Technology poses biggest threat to brands yet best hope against counterfeits

Advanced anti-counterfeiting technology is proving game-changing when it comes to cracking down on counterfeit goods. Unfortunately, the criminals behind the trade in fakes are just as keen to take advantage of the latest innovations. Front-line experts from key markets around the world fear that although emerging tech is indispensable in the fight against online fakes, it is evolving at such speed that brand owners may always be a step behind the counterfeiters.

According to contributors to the latest edition of WTR’s Anti-counterfeiting and Online Brand Enforcement Guide, it is not enough to fight tech with tech – the best solution is a hybrid approach. Leading practitioners in China, Germany, India and Italy offer WTR on-the-ground insight into what brand owners should be doing to protect themselves, and how governments and courts around the world are stepping up to meet ongoing challenges.

Technology – a force for good and evil

Blockchain is transforming enforcement

Given the speed at which technology is developing, it is little surprise that it is front and centre when it comes to fighting fakes. According to Reinhard Fischer and Tamara Moll of Cohausz & Florack, AI and blockchain technologies are pivotal advancements in anti-counterfeiting. They are “helping to enforce trademark, patent and design rights”, while blockchain is “transforming enforcement” by providing secure, traceable product records.

Companies must look to adopt emerging tech

Organisations such as Red Points are using AI “to identify counterfeit products and infringing trademarks online”. Meanwhile, IBM and Walmart’s blockchain collaboration to track pharmaceutical products stands out as a key example of collaborative efforts to capitalise on cutting-edge innovations.

Fischer and Moll urge companies to turn to other developments (eg, nano-optics for packaging and product labels), which offer “high-secure holographic features that are almost impossible to copy”.

Elsewhere, De Penning & De Penning’s Ruchi Singh, Rommel Pandit, Paramita Nandy Gupta and Sonu Shaji insist that it is “imperative” for corporates to adopt the latest available technologies. Key examples include:

• radio frequency identification, which stores information on a device and can be connected to the Internet for real-time data;
• near-field communication tags, which can be embedded into labels; and
• smartphone apps to help consumers check a product’s authenticity, as well as fingerprints and contact chips.

Deepfake technology is on the rise

While innovation is helping brand owners make significant strides when it comes to enforcement, the “world of counterfeiting is evolving in parallel”, Fischer and Moll report. “The spread of deepfake technology and increasingly sophisticated counterfeiting techniques pose a serious threat.” Counterfeiters are now able to create near-perfect replicas of products, documents and even digital identities, making it all the more crucial for brand owners to invest in advanced anti-counterfeiting software. “Using AI and machine learning tools, organisations can analyse and predict patterns in counterfeit activity, enabling them to proactively identify potential threats.”

Issues with the Internet

Decentralisation of the Internet is also proving to be a big problem. “The decentralisation and anonymity of cryptocurrencies offers a new avenue for illegal transactions of counterfeit goods,” Fischer and Moll reveal, while Singh, Pandit, Gupta and Shaji fear that “with the stupendous growth of e-commerce and a decentralised internet, it will get increasingly difficult to tackle counterfeiting”.

“With the popularity of e-commerce and live streaming, online sales have become one of the main channels for counterfeit and shoddy products,” argues Elian Xue of Kangxin. “The anonymity of online sales makes infringement more concealed and complicated.”

Cesare Galli of IP Law Galli in Italy also recognises the danger of online transactions. It is not just about websites or the metaverse, he insists. “Social networks are becoming a favoured place for counterfeiting, through hidden links (ie, advertising fakes on social pages) where codes are provided to order from websites that are apparently offering legitimate products.”

Tech is not always the answer to a tech problem

While Galli stands firm that monitoring the web is indispensable and Singh, Pandit, Gupta and Shaji anticipate that AI and blockchain solutions will provide effective methods of increasing supply-chain transparency “with stronger authentication systems”, offline action (eg, training agencies, Customs and border protection, and educating consumers) remains essential. The impact of alerting various authorities and filing civil actions should not be underestimated, and Galli maintains that “combining criminal, administrative and civil actions is the most effective strategy”.

Xue agrees. “When it comes to counterfeits in online sales, deep online and offline investigation and comprehensive enforcement actions, such as raid or criminal action, should be taken into consideration,” she states.

Taking the fight offline

Brands, retailers and governments will have to collaborate to innovate and get ahead of counterfeiters.

Italian court crackdown on counterfeits

In Italy, the fight shows no signs of slowing as the country’s courts clamp down on online counterfeiting. From the front line, Galli reveals that judges in Italy’s IP Specialised Divisions have received extensive training, “during which counterfeiting in the metaverse and through NFTs was examined in depth”.

The Court of Rome has already rendered a pivotal decision on this matter, sanctioning parties every time they commercially exploit another’s trademark. Italian courts are also issuing dynamic injunctions, the admissibility of which are considered “undisputed”.

Meanwhile, the Naples Court of Appeal recently issued a landmark decision to exclude accessories and consumables from the scope of the design/model repair clause, “making protection against design counterfeiting even more effective”.

Zero tolerance in China

China is placing growing emphasis on IP protection, promoting it as a national strategy. The government is working to continuously bolster protection through legislation and policy measures, as well as by strengthening law enforcement, Xue reports.

“By revising and improving relevant laws and regulations, and increasing the punishment for IP rights infringers, the cost of breaking the law has increased,” she reveals, insisting that this has had a deterrent effect on counterfeiters.

Amid the turbulence, the future is promising

In the realm of anti-counterfeiting, technology is both a help and a hindrance.

For brand owners, it is crucial that they be proactive rather than reactive, using key emerging technologies to their advantage as a force that can detect and block the sale of fake products.

However, as technology evolves to undermine these efforts, offline action remains essential. Around the world, governments and courts are taking stricter approaches to enforcement and amending key legislation in ongoing efforts to get ahead of counterfeiters, both online and offline.

The Anti-counterfeiting and Online Brand Enforcement Guide combines the latest strategic analysis with practical, country-by-country exploration of the best protection around the world. The latest edition was published in September 2023.

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• Source: https://www.worldtrademarkreview.com/article/technology-poses-both-biggest-threat-brands-and-also-best-hope-against-counterfeits