by techdirt?

    Can I visit this mystery site? Is their a bizzaro Mike Masnick? A bizzaro techdirt?

    And doesn't "mehdirt" have a better ring to it. You're not very creative, are you?

     

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  27.  
    identicon
    Anonymous Coward, Dec 7th, 2009 @ 6:52pm

    Re: Re: Re:

    Actually, I saw a program on (I think it was) National Goegraphic channel that pretty much showed not only how much damage fake goods can do to the brandholders, but also how much of the money is used in other illegal activities, from prostitution to supplying insurgents in various places.

    I have visited personally electronics "malls" in China and seen people taking low grade DDR3 memory and applying carefully made "Kingston" stickers in the correct places to these memory sticks. I can imagine that these sticks, let loose in the western world, would sell for under normal costs, but would likely fail more often or offer less than comparable performance. That would negatively effect Kingston's brand, wouldn't it?

    The knockoff industry is huge, in Hong Kong you can buy Tommy Hilfiger shirts for about $4 US, with nice labels and everything. Trust me when I say nobody from Tommy's company has ever seen these shirts or makes a penny off them. They are significantly inferior quality, and if imported into the US and sold, would negatively effect the brand.

    I would say that potentially 100% of the people who buy this stuff want the real thing, and maybe only 46% of them are willing after to part with their money, after seeing an inferior product that might scare them away from the real thing.

    The study Mike points to doesn't explain what the other 54% of people are thinking, and they are they key. More than half the market appears to have been ruined.

     

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  28.  
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    slander (profile), Dec 7th, 2009 @ 6:59pm

    Re:

    Pepsi is counterfeit Coke? I thought baking powder was counterfeit coke.


    Wait, I get it. Never mind...

     

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  29.  
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    Mike Masnick (profile), Dec 7th, 2009 @ 11:20pm

    Re: Re: Re: Re:

    The knockoff industry is huge, in Hong Kong you can buy Tommy Hilfiger shirts for about $4 US, with nice labels and everything. Trust me when I say nobody from Tommy's company has ever seen these shirts or makes a penny off them. They are significantly inferior quality, and if imported into the US and sold, would negatively effect the brand.

    Except, as the study found, almost everyone recognized and knew the fakes were fakes, so they did not negatively impact the brand at all.

     

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  30.  
    identicon
    Neil Tunstall, Dec 8th, 2009 @ 1:52am

    Counterfeits

    Although I have to agree that some brand owners leave themselves open to being copied, by inflating the markup on their products, they do employ skilled workers and there is spin off work to others such as advertising and high end shopping centres. These are overheads the vendor who is selling knock offs, doesn’t have, and as such is robbing people of jobs that pay taxes.

    The roll on effect of some illegal immigrant selling fake DVD‘s handbags and watches on the street corner is quite big, the loss of revenue to the government on both personal and imports taxes is quite large, also encouraging illegal’s to come to your country because they know that they’ll always find work in this industry, this undermines local government policy, and put unnecessary pressure on local law enforcement who could be better employed elsewhere

    Products such as bags and fake watches do not overly affect the brand owner, but when we start looking at health products, and goods designed to save life, these have smaller mark ups, they directly affect jobs, and more importantly put the consumer at risk. Fake brake pads made of compressed cardboard, fake circuit breakers that don’t work and trailing sockets that melt and burst in flames are but many unsafe products that are now flooding our markets

    The GAO and the OECD have their heads in the sand, and the “problem" of counterfeiting has not been massively inflated by lobbyists. They need to get out on the street and see the larger picture

     

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  31.  
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    Mike Masnick (profile), Dec 8th, 2009 @ 3:32am

    Re: Counterfeits

    The GAO and the OECD have their heads in the sand, and the “problem" of counterfeiting has not been massively inflated by lobbyists. They need to get out on the street and see the larger picture

    Ha! I've never seen anyone claim that either organization has their head in the and. Both are quite respected on these issues. So, I'm sorry if I take their word over your unsubstantiated claim.

    I also have trouble with the following:

    The roll on effect of some illegal immigrant selling fake DVD‘s handbags and watches on the street corner is quite big, the loss of revenue to the government on both personal and imports taxes is quite large, also encouraging illegal’s to come to your country because they know that they’ll always find work in this industry, this undermines local government policy, and put unnecessary pressure on local law enforcement who could be better employed elsewhere

    So you have no problem admitting that resources could "better be employed elsewhere" but don't recognize that the huge detrimental waste of effort in fighting non-harmful counterfeiting "could be better spent elsewhere." As for the "roll on effect" I'll only note that you ignore the fact that this effect works in the other direction as well. The less people have to pay for counterfeit products, the more they can spend on other products...

    Why do people always ignore that side of the equation?

    Anyway, given that this is the 3rd study suggesting that the counterfeit complaint is totally overblown, and the only ones supporting that claim are the lobbyists... guess who seems more credible?

     

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  32.  
    identicon
    Anonymous Coward, Dec 8th, 2009 @ 5:32am

    Re: Re: Re: Re: Re:

    Mike, when everyone wears the fakes, and the fakes become too common, they hurt the brand (overexposure). It also hurts the brand if people see shoddy looking clothes with the brand on it (not the people buying, just the people watching you walk by with a crappy looking Tommy shirt on). The negatives are all over the place.

    As for "the study", I stand by my point: I think they started with an answer and asked questions to get the desired result. Basing your entire answer on a single study seems, well, weak.

     

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  33.  
    identicon
    Anonymous Coward, Dec 8th, 2009 @ 5:35am

    Re: Re: Counterfeits

    Why do people always ignore that side of the equation?

    Mike, when you best economic theories start with "and someone rips someone off" you can imagine that nobody cares about the positive that comes out of it.

    You find yourself in the position of once again supporting the criminal element. Are you now going to say you "don't support conterfeiting, just the economic effects of it?"

    *shakes head*

     

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  34.  
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    Cody Jackson (profile), Dec 8th, 2009 @ 5:52am

    Why are the originals so expensive?

    I'm still trying to figure this one out. I have asked many women why purses and handbags are so expensive for the name-brands, like D&B or Coach. They can't really give me a good answer, other than "it's the quality." Umm, it's a bag? Sure, the quality of a counterfeit Coach bag may not be very good, but there are plenty of other, legitimate brands on the market that have the same amount of quality as Coach for much, much less.

    I will concede that other name brand items are worth the price, e.g. shoes. An expensive pair of shoes should last you many years. And you can often get them repaired rather than buying new ones all the time.

    But counterfeit brands are essentially free advertising for companies. Even if they don't have the same quality, people only see the name.

     

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  35.  
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    Michael Lockyear (profile), Dec 8th, 2009 @ 11:37am

    Re: Re:

    If people choose homeopathic medicines, pray to the Elbonian god of fertility, or simply forego treatment, that is a choice a free adult makes.

    Relying on drugs that you believe to be genuine, but aren't, is a completely different story.

    RE: Africa - I live in Africa, so this is not a hypothetical debate. If a poverty-stricken African living in a Malaria area, dies of Malaria because the medication they were given by the clinic or pharmacist is counterfeit no-one will ever know. If an infant dies of malnutrition no-one will suspect counterfeit infant formula. As for HIV, who will become suspicious if a sufferer dies a little sooner because the "anti-retrovirals" they were using containing no active ingredients.

    As for proof, this is difficult:) The first known case of death as a result of counterfeit medicines in Canada, for example, (Google it) was only recorded in 2006. This victim died unexpectedly, triggering tox tests...these raised red flags...analysis of the drugs in her possession raised further red flags...a forensic examination of her computer revealed that she had purchased counterfeit drugs over the internet. I suspect, that even for a first world country this was quite a detailed investigation. Where I live not even a murder investigation will be done this deeply! So the proof gets buried. Maybe if enough people die we will get the proof we need.

     

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  36.  
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    Michael Lockyear (profile), Dec 8th, 2009 @ 12:09pm

    Re: Re:

    I am talking about products being passed off for something that they are not. Whether they are adulteratd or "genuine" counterfeits is a moot point.

    The statement... "But, an even MORE annoying part of all this is the use of fear mongering over "counterfeit goods" as some huge problem that has to be solved, when the evidence increasingly suggests otherwise." ... to ME is what the article is about and this is what I am challenging.

    This website focuses a lot on entertainment (music) (and now luxury products (handbags))...I am suggesting that the issue is deeper than this...the legislation which protect these companies is the same legislation that protects pharma companies AND consumers of these products.

     

    reply to this | link to this | view in thread ]


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