Manufacturers of genuine construction products, equipment and materials are largely the victims of counterfeiters, as are their distributors, customers and the public. However, genuine producers also contribute to the overall problem. Here’s how.
1. Planned Obsolescence
Although the rising use of the Internet and the rapidly growing global supply chain are often cited as the largest contributing factors to the influx of counterfeit goods in the construction industry, the next-generation features that original-equipment manufacturers engineer into their products helps counterfeiters create confusion in the marketplace.
Marketing new products can be a double-edged sword. In the case of Square D circuit breakers, one of many counterfeits discussed in this week’s cover story, a stamped amperage number on the handle, rather than a number painted in white, is one of the tip-offs that a breaker is a fake, but it is not the only clue.
Authentic breakers made in 1999 and older were also stamped the same way. So just looking at the handle may not be enough to tell you if a Square D breaker is genuine or fake.
Better methods to determine whether a breaker is fake, says Square D, include the following: Check to see if the label is missing a country of origin, check the color of the rail clip (it should be yellow-chromate in color) and make sure the company logo is molded into the case.
2. Short Product Lifecycles
The growing competitive landscape for technology has shortened the time it takes manufacturers to research, develop and launch new products. An October 2009 report from the Electric Power Research Institute explains how it took Intel more than 10 years to move forward incrementally from its 5-MHz, 8088 microprocessor in 1978 to the 66-MHz Pentium chip in 1993. Granted, this was more than a 1000% increase in processing power, but it wasn’t yet enough to satisfy the needs of computer users and their rapidly-changing demands.
Flash forward to 2000, when Intel introduced its 1.5-GHz Pentium 4 chip. It was three times the the speed of the Pentium III chip that was introduced a year earlier.
Quickly phasing out older products, though often far inferior to the new ones, helps the market for piracy, counterfeiting, and “gray” market material because the demand for the older product speeds up. What's more, manufacturers typically place more efforts on supporting newer products than older ones.
3. Poor Communications
Manufacturers that are getting ripped off don’t always like to announce it to the people who can help them the most, such as customers, distributors, customs officials and the media. While maintaining a tight-lipped strategy can help manufacturers and their allies secretly investigate counterfeiters, it also can prolong the problem.
In an interview earlier this month, Therese Randazzo, director of intellectual-property-rights policy and programs for U.S. Customs and Border Protection, told me that manufacturers must engage more with authorities if they expect border officers to help protect them.
“We rely on them to alert us to problems,” Randazzo said. “Our officers have to be aware that an issue exists."
Because construction goods are not traditional counterfeits that officials regularly seize, trademark owners should register with Customs in a process called “recordation” that costs $190 and is good for the life of the trademark. Just because you are granted a trademark doesn’t mean authorities are on the lookout for fakes.
Trademark owners also are invited to provide training materials and hands-on training to the roughly 29,000 authorities that deal with IPR problems at the 327 ports of entry around the country.
If you are not a manufacturer and think you have a counterfeit product, you can report it directly to Customs here.
Offshoring manufacturing also contributes to confusion in the market and makes it easier for fakes to slip into the supply chain. When we spoke with researchers studying the counterfeit problem for the Construction Industry Institute, one person commented that any Square D circuit breakers being imported into the country must be counterfeit because Square D only manufactures in the U.S.
Not true, say Square D officials. While the company builds circuit breakers in Nebraska, it also makes them in Mexico. Certainly, any Square D circuit breaker made in China is a fake.
But many other genuine construction products besides circuit breakers are made in China, and not all of them are counterfeits. Indeed, many good quality products are today made in China, say CII researchers. Having a global supply chain and factory base may be good for business, but it also helps out counterfeiters.
There are many contributing factors that allow counterfeiters to thrive in today’s economy, but everyone can play a role in fighting the problem.