Developing Anti-Counterfeiting Strategies for a Global Environment

Peggy ChaudhryAssistant Professor of International Business

Villanova University – College of Commerce and Finance

Victor CordellProfessor & Director of International Business Planning Program

Fisher Graduate School of International Business – Monterey Institute of International Studies

Alan ZimmermanAssociate Professor of International Business

City University of New York – College of Staten Island

IPR Commodities Seized

Commodity2003

% TotalValue

Commodity2002

% Total Value

Cigarettes 44% Cigarettes 38%

Wearing Apparel 15% Media 29%

Handbags/Backpacks 12% Wearing Apparel 9%

Media 8% Consumer Electronics 5%

Consumer Electronics 4% Watches/Parts 4%

Watches/Parts 4% Handbags/Wallets/Backpacks

3%

Footwear 3% Toys/Electronic Games 2%

Toys/Electronic Games 2% Cigarette Rolling Papers 1%

Sunglasses/Parts 1% Sunglasses/Parts 1%

Headwear 1% Headwear 1%

All other commodities 6% All other commodities 8%

Source: International Anti-Counterfeiting Coalition, 2002 and 2003

U.S. Customs Service IPR Seizures by Country of Origin

Country2003

% TotalIPR Seizures

Country2002

% TotalIPR Seizures

China 66% China 49%

Hong Kong 9% Taiwan 27%

Korea 3% Hong Kong 4%

Pakistan 2% Pakistan 2%

Mexico 2% Korea 2%

Malaysia 1% Indonesia 1%

Philippines 1% Switzerland 1%

Canada 1% France < 1%

Switzerland 1% Malaysia < 1%

Thailand <1% Kazakhstan <1%

All other countries

12% All other countries

11%

Source: International Anti-Counterfeiting Coalition, 2002 and 2003

Key Research Questions

How do managers conceptualize the intellectual property environment?How does the intellectual property right environment affect the market entry decision?What anti-counterfeiting strategies are most frequently used?How effective is each anti-counterfeiting tactic?

Consumers

DistributionChannels

Host Governments

International Organizations

IPR Actions

Mode of Entry

IPR Environment

Level of Consume

r Complicit

y

Level of Host

Country Enforcemen

t

Conceptual Framework

Level of Market

Commitment

Level of Pirate

Activity

Pirates

Summary of Anti-Counterfeiting Strategies

Targeted at Consumers Targeted at Host Country Governments

-Use special packaging and/or labeling-Emphasize benefits of genuine product-Provide lists of legitimate channel members-Emphasize warranties and after-sale service-Offer site licenses

-Register trademarks and patents-Educate local law enforcement-Lobby for more stringent laws/enforcement-Seek assistance from tax authorities

Targeted at Distribution Channels Targeted at International Organizations

-Educate channel members about copycats-Provide warnings to distributors/retailers-Give financial incentives to reject counterfeits-Solicit dealer suggestions to develop tactics-Use RFID Technology-Monitor and investigate retailers and

distributors

-Monitor policy of UN/ECE Advisory Group-Participate in IACC actions-Use the TRIPS of WTO-Monitor the actions of WIPO-Participate in multilateral organizations-Lobby for stronger global IPR protection

Summary of Anti-Counterfeiting Strategies

Targeted at Pirates

-Establish internal enforcement team-Use surveillance program in retail outlets-Pursue injunctions against counterfeit goods-Warn counterfeiters of possible legal action-Use acquisition and/or joint venture strategy-Use covert actions -Obtain local police support

Based on your experience in many countries, overall how would you rate the effectiveness in reducing counterfeiting of any of the following actions you may have taken?

Most effective anti-counterfeiting strategies directed at channel were:

Educate channel members about counterfeit productsEncourage distributors to notify manufacturers that counterfeit goods are in the market Provide warnings to distributors/retailers of possible damages from selling counterfeitMonitor and investigate retailers and distributors

Most effective anti-counterfeiting strategies directed at:

Home/Host Country Governments:Encourage enforcement of existing lawsLobby for stronger global intellectual property protection

International Organizations:Participate in International Anti-Counterfeiting Coalition actions

Most effective anti-counterfeiting strategies directed at pirates are:

Establish enforcement team within the companyMonitor information sources for general anti-counterfeiting developments Pursue injunctions against counterfeit goodsObtain local police support

Conclusion

Need to evaluate why some strategies did not appear to be effective? For example, why did the respondents not give tactics targeted at consumers an effective rating?Further data collection is required to provide better insight into managerial perceptions.