The Hidden War: Corporations’ Fight Against Counterfeiting

Phony goods show up all over the world and in all forms: from low-tech Nike athletic apparel to high fashion Chanel bags and, more ominously, to drugs of all kinds, even chemotherapy compounds.

Counterfeit goods have been around for a long time but the internet has extended their reach and allows the makers of phony goods to sell them with ever more impunity. China, with nearly unlimited manufacturing capacity, has been unable or unwilling to effectively police the counterfeit trade.

What’s the harm? For some consumers, a knock-off Gucci handbag or Rolex watch allows them to wear a famous badge without busting their budgets. And some marketers have argued that even counterfeits help to reinforce a brand’s equity. In the case of phony drugs, however, the risks are much higher even if the price is lower—today, more and more unregulated cancer drugs are getting into hospitals.

Whatever the products, American firms’ losses to counterfeiters have been mounting. That’s why some companies have stepped up private enforcement, doing the ground work so law enforcement can move in. One company, Wisconsin-based Empire Level, recently went on the offensive, serving a complaint and summons to eight alleged Chinese counterfeiters at the National Hardware Show in Las Vegas.