COVID-19 and overwhelming amounts of counterfeits online: What businesses should do — right away!

Written by Xuan Nguyen

 

According to an update from the World Health Organization (WHO), by 15 April 2020 the coronavirus disease (COVID-19) had already infected 1 918 138 people in 213 countries, territories and areas, resulting in 123 126 deaths. Various governmental interventions have been applied, including border closures, strict quarantines, travel bans, and the forced closure of many businesses. 

It is expected that a deep economic crisis will follow the pandemic (which is still evolving and unpredictable). So far a dramatic slump in economic activities has been witnessed, affecting not only the supply chain (production of goods and services) but also demand (consumption and investment). Many people are forced to stay at home, factories have stopped operating, restaurants, shops and public places are closed. Consumers are being driven toward online shopping marketplaces. While major parts of the world, including, Europe, the USA and a lot of Asia, are struggling to fight against the crisis, in China the situation is now apparently under control and factories are gradually returning to normal.

Photo source: https://pixabay.com

Photo source: https://pixabay.com

The current situation has also created fertile ground for the sale of counterfeit goods online, especially in sudden upsurge sectors such as pharmaceuticals and medical devices. According to Interpol, during one week of action (3–10 March 2020), authorities in 90 participating countries seized more than 4.4 million units of illicit pharmaceuticals, more than 37 000 unauthorised and counterfeit medical devices, and closed down more than 2 500 web links, including websites, social media pages, online marketplaces and online adverts for illicit pharmaceuticals[1].

In South-East Asia all 10 countries have reported a substantive number of COVID-19 cases. Since there was already a high number of local counterfeit manufacturers available, and a significant trade exchange with nearby China, the region is very high risk in terms of counterfeits invading the market. Recently, Thai police seized 45 000 fake COVID-19 test kits, 350 000 medical masks, and 1 200 infrared thermometers that were smuggled into the country by two Chinese men. All products sold online claiming to be COVID-19 test kits at the moment are fake, according to the Thai Food and Drug Administration (FDA)[2].  Vietnamese authorities also found that a company in Vietnam had been making masks out of toilet paper amid the coronavirus outbreak and skyrocketing demand[3].

These figures are just the tip of the iceberg. There are overwhelming numbers of counterfeit products. This article will discuss how counterfeits are being fueled by an online market and what the brand owner should do to mitigate the impact.

Why have counterfeits surged in the shadow of the COVID-19 outbreak?

  • The COVID-19 crisis has resulted in a spike in demand for essential products, such as personal protective devices (facemasks, hand sanitizers and antiviral medication), vitamins, pharmaceuticals, foods and beverages, as well as non-essential products, such as cosmetics and personal care items, household products, electronics, work-from-home tools, entertainment technology and children’s toys. Meanwhile, the majority of factories are being shut down, causing the shortage of supplies of genuine products. ‘In moments of high demand and rushed buying decisions, counterfeiters can jump on the opportunity and sway buyers in their direction[4].’
  • People are shopping online much more than ever. According to analysis by ACI Worldwide, ‘The COVID-19 crisis is driving the global growth of e-commerce sales, with millions of consumers worldwide in quarantine shopping for goods, services and entertainment online. Transaction volumes in most retail sectors have seen a 74 percent rise in March compared to the same period last year.’ The dark side of this phenomenon is that people can be more easily tricked. Many sellers use photos of genuine products while offering extremely low prices to attract online buyers during a time of crisis, and then provide fake products to consumers. It can also create a backlash for brand owners, leading consumers to mistakenly believe the product quality is very low and to lose interest in the brand.
  • The crisis has caused an immediate reduction in the income of many people across the globe, and consumers are looking for the cheapest possible versions of goods because of their reduced budgets. While the pandemic is still evolving, millions of people have lost their jobs following business restrictions and closures. According to a report by the International Labour Organization (ILO), if we are experiencing a ‘“High” scenario where COVID-19 has serious disruptive effects, reducing GDP growth by around 8 percent: Global unemployment would increase by 24.7 million, with an uncertainty ranging from 13 million to 36 million[5].’ Given the current environment of uncertainty and fear, and the real threat of significant declines in income, consumers in many economies are unable to purchase branded goods and services as before; buying cheap counterfeit products can be a tempting option.
  • Many counterfeit suppliers are concentrated in China where the situation is under control and factories have gone back to their normal operations. This means counterfeiters may be in a better position to jump onto the upsurge in demand before legitimate sellers can reopen production. Amid the panic of the crisis, a lot of companies, especially small and medium-sized enterprises (SMEs) are concentrating on solving critical issues such as declines in revenue, insolvencies and job cuts, rather than keeping an eye on monitoring the marketplaces for fakes. As a result of the lack of the legitimate owners’ attention, counterfeiters can more easily flood the market with fakes.
  • Customs checks, market investigations, and raid and seize activities have been reduced following social distancing and safety measures. In the same way as many other public services during this health crisis, officers involved with anti-counterfeiting activities have been physically limited to avoid the risk of infection. This means that infringers have more opportunity to take a free ride on the market.

What should brand owners do?

During volatile market conditions and the resulting increase in online shopping, consumers easily become targets for counterfeiters. Brand owners need to stay on top of monitoring and combating fakes more than ever. Otherwise, they may lose sales to counterfeiters.

  • Focus on monitoring e-commerce and social media platforms and proactively communicate with the customers. During the current social distancing measures and travel bans, a majority of customers has been using the internet for buying stuff instead of shopping physically, you need to keep a close eye to the net to protect your revenue and maintain safe channels for your business during the crisis, and after it ends. When some sectors have a spike in demand while genuine supply chains are being disturbed, fakes become a more serious issue. Brand owners should be more protective about their communications with their consumers, guiding them to available supply channels with authentic products and warning them about fakes.
  • Conduct an investigation and gather facts. Don’t make a groundless claim, it will cost you both time and money. Once you have found a suspected infringement on the internet, the first step is to quickly collect evidence on the infringer, e.g. basic information (name, address, other contact details, the scale of their business and the origin of their products).
  • Take-down Notices and Warning Letters: Utilise the available complaint functions on the e-commerce platforms and encourage social media operators to quickly take down infringing products. In the meantime, as a legitimate brand owner, you can also consider sending Warning Letters to the counterfeiter to ask them to stop their illegal activities.
  • Inform the competent authorities: In South-East Asian countries, local governments have recently made many efforts and improvements in combating online counterfeits. Brand owners can find available complaint tools — such as hotlines, emails or complaint submissions on the websites of customs, market police departments and other relevant national bodies — to promptly notify the authorities.
  • Seek advice from local IP experts. In critical cases, companies are usually advised to consult with local experts that are familiar with infringement cases and have close relations with enforcement bodies such as customs, investigators and the police. It is worth noting that many counterfeits are advertised in local languages or posted on local websites, so monitoring using detection software or search tools (usually in Roman characters) doesn’t work effectively.

The COVID-19 pandemic is unprecedented. Our lives, and the way we do business, have changed in recent weeks. Brand owners should swiftly adapt to the new situation to protect their businesses against counterfeiters. Neglecting this during the crisis might cost you more than you imagine, i.e. from losing your faithful customers to losing your entire share of the market. Keeping your company safe amid the chaos, and getting ready for normal business to resume, is the only way to retain both your revenue and your reputation.

[1] https://www.interpol.int/en/News-and-Events/News/2020/Global-operation-sees-a-rise-in-fake-medical-products-related-to-COVID-19

[2] https://thethaiger.com/coronavirus/big-arrest-on-price-gouging-of-covid-19-safety-gear-and-fake-test-kits

[3] https://www.insider.com/vietnam-company-using-toilet-paper-for-coronavirus-masks-faces-penalty-2020-2

[4] https://www.redpoints.com/pdfs/market-research-impact-of-covid-19-on-ecommerce-sales/?utm_campaign=HS284-market-research-survey-impact-of-covid-9-on-ecommerce-sales&utm_medium=email&_hsmi=84691783&_hsenc=p2ANqtz-_KXO0X8sOU11ZaL9gXi53LxFBQjYdtj-ZtCHwLlocKYxHxgibn05yKKsXyfyIzVAccGKAF&utm_content=84691783&utm_source=hs_automation

[5] https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/documents/briefingnote/wcms_738753.pdf

How to Protect your IPR in the Tourism Industry in the Philippines

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BRAND on price labelsUnderpinned by the intensive governmental investments in marketing and infrastructure to support the tourism industry, the Philippines’ tourism industry is rapidly growing. The industry contributes around 11% to the annual GDP of the Philippines, bringing in about EUR 30 billion in 20141. As the country is promoting foreign investments in special economic zones of tourism development like Metro Manila, Cebu City and Mactan Island, there will be many lucrative future business opportunities for European SMEs in the tourism industry in the Philippines. 

SMEs engaged in tourism industry need to pay special attention to protecting their intellectual property (IP) rights, because IP infringements are still relatively common in the Philippines. IP rights are a key factor for business success and neglecting to register these rights in the Philippines could easily end SMEs’ business endeavor in the country. Thus, a robust IPR strategy is needed, when entering the promising market of the Philippines.   

Make Sure your Brand is Protected 

Branding is especially crucial for the tourism sector, as it allows companies to differentiate themselves from the rest, creating a niche market and an individual appeal that will translate into more tourist arrivals. Thus, it could have devastating consequences for a European SME if another company started to use similar or identical brand to promote their services. In tourism sector ‘destination branding’ is equally important to company branding. Destination branding often relies on a logo and a tagline, the examples being the Swiss resort St. Moritz using the tagline ‘Top of the World’, the  Tourism Malaysia campaign of ‘Malaysia, Truly Asia’ or the slogan ‘it’s more fun in the Philippines’ that the Philippines Department of Tourism uses to promote the country internationally.    Continue reading “How to Protect your IPR in the Tourism Industry in the Philippines” »

Tips for Protecting your Brand in South-East Asia

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Business in South-East Asia – the facts and figures

Economic growth in South-East Asia has been, and is likely to remain strong. As its Thailandeconomies have shifted from exports to a broader base of growth drivers, both consumption and investment in the region has soared[1].

Between 2015 and 2019, it is predicted that the ten ASEAN nations (Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei Darussalam, Cambodia, Laos, Myanmar and Vietnam) will experience 5.6% GDP growth on average, with business fueling much of the growth in the region[2].

This region is increasingly attractive for international trade and foreign investment, due to rising domestic demand for foreign products. Among the most promising sectors for European companies in South-East Asia are electronics, automotive components, mechanical engineering (machinery), IT/software, food processing and leisure and tourism. Continue reading “Tips for Protecting your Brand in South-East Asia” »

In Vino Veritas: A New Industry IPR Series from the China SME IPR Helpdesk

 

wine label-02Wine is one of the most civilized things in the world . . . it offers a greater range for enjoyment and appreciation than, possibly, any other purely sensory thing.

                                                                                      – Ernest Hemingway

Continue reading “In Vino Veritas: A New Industry IPR Series from the China SME IPR Helpdesk” »

South-East Asia IPR Basics Series: Trade Mark Protection in Vietnam

brand-trademark-collageHere at the Helpdesk we always advise companies looking to enter new markets to initiate trade mark registration proceedings ASAP, once the decision is made to investigate a new potential market.

Trade mark protection is cheap, easy and painless if done right. Unfortunately, widespread bad faith registrations and ‘trade mark squatting’ practices in Southeast Asia can make for a far less comfortable experience for companies too slow on the uptake.

Today we discuss the peculiarities of Vietnamese trade mark protection and the registration and enforcement procedures which European SMEs can use to protect their brand and enforce their rights in Vietnam.

As always, our door is always open, and if you have questions about how best to protect your brand in Southeast Asia, just drop us an email today and we’ll get back to you within 3 working days!

Continue reading “South-East Asia IPR Basics Series: Trade Mark Protection in Vietnam” »