Everyone worries about the image that others have of them. Brands are no different. This is why they hire extensive teams of experts on reputation and communication to make sure their image is exactly what they want it to be. Additionally, they spend a lot of money on advertising so their image is that much stronger. So when contraband and forgery make an appearance, brands are severely damaged. Because the product that have been sold under the false name of a reputable brand have not undergone the same quality and safety protocols, they tend to be of a lower quality.
Brands, however, can seek the law to fight off counterfeiters and be compensated for damages. Among the five compensations we can cite five: loss of income, damage to the brand, corrective advertising, royalties for trademark infraction and punitive damages.
In the first case, the company can sue the infractor for the revenue they obtained under the false name, since these were potentially sales the registered brand would have made. As far as the damages to the value of the brand, the judge will take the depreciation of stocks or share capital since the first illegal sale took place to the current time of the trial. The third grounds for legal action asks of the guilty party to assume the economic cost of an advertising campaign that would be needed to restore the brands image.
The company can also sue for trademark infringement. The amount to compensate is determined with a calculation of the brand worth as well as the value of the product that was victim of infringement. Lastly, punitive damages are a fine that the judge enforces as punishment for the crime. This is meant to dissuade the criminals from committing the crime again.
There are two potential markets for these kind of products: that of the people who look for forgeries due to their low price and are aware that they are buying a non-original product and that of the people who don’t know and pay full price believing it is the trademark product. In the second scenario, the reputation of the bran is severely damaged since, when the product show its low quality, they people judge the brand they believed to have bought it from.
Brands and their contribution
Many people buy counterfeit good without fully understanding the effect this has over our economy. In first instance, it hurts the large enterprises in different countries. And although many think this is some sort of Robin Hood justice, it really is just damaging to everyone. Big brands contribute over 70.500 million euros yearly to Social Security. These brands also contribute over 73.500 million euros in taxes alone. This is enough to pay one retirement pension for over 200 people.
This means that big brands are a very important part of the social economy of the country. Not to mention that they are some of the biggest creators of employment. Meanwhile, piracy of physical products costs Spain over 5.655 million euros a year. And the whole European Union over 36.200 million.
Additionally, 5% of all European imports are contraband. Contraband that is brought in through two different channels: ports and online shopping. The biggest contraband port is Port Piraeus in Greece, whose concession belongs to China up to 2050. Curiously enough, 63% of all contraband comes from China.
Of all products, 70% are brought into Europe through online shopping. These forgeries come to Europe and subsequently Spain next to all other legal products. Their contents are analyzed like all others. However, customs offices are not qualified nor do they have the man power to verify each products authenticity and trademark.
The main site used in Spain and Europe for contraband (both knowingly by the customers and unknowingly) is Alibaba and it’s sister sites. Alibaba, however, has invested over 160 million dollars fighting against forgery in their website. It does this because with each illegal product that is sold, their reputation is harshly damaged.
But those websites we hold in highest regards are not immune to falling prey to those who want to use them to sell illegal products. Amazon has received serious demands by Apple to harshen its security regarding falsified products. Some people took advantage of Amazon even though in 2016, it hired over 1.000 people and invested tens of millions fighting against illegal products being sold on its site, as well as fighting against fake reviews and profiles. The company has also hired teams of researchers, programmers and engineers who are qualified to fight off this constantly looming danger.
We must not forget, that contraband and forgery highly damage a company’s reputation. For each product of inferior quality that is sold in their name, the company loses credibility and their clients lose faith. But even worse, citizens lose valuable tax contributions to the state. And we risk many jobs and considerable incomes to households, Social Security and the State.
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3ANTS is a content protection company that specializes in fighting the threat of piracy with innovative technology and a qualified team of experts on piracy. Specialized software and custom-made processes offer the best protection on the market. If you want to know more about our services, please contact us.
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