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issue: June 2003 APPLIANCE Magazine

The Open Door
The Threat of Counterfeiting

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by Manny Gratz, manager, Special Investigations and
Anti-Counterfeiting, CSA Group

Widespread use of counterfeit marks undermines the entire North American system of standards, testing, and certification that has been put in place to protect the interests of retailers, regulators, specifiers, product manufacturers, as well as consumers.

If unchecked, proliferation of counterfeit approval marks can enable unsafe or otherwise deficient products to gain widespread access to the North American market. This can place consumers at direct risk of exposure to unsafe or deficient products and increase retailers’ risk of legal action and unfavorable publicity should they unwittingly supply those products. Widespread counterfeiting can also jeopardize public confidence in products bearing legitimate approval marks, posing a significant threat to leading national brands and the profits of the companies behind them.

Proprietary, trademarked approval marks are among the most valuable brand assets of testing laboratories. Counterfeit marks pose a very real threat to the acceptance of these legitimate marks. Reduced acceptance represents a significant loss of brand equity and could place a testing laboratory at a competitive disadvantage, ultimately resulting in significant loss of business.

A Global Threat

The threat of counterfeiting is not limited to product approval marks. The appearance of counterfeit products in North America has increased dramatically over recent years. These products are often unsafe, compete unfairly with legitimate business, and can damage legitimate manufacturers’ reputations.

The IACC (International Anti-Counterfeiting Coalition, www.iacc.org), a watchdog over this area, estimates that trademark counterfeiting robs the U.S. of more than U.S. $200 billion annually in product sales, distribution, and lost jobs. In 2001, U.S. Customs seized and destroyed more than $4 million worth of counterfeit electrical equipment alone.

The IACC reports the majority of counterfeit products come from Asia, primarily China, and that Eastern Europe has also become a significant source. The manufacture and distribution of counterfeit products has been linked to organized crime.

A wide range of potentially unsafe products could have counterfeit approval marks. Counterfeit approval marks have been found on electrical products built using substandard materials and exhibiting compromised electrical spacing - both of which are potential shock and fire hazards. Recently, circuit breakers bearing counterfeit approval marks were found in a hospital panel board supplying power to life-support equipment.

Who Buys Counterfeit Products?

Anyone could unwittingly purchase a counterfeit product or a product bearing counterfeit approval marks. These are the real victims of counterfeiting because they believe they are purchasing or specifying a legitimate product and are paying for the value they associate with that product.

While these people may be disappointed in the performance, reliability, and durability of the product, the real threat posed by many counterfeit products is safety. If the product has not been tested and certified to meet applicable standards and does not bear legitimate approval marks, it could pose a serious fire, shock, or other hazard to the user and represent a serious liability risk to retailers, distributors, or others who may have supplied the product.

Determining a Counterfeit Approval Mark

Sometimes the appearance of the mark itself is an obvious indication that it is counterfeit. CSA marks, for example, have distinctive graphic features that are often not accurately reproduced by counterfeiters. One common difference is in the proportion of the letters in the marks. Marks on products that deviate from these official designs should be viewed with suspicion.

Examination of products and their packaging can sometimes indicate a counterfeit. For example, unclear printing on products, labels, or packaging or spelling mistakes can be an indication that the product is counterfeit and may have counterfeit approval marks. A discrepancy between the contents of the product package and the description on the package may also be a sign of counterfeiting. Missing product information or other package enclosures are another reason to be suspicious.

Significantly lower pricing can be another sign that a product is counterfeit. And, availability of a product through an unauthorized distributor can indicate that the product is not legitimate.

Aggressive Action is Called For

The threat posed by counterfeit approval marks calls for decisive detection and enforcement action to defend the interests of businesses - and consumers - who rely on approval marks for assurance that products or components meet applicable standards. Leading manufacturers should consider initiating aggressive, "No Tolerance" programs to detect, expose, and punish any unauthorized use of its registered trademarks or product designs.


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