Truth in Numbers

Numbers are often a matter of interpretation. An increase in crime statistics, for example, might actually be good news if the statistics reflect increased enforcement and not increased criminal activity. Whether yesterday's released numbers on counterfeit seizures in the United States reflect better enforcement or a worsening counterfeit flood will require some digging, but the volume is staggering and a bit grim. According to the Associated Press, the United States Government seized over $270 million in counterfeit and pirated goods in 2008. These numbers represent a staggering 38% increase over 2007 numbers. Richard Rocha, a spokesman for Immigration and Customs Enforcement and apparently an optimist, credited improved law enforcement collaboration for the increase in counterfeit seizures.

Shattered

Some sad news earlier this week for lovers of fine china: Waterford Wedgwood - the makers of luxury crystal and glassware products - has filed for bankruptcy protection. Citing the current economic climate and credit crunch as the reasons for taking this action, Waterford Wedgwood has taken vowed to continue operations while seeking a buyer. No doubt, the company's 7,700 employees worldwide cannot feel too comfortable with this vow in a climate like the present.

Like many companies going out of business, Waterford Wedgwood has been the target of counterfeiters who could foist fake glass and crystal to the public. In good times, counterfeiters are an expensive nuisance to companies like Waterford Wedgwood. Not only do counterfeiters cost companies sales, but companies also must enforce their brand by hiring investigators and lawyers to go after the counterfeiters. These actions can typically cost a company like Waterford Wedgwood tens of thousands of dollars each year. And if companies don't spend this money, counterfeiters can then counterfeit with impunity, decreasing profit margins even more. In the current economy, careers can be as fragile as crystal. For Waterford Wedgwood's employees, the nudge from counterfeiters could leave their jobs and lives shattered.

New Jersey: Where the Rubber Did Not Meet the Road

And a fortunate thing, that. Via MyCentralJersey.com, news that police are seeking an Edison man caught with 600,000 fake condoms. While not identifying the brand of condom, a police spokesman confirmed that the condoms were "substandard."

Eternal Vigilance

Andrew Jackson, the American President whose long face adorns the twenty dollar bill, once remarked that the price of liberty is eternal vigilance. In these hard times, CBS News reports that counterfeits are pervasive, hard to spot and dangerous. Consumers and businesses alike without much disposable cash can be tempted to look the other way for a good price on an item of questionable origin. Given the dangers of counterfeits cited by the article, eternal vigilance might also be the price of safety and peace of mind.

Stopping Traffic

It's the old story - attract the attention of a state trooper for a minor traffic infraction, only to be discovered couriering around over 600 counterfeit handbags worth over $100,000. Well, except for the handbags part, but still, contraband is contraband, and two Chinese nationals are in hot water over their indiscretion. Apparently, police dogs sniffed out the rogue bags. Who knew counterfeit handbags had their own smell? Or that police dogs were so smart?

Risking It All for Lust

Viagra has changed the lives of millions of men. What factors such as age, diet and stress have contributed to Erectile Dysfunction can be successfully combated with application of the little blue pill. But such advances in pharmacological technology are expensive, and those costs are passed down to the consumer in the form of high prices. So despite knowing little to nothing about many of the internet vendors dealing "discount" prescription drugs, many men have attempted to purchase Viagra online.

Now the BBC has published a piece illustrating the extreme danger these online hunters at the intersection of lustful and miserly face. And it's not just Viagra. Drugs for the treatment of conditions ranging from cancer to heart disease proliferate online, despite that 90% of all prescription drugs sold online are fake. These counterfeit medicines are often enough made up of materials such as "talcum powder, or even rat poison." The problem is worse in Third World countries, where counterfeits used to fight conditions such as malaria have killed scores of vulnerable people. But in the rich United Kingdom, many men have bypassed legitimate channels to purchase drugs. Aside from a 90% chance of having just thrown their money away, these men face a real risk to their health.

Ticket to Nowhere

My Authentics does not normally focus on counterfeit tickets, but ticket search engine Ninja Tickets has issued a press release guide to sleuthing out counterfeit tickets to sporting events. It contains some useful tips and is certainly somewhat related to our own topical sweet spot. So if you're in the market for some resold tickets, please read this guide before wasting your hard-earned money on fake tickets.

Presents Roasting on an Open Fire

Classic crooner Nat King Cole would not approve of this Christmas fire hazard: Counterfeit Christmas Lights Pose a Shocking Hazard. I can think of few things more detrimental to Christmas cheer than an electrical fire burning down the Christmas tree.

Terror in a Bottle

From The Independent in Britain, millions of British citizens could potentially be at risk from counterfeit medication. From high blood pressure and anti-cancer medications to Viagra, the problem is serious. With the World Health Organization estimating that 1% of all medications worldwide are counterfeit, seven million prescriptions in Britain per year could be counterfeit.

The counterfeit medicine problem is complicated by several factors: first, medicines are frequently packaged and repackaged and sold and resold in Europe. This sheer complexity of the supply chain can make enforcement difficult. And diagnosis of counterfeit medications can also be difficult. Was it a fake pill that caused a "natural death" in a sick patient? Current medical procedures do not test the medication, meaning that plenty of dangerous pills could be ingested

And one other thing to worry about: terrorists. Intentional adulteration and sabotage of medicine is possible. With detection difficult and danger high, poisoning drugs could be low-hanging fruit for evil doers.

Cannes Fake Festival

Or rather, an anti-fake festival. From DFNI Online, news from Cannes that the Tax Free World Association (TFWA) played host to the signing of the Declaration of Cannes. According to this article, the Declaration of Cannes is an agreement between nine countries that will help fight the global $700 billion counterfeit luxury goods industry.

Up in Smoke

Counterfeit cigarettes seized in a raid in Felixstowe (UK). The cigarettes were hidden in a consignment of fireworks.

Paying the Piper

We recently commented on a Japanese poll showing a majority of Japanese citizens condoning the purchase of counterfeit goods. Anecdotally, we have further evidence of this worldwide trend in the American Presidential race.

The Authentics Foundation will studiously avoid the appearance of favoritism or partisanship during this American presidential election season. Counterfeiting is, after all, a problem that transcends party loyalties, and we are hopeful that both major tickets would use the levers of American Federal Government power to fight counterfeiting. But given that, we would be remiss if we did not comment on this recent photo of Sarah Palin's daughter Piper carrying a fake Louis Vuitton bag.

We do not know, of course, who purchased the bag or if the Palins were aware that Piper's handbag was counterfeit. And even so, a huge swath of Americans do not realize how profits from counterfeit goods can fund some truly undesirable activities such as child labor or criminal enterprises. The Palins also have a lot on their minds these days. Nevertheless, that the daughter of a Vice Presidential candidate can casually tote a fake handbag through a minefield of media and image handlers illustrates how deeply ingrained the consumption of counterfeit goods is, even in faraway Alaska. Highly discouraging stuff.

Fried Apples

I use a MacBook Pro to manage this blog, and it is possibly my most cherished possession. When I read stories like this showing fake power adapters that could possibly fry the motherboard of my baby, my blood runs cold. I suspect most other Mac owners would react similarly. Given the stakes, how anyone could take a chance on a "cheaper" adapter is mystifying.

Japanese Dissonance

Discouraging news from Japan, where a poll found that 52% of the people surveyed condoned the purchase of counterfeit goods. Even more discouraging is that the Japanese government has been attempting to raise the public's awareness concerning the dangers and drawbacks of counterfeit goods, and that the number of Japanese condoning counterfeiting has risen despite this campaign.

That these attitudes occur in Japan is even more disheartening. Japan is resource poor but highly educated and wealthy in large part from its innovations and intellectual property.

Smoking Dragon, Royal Charm, and the PRO-IP Act

What do you get when you combine four FBI Agents, 62 Chinese smugglers, and a billion counterfeit cigarettes? Besides the plot of a Hollywood potboiler, you get the tale of an intricate counterfeit cigarette bust that spanned several continents, a slew of agents, six years, 1,000 meetings, and enough fake smokes to supply every American man, woman and child with more than a few carcinogenic puffs.

Writing for the Center for Public Integrity, Te-Ping Chen brings her readers into the murky world of counterfeit cigarettes. Through bribery and sheer volume, Chinese cigarette counterfeiters overwhelm the inspection infrastructure in China and the United States. The numbers are startling. A shipping container of one million counterfeit cigarettes can cost about $120,000 to make, but can sell for as much as $2 million in the United States. A bribe of $20,000 can ensure safe passage out of China, and then it becomes a game of chance stacked in favor of the counterfeiter. Cargo containers are only inspected 22% of the time on average in the United States. While seizures are considered a cost of doing business for these smugglers, a run of bad luck seizures tempted the counterfeiters in the story to attempt to purchase protection from the Italian Mafia. Unfortunately for the villains, the Mafia fixers turned out to be FBI agents.

Te-Ping Chen does an excellent job of detailing the intricate nature of the smuggling world. Through the well-worn trade paths of cigarettes also comes counterfeit money, fake pharmaceuticals, and weapons. Notorious bad actors like the North Korean government profit greatly from the criminality. No doubt, a weapon of mass destruction could conceivably slip through safeguards using these same trade routes.

And what does this have to do with PRO-IP Act? Plenty, in fact. The PRO-IP Act goes to the root of the counterfeiting problem by increasing the price of doing business in counterfeits. Doubling the fines per counterfeit violation is a good start. Increasing diplomatic resources will also help, as it could enhance cooperation with law enforcement at the point of origin. And with counterfeit cigarettes often unhealthier than the real thing, criminal penalties for selling counterfeit items that do bodily harm could possibly ensure long jail sentences for the counterfeiters of cigarettes and other types of potentially harmful contraband.

This is an excellent article - entertaining, informative and even poignant in parts. Towards the end of the tale, two of the counterfeiters at the center of the investigation presented their undercover FBI Agent with two Rolexes as a wedding present for the mock gangster. "These aren't counterfeit, are they?" asked the agent. "No," replied the suspect, "these are the real deal."

You'll think Goodfellas, and you won't be far off - or disappointed. Read the whole thing.

Signs of the Times

Underwriters Laboratories, the guardian of global product compliance, has issued a press release warning customers that signs made by a company called "Clover Signs" bears the UL mark without having been approved.

Watch This!

From the Wall Street Journal, a watch that cannot be counterfeited. Or at least, not yet.

The watch is made by Vacheron Constantin, the venerable Swiss watch maker that first started making watches in 1755. This old school outfit employs cutting edge technology and clever technique to fight counterfeiting. Using "layers of invisible UV marking, laser perforations of some watch parts, special high-security inks, and other measures used to secure passports and currencies like the euro and Swiss franc," Vacheron Constantin has designed the "Quai de l'Ile" watch it claims is "impossible to counterfeit." If you hold the Quai de l'Ile under ultraviolet light, a tiny image of the sun appears between the 1 and 2 on the watchdial.

The article sounds a warning - counterfeiters have become increasingly capable themselves, so Vacheon Constantin's braggadocio may be misplaced. Nevertheless, anti-counterfeiting techniques like these can keep the brand owners one step ahead of the counterfeiters, and that, even if only temporary, is a good thing.

Read the whole thing.

PRO-IP Act

President Bush signed the Prioritizing Resources and Organization for Intellectual Property Act (a.k.a., the PRO-IP Act) earlier this week.

You can read about it here and here. The full text of the PRO-IP Act can be found here.

The PRO-IP Act establishes increased penalties for counterfeiting violations and strengthens America's ability to combat counterfeiting, including by the following means:

• Treble damages in civil actions and a doubling of criminal fines.
• Strengthened penalties against sellers of counterfeit goods that do physical harm.
• Increased seizure ability by law enforcement in copyright cases (normally, pirated media rather than counterfeited manufactured goods).
• Increased diplomatic resources and attention to the problem of counterfeiting and piracy by dedicating ten "Intellectual Property Attaches" to staff American embassies to promote the protection of intellectual property as a formal component of international relations.
• $25 million to help local law enforcement develop anti-counterfeiting law enforcement techniques.

There has been a large amount of online commentary (also here and elsewhere) about the PRO-IP Act and its impact, but the chatter is mostly concerned with the effects of the law on online piracy of music and entertainment.

In addition, there has been some debate on whether the full intent of the law will be carried out. For example, Counterfeit Chic's Susan Scafidi writes that the new Intellectual Property Czar will likely be appointed by the next President. Unless there is a late surge by Senator McCain, Senator Obama is likely to be elected the next President. Scafidi believes that he could then appoint Larry Lessig as the first IP Czar to enforce provisions of the PRO-IP Act. While Lessig advocates a radical loosening of enforcement of copyright, his primary focus is on the intangible world of the internet rather than physical counterfeiting. Lessig has shown relatively little interest in undermining the real world regime, and as such, I must respectfully dissent from Professor Scafidi's analysis (at least in terms of "real world" counterfeit goods).

Wired's Threat Level Blog is polling its readers on who should be the next Intellectual Property Czar here.

And while $25 million dollars sounds impressive, the actual application of the monies (spread over the entirety of the United States) may well be insufficient for the task at hand.

While attention and controversy swirl around the copyright/media portion of the PRO-IP Act, there is little doubt and debate that for the real world manufactured counterfeits, the increased enforcement is very welcome and a very positive step in the right direction.

Don't Brake for Fakes

From SkyNews, a spotlight on fake auto parts. Imagine trying to make a sudden emergency stop with fake brake pads made from compressed grass clippings and wood chips. Really, could there be anything more dangerous?

Fake Grass

If you click on the image to the right, you will read an excerpt of an interview with Phillip Jennings, founder of Phillip Jennings Turf Farm. Mr. Jennings has successfully developed golf turf for areas normally considered too dry or inhospitable for normal grass. When asked what his biggest competition is, he says, "Piracy."