Open market for fake goods

A reluctance by the police to enforce criminal laws against counterfeiters is fuelling their illicit trade. Harsh Aggarwal and Roma Arora report

Counterfeiting is one of the biggest challenges facing brand owners, as it threatens their profits, reputations and, potentially, the lives, safety and loyalty of their customers. Sub-standard raw materials are generally used to make counterfeit goods for cheap imitations of reputed brands that customers trust. Counterfeit goods affect multiple industries such as apparel, fashion accessories, medicine, cigarettes, automotive parts, consumer goods, toys, electrical and electronic goods.

Trades in counterfeits can be broadly divided into two categories:

1. Consumers knowingly purchase counterfeit products and there is no element of deception.
2. Consumers intend to buy original products but are deceived into buying counterfeits and, certainly, there is deception.

Trades in the first scenario involve products like clothing, footwear and fashion accessories. Such transactions infringe the copyrights and trademarks of the brand owners, but they do not represent any form of cheating. The second scenario involves products such as printer cartridges, auto parts, mobile phones and related accessories. Given the nature of these products, they will not affect the health and safety of the user.

However, when it comes to food and beverages, medicines, cosmetics and life-saving electrical devices, such as miniature circuit breakers (MCBs) and wires (special products in short), a customer chooses brands only because of their high quality and the trust they have in the name. No end-customer knowingly buys fake medicine or a life-saving device. Such products, due to their very nature and usage, strongly affect human health and safety.

Harsh Aggarwal is joint general manager of legal and Roma Arora is the deputy general manager of legal at Havells.