Technology lead innovation is the answer to the US $500 billion Counterfeit Goods Market
Quantifying the impact of counterfeiting today
Globally, counterfeit goods account for more than US $500 Billion in trade. A significant portion of goods held by customs authorities is pirated or counterfeit products. For millions of people worldwide, owning goods like Nike sneakers or a designer handbag is a status symbol. As a result, the demand for inexpensive versions of such goods has fueled the growth of the multi-billion-dollar counterfeit industry.
Counterfeiting, where unauthorized copies of products sold as original products, are usually perceived as a victimless crime. However, counterfeiting impacts several key stakeholders – from the consumer to businesses and the government itself. Consumers are duped into buying sub-standard products, businesses become less likely to invest in product innovation, and the government suffers immense loss in revenue from customs duty and import taxes. Trade association FICCI estimates the global economic and social cost of piracy and counterfeiting to be upwards of US$1 Trillion 2022.
Existing anti-counterfeit measures are falling short
India has a comprehensive legal regime to prevent and punish counterfeiting. But despite having these measures spread across IP, consumer protection and customs law, counterfeit goods continue to flood both offline and online markets in India. This is because the scale of the issue in the Indian context requires innovative solutions. The demand for counterfeit goods is not likely to diminish anytime soon. For every successful raid resulting in the arrest of a counterfeiter, several sellers are waiting to fill the gap left by this arrest. Therefore, the best approach is to cut off the supply of counterfeit goods at the source. But locating this source is difficult in India due to its sheer size, which allows for several leakages in the supply chain.
To address the issue of counterfeiting, enforcement actions need to be stronger. The lack of adequate resources on the ground means that several suppliers are often able to slip through the cracks or navigate the system undetected. The government should explore innovative tech solutions like scannable codes on packaging, AI/ML and blockchain technologies to automate investigative processes and improve the speed and efficiency of law enforcement.
Technology should inform enforcement actions and supplement anti-counterfeit measures
Online retailers are taking the lead in deploying innovative anti-counterfeit measures and have already begun implementing internal measures to root out fake listings in partnership with brands who are motivated to protect their IP. AI/ML technologies are being used by these platforms to scan shopping listings for fake goods. This allows large batches of listings to be scanned in real-time, making the process more efficient and fast than doing it manually.
The government, too, should formalize the use of emerging technology to identify counterfeit goods, expedite investigations and catch bad actors. It should explore partnerships with technology service providers and e-commerce entities to implement tech solutions at scale and conduct training for its officials. Similar partnerships have been forged in Dubai – which is a prominent shopping destination for tourists worldwide.
In 2019, the Dubai Department of Economic Development signed an MoU with a product authentication technology provider to tackle trade in counterfeit products in Dubai. The provider uses algorithms to quickly identify counterfeit goods to match pictures of a suspected fake product against a database of client-submitted markers of authenticity such as microscopic logos. Similarly, India can enter into mutually beneficial partnerships with brand owners, retailers and tech-based start-ups to strengthen anti-counterfeit measures.
Another solution is to explore the use of blockchain technology. It is a highly secure digital record of information analogous to a ledger. It is an emerging technology which is now also being used to secure the supply chains of multinational conglomerates like Coca-Cola and Unilever. Counterfeiters commonly attempt to pass off fake goods as original items, and tracing the source of these leaks will greatly improve enforcement. Tampering with a shipment gets logged on the blockchain and can be easily traced back to the originator. This will allow law enforcement to accurately trace the source of a leak in the supply chain, such as stolen product shipments or stolen packaging.
The allure of owning branded goods is only increasing daily, feeding the billion-dollar counterfeiting industry. There is ample opportunity for the government to nurture Indian talent through boot camps and hackathons to develop innovative tech-based solutions to strengthen enforcement measures. Establishing a strong IP enforcement regime will signal to the world that India is a safe haven for IP protection. This will attract foreign investment and bring the country closer to meeting its goals of becoming a manufacturing hub in the near future.
The right way to tackle counterfeit goods lies in the early adoption of tech solutions, and pooling the best practices of established players on these measures can help fasten the process.
Views expressed above are the author’s own.
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