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Yet Another Study Says Counterfeit Products Aren't Really A Problem

from the let-it-go dept

Last year, we wrote about a fascinating study that indicated that counterfeit goods very often are not a problem for the manufacturers of the legitimate goods. That was because the study found two things: (1) most consumers buying counterfeit goods weren't being "tricked." They knew they were buying counterfeit goods, and it actually created a lower entry point into the market; (2) as such, it actually acted as really good advertising. The study found that 46% of those who bought a counterfeit brand-name purse, went and bought the real thing within two and a half years. That came on the heels of a variety of studies and reports that showed that the claims from the industry about the supposed "harm" from counterfeiting wasn't just overblown, but were blown so far out of proportion as to be ridiculous (though, politicians and reporters seem to have no trouble repeating such claims regularly).

It looks like we've got yet another study highlighting exactly the same thing -- and this one coming from a guy who is an advisor to the UK government. Gautam John points us to this new bit of research by Professor David Wall which was funded by the EU, which found that counterfeiting isn't really that big of a problem. The findings were quite similar to the study we reported on last year. It says that there's a consumer benefit to buying knockoff designer goods, and that the "losses" claimed by companies are way out of line with reality. Furthermore, perhaps most surprisingly, the report says that law enforcement should not waste their time trying to stop the bootleggers. The report also debunks the popular claim from the industry that counterfeit goods fund terrorism and organized crime.

Now, the report focuses on designer goods -- and notes that there is a real concern about potentially counterfeit pharmaceuticals (though, the industry often tries to lump generics in with counterfeits) and things like fake airplane parts. But this has always been the problem with attempts at lumping together all of these things. The actual "harm" is very different depending on what kind of products you're talking about. The designer goods industry -- and the copyright industries -- have been trying to lump themselves in with things like fake drugs, to try to get everyone worked up in their favor.

So it's nice to see a report like this specifically break it out and note that designer counterfeits aren't a problem. In fact, the report points out that problems of lumping all these things into one category: which is that law enforcement spends less time focusing on the things that really can create harm (fake drugs and airplane parts and such) and is forced to go running after fake handbags that don't actually damage the market.

With various governments getting ready to finalize ACTA in a few weeks, isn't it... rather concerning that the entire basis of the agreement doesn't appear to hold much water?




Separately, Bruce Ediger points us to a different study that tries to claim that people who have counterfeit goods are more prone to dishonesty, greed and cynicism. So, perhaps you can read into that a different kind of "harm" from counterfeit designer goods, though the design of the study itself seems a bit more suspect -- and even if you believe that study, that's never been the rationale for government action when it comes to counterfeiting.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Aug 30th, 2010 @ 11:55am

    On the last part, it may be true that "people who have counterfeit goods are more prone to dishonesty, greed and cynicism." I would think that the counterfeit possession doesn't cause these things but are a result of them.

     

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    Jay (profile), Aug 30th, 2010 @ 12:18pm

    The missing link

    "The report also debunks the popular claim from the industry that counterfeit goods fund terrorism and organized crime."

    Actually... There is a very small link to organized crime and counterfeit goods. Most gangs make a lot of counterfeit goods that they sell in their community. While I understand the rationale when the VCR was prevalent, it's such a minor crime that anyone could do it. With DVDs and the internet, there's probably more that's done with counterfeiting and crime. A few gangs I hear about were the mafia, the Chinatown triads, and quite a few other gangs that want to make a fast buck.

    I don't say this to say that I advocate a heavy handed approach to counterfeiting. I just believe that if there IS a link to these two, the least of a worry trying to arrest criminals is whether they're copying a movie.

     

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  3.  
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    :Lobo Santo (profile), Aug 30th, 2010 @ 12:22pm

    Re: The missing link

    You've got the gov logic backwards. If you're counterfeiting or copyright infringing, it's pretty good proof that your some sort of gang member or terrorist.

     

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  4.  
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    Maniac, Aug 30th, 2010 @ 12:34pm

    Anyone got a link to the study?

     

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  5.  
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    out_of_the_blue, Aug 30th, 2010 @ 12:38pm

    The real harm is materialism.

    These "designer" products feed on a sick society in which material goods give the purchaser a false self-esteem in place of any actual merit or accomplishments, a problem particularly for the rich who basically never do *anything* to merit high incomes. The Rich are spriritual thieves too: flaunting luxury goods simply tries to steal the merit that comes from hard work, same as yuppies in 4-wheel drive pickups are trying to steal the merits associated with the American farmer and cowboys. It's another ill that'd be greatly ameliorated by the simple fix of high and progressive income tax rates.

     

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  6.  
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    Shawn (profile), Aug 30th, 2010 @ 12:39pm

    They have the public and public officials snowed with the same garbage math the software and entertainment industries have been using for years.

    Sally really likes the $500 Coach bag. Sally only has $20 to spend on a bag. Sally buys a counterfeit coach bag for $20 on the street corner, she knows it is not real and does not expect it to be of the same quality but it looks good.

    ZOMG Coach totally lost $500 to the evil counter fitters!!! We know that there were over a million counterfeit bags sold last year so obviously coach lost $500,000,000 to the pirates!! Write up a new treaty of something quick!!!

     

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  7.  
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    Dark Helmet (profile), Aug 30th, 2010 @ 12:39pm

    Re: Re: The missing link

    Right, and if you're not, then you're a "POTENTIAL gang member or terrorist".

    Better keep an eye on you now. It's only a matter of time....AH! RAPORIST! RAPORIST!

     

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  8.  
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    Brendy, Aug 30th, 2010 @ 12:42pm

    Sweet now they can apply that some logic to unauthorized file sharing...

     

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  9.  
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    Dark Helmet (profile), Aug 30th, 2010 @ 12:54pm

    Re:

    "ZOMG Coach totally lost $500 to the evil counter fitters!!! We know that there were over a million counterfeit bags sold last year so obviously coach lost $500,000,000 to the pirates!! Write up a new treaty of something quick!!!"

    In completely unrelated news today, The United States government unleashed a new law to battle counterfeit designer bags. Detractors said that they are doing this only at the request of specific companies, a charge that Senator Dewey Cheetum steadfastly denies:

    "There is nothing," Senator Cheetum said angrily. "To the rumors that the Consolidated Offensive Against Crappy Handbags bill was manifested at the request of ANY individual company. None whatsoever!"

    One demonstrator pointed out the acronym of the bill and asked Senator Cheetum about it.

    "No, no, no," he responded. "You have it all wrong. The bill was written at the request of Craig T. Nelson."

    The Senator was then shot 442 times in the balls....

     

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  10.  
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    Gumnos, Aug 30th, 2010 @ 1:02pm

    Study on counterfeiting corelated to dishonesty, greed and cynicism

    @Maniac: "Psst, hey, buddy. I've got a copy of that study for you right here. Real thing. Only 5 dollah..."

     

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  11.  
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    TtfnJohn (profile), Aug 30th, 2010 @ 1:28pm

    Re:

    Even authorized file sharing.

     

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  12.  
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    TtfnJohn (profile), Aug 30th, 2010 @ 1:36pm

    Re:

    Thing is you don't even have to go on the street corner to get this stuff. For example during the 2010 Winter Games VANOC and The Hudson Bay Company (the lover of all things Indian/First Nations/Native) were happily flogging off counterfeit Cowichan (Indian) Sweaters at nearly the same price the genuine article is sold for. Now a genuine one with some small care will last a lifetime or two while the knock offs are probably already falling apart which didn't lead either organization to lose a microsecond's sleep.

    Go to any tourist trap area of any large city and you'll find stores filled to the brim with them which will later appear in thrift stores such as Value Village a few weeks after the tourist "season" ends. (For Vancouver there are two of them: Summer or Grouse Grind Season and Winter or Ski Season.)

     

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  13.  
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    David Mertz (TechDirt Staffer), Aug 30th, 2010 @ 1:40pm

    User Comment Rule and Additional Info

    Thank you for all of the insightful comments. Unfortunately, some of our users have been spamming the counterfeit thread. As such, we are policing the thread and will only keep those comments that recognize the validity of the study. Additionally, in the very least, all comments should be focused on less trademark and copyright regulation. Please visit www.whitehouse.com for more information on the study.

     

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  14.  
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    lee, Aug 30th, 2010 @ 2:41pm

    Re: The real harm is materialism.

    Yes Yes. Let's fix the rich self-esteem issue by taxing them more. It's the rich's fault that poor people get loaded on debt trying to have stuff the rich have. It's the rich's fault that poor people have to shop at Wal-Mart.

    Also, all rich people never did anything to earn their money. Literally ALL rich people inherited their money, and since this IS true and in FACT true, we must tax them to death so that all the poor people can have problems with materialism as well.

    Let's make sure the poor people are exactly like rich people. Make sure poor basically never do *anything* to merit stuff either.

    Spread the materialism and entitlement (that we hate rich people for) to poor people as well.

    Now EVERYONE will be the same life-sucking materialistic dirtbags.

     

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  15.  
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    Bob, Aug 30th, 2010 @ 3:21pm

    Re: User Comment Rule and Additional Info

    That's one way to live in happy, la-la land. Okay, I'll bite. I recognize the validity of the study. Can I stay?

    And you realize that the effects of counterfeiting are minimal because of enforcement, right? If you could buy a fake rolex at a store selling real ones, the one selling real ones would go out of business right away. But if they're only available in sketchy corners of town where the sales force is barely trustable, the effects will be minimal just like the study found. This proves that enforcement is good.

    But go on believing this study and thinking that the world will okay if we could only buy fake Land-o-lakes butter for the half the price of the real butter. We know that the fake factory in China would never mix in melamine or something inedible, right? We know the fake Gucci factory would never use lead or something poisonous in their dyes. We know that the fake Nike factory would use quality leather from green sources and tell the truth about it in their advertising.

    Face it, if you lie down with dogs, you're going to get fleas.

     

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  16.  
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    Anonymous Coward, Aug 30th, 2010 @ 3:50pm

    Re: Re: User Comment Rule and Additional Info

    I know the U.S. bootlegged everything from Europe and got rich, I know Japan bootlegged everything from the U.S. and Europe and got rich and I'm pretty confident China is rich now and like the others will at some point reach the same standards and start inventing their own solutions just like the U.S., Japan and others throughout history.

     

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  17.  
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    Anonymous Coward, Aug 30th, 2010 @ 3:54pm

    Re: Re: The real harm is materialism.

    1% of the population in America holds 80% of all the money.

    Are you saying that those people can't pay?

    The most incredible part is that the other 99% are the ones that foot the bill when it comes to taxes, something is wrong don't you think?

    Not that I care that much about others being filthy rich, I don't care about that, what I do care is balance and right now things don't seem to be balanced at all.

     

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  18.  
    identicon
    Anonymous Coward, Aug 30th, 2010 @ 3:54pm

    Re: Re: User Comment Rule and Additional Info

    Did you know that some bootlegs from China are actually of better quality then the original?

     

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  19.  
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    nasch (profile), Aug 30th, 2010 @ 4:09pm

    Re: The real harm is materialism.

    I'm a little confused. I get that you want everyone to have the same amount of money, but what is it that the rich are stealing? How do you steal merit, and who are they stealing it from?

     

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  20.  
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    nasch (profile), Aug 30th, 2010 @ 4:14pm

    Re: Re: User Comment Rule and Additional Info

    If you could buy a fake rolex at a store selling real ones, the one selling real ones would go out of business right away.

    Do you have any evidence for that claim?

    But if they're only available in sketchy corners of town where the sales force is barely trustable

    Do you have any evidence that that's where knockoffs (I'm assuming by "fake" you mean imitations, not trademark-violating counterfeits) are primarily sold?

    We know that the fake factory in China would never mix in melamine or something inedible, right?

    You know that product safety is a different issue, right? And that it was explicitly mentioned in the post?

     

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  21.  
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    Mike Masnick (profile), Aug 30th, 2010 @ 4:23pm

    Re: Re: User Comment Rule and Additional Info

    That's one way to live in happy, la-la land. Okay, I'll bite. I recognize the validity of the study. Can I stay?

    The post you responded to was a joke, not a serious comment from anyone here. That is not someone working for us.

    Amusing that you would miss the satire, but oh well.

    Everyone is free to post here, even if you disagree with the results of the study.

    And you realize that the effects of counterfeiting are minimal because of enforcement, right? If you could buy a fake rolex at a store selling real ones, the one selling real ones would go out of business right away.

    Conjecture not supported by any evidence. In fact, the actual evidence supports otherwise. Last year we wrote about a clothing firm that created its own "counterfeit" brand to see what happened, and offered it in stores, and found that it increased the sale of their main brand. Ah, proof.

    But if they're only available in sketchy corners of town where the sales force is barely trustable, the effects will be minimal just like the study found. This proves that enforcement is good.

    Wait, some totally random conjecture, that isn't back up by any evidence "proves" something. How so?

    We know that the fake factory in China would never mix in melamine or something inedible, right? We know the fake Gucci factory would never use lead or something poisonous in their dyes. We know that the fake Nike factory would use quality leather from green sources and tell the truth about it in their advertising.

    Ah, false appeal to safety. I made clear in the post that this didn't mean we should ignore the safety aspects, and there you go lumping it in with the non-safety aspects.

     

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  22.  
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    Jeff (profile), Aug 30th, 2010 @ 6:22pm

    Re: Re: User Comment Rule and Additional Info

    You do realize that www.whitehouse.com is an infamous porn site???

     

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  23.  
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    Jeff (profile), Aug 30th, 2010 @ 6:23pm

    Re: Re: Re: User Comment Rule and Additional Info

    well they used to be anyway... not so much anymore... :-)

     

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  24.  
    identicon
    Anonymous Coward, Aug 30th, 2010 @ 8:29pm

    One big issue for manufacturers is that "counterfeits" can actually be of the same quality as the "real" product. I know for a fact that you can buy exact copies of Ping golf clubs (that don't carry the Ping name) that are every bit as good as the Ping clubs. How do I know this? Well, they are made in the same factory as the Ping clubs but sell for a fraction of the cost. I would imagine that quite a few products made in China have this happen to them. You don't think those contract manufacturers let their lines go quite do you?

     

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  25.  
    identicon
    OpSec, Sep 15th, 2010 @ 10:24am

    Sure, a designer handbag itself is not dangerous to the consumer, but if you were able to track it's supply chain, you expose the network of illegal activity. Child labor, toxic ingredients, brazen cost-cutting, money laundering, organized crime, and terrorist activity are all prevalent in the business of counterfeit goods.

    OpSec Security Brand Protection Solutions

     

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

  26.  
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    nasch (profile), Sep 15th, 2010 @ 11:17am

    Re:

    Says the person whose business is protecting companies against counterfeit goods.

     

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


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