Fighting Counterfeits
If last month’s uncovering of at least five fake Apple stores in Kumming, the capital city of Yunnan Province in Southwest China, wasn’t so shocking, it would have been laughable.
While the attention to detail in mimicking a real Apple Store was amazing, whether or not the products were legitimate remains undetermined. But whatever the case, the discovery was a hallmark of the times.
“We are seeing, right now, an explosion of counterfeiting, like we’ve never seen in the world,” said Dave Tognotti, general manager, vice president of operations and general counsel for Monster Cable. “It’s rampant across every single consumer good. Consumer electronics is just one segment of that.”
The buying of counterfeit products, the pricing pressure generated by websites selling them, and the successful return of the fake goods all hammer away at the bottom line of the legitimate CE industry. Some manufacturers—such as Monster, SpeakerCraft and OmniMount—have had enough and want retailers to help secure supply chains, raise consumer awareness and reduce demand for counterfeit goods.
But counterfeiting poses a massive and elusive problem for the CE industry. The International Chamber of Commerce’s Counterfeiting Intelligence Bureau estimates that counterfeiting (across all product categories) accounts for between 5 percent and 7 percent of world trade worth about $600 billion a year.
In the United States, the federal Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies reported that consumer electronics accounted for roughly 18 percent of seizures of goods that infringe on intellectual property rights in 2010.
CE goods from 2010 seizures in the U.S. totaled $33.6 million in wholesale value and $87.8 million retail, the report estimates. That’s roughly a 6 percent increase, compared with the value of counterfeit CE goods seized in 2009. In addition, that $87.8 million figure represents the retail value of only the counterfeit CE goods seized from U.S. express, mail and cargo deliveries. Plenty more got through.
China was the most frequent source country last year for all seized products that violated intellectual property rights, followed by Hong Kong and Jordan, according to the ICE/CBP report. The total value of all commodities seized in 2010 was $260.6 million wholesale, $1.4 billion retail. The number of seizures spiked 34 percent from 14,841 seizures in 2009 to 19,959 in 2010, in part due to low-value shipments from websites that sell counterfeit goods direct to consumers.
Monster is not hiding the fact that it has a counterfeit problem. If anything, it’s promoting the problem. “We want our prospective customers to know that there is counterfeit Monster product out there, how to watch for it, how to avoid it, and how to buy legitimate products,” Tognotti said.
The stakes are high for CE manufacturers, not only in customer satisfaction and brand perception, but consumer safety, especially with powered CE products or in weight-bearing products like mounts and stands.
Monster employs roughly 25 people worldwide—investigators, analysts, lawyers, brand specialists and others—to battle counterfeiting. The statistics that have emerged from Monster’s fight against counterfeiting are staggering:
• 250,000 online listings removed from more than 700 websites selling counterfeit Monster products in 2010
• Hundreds of emails sent weekly to IPProtection@monster
cable.com from consumers complaining of counterfeit products or fraudulent websites
• 43 arrests in the U.S., Asia and UK, including two recent arrests in Los Angeles, over the last 18 months
• Hundreds of blacklisted websites known to sell counterfeit Monster products
• Nearly a million serial numbers checked by customers via beatsbydrdre.com’s online “Verify Before You Buy” tool
SpeakerCraft CEO Jeremy Burkhardt estimates that his company spent well over 1 percent of sales in the last three years on sting operations, private detectives, website monitoring, investigations, cease-and-desist orders and lawsuits to fight illegal Internet sites and counterfeit. But more needs to be done. “I see our numbers going higher, unfortunately,” he said. “We have to do it so we have a clean market.”
pic taken at counterfeit Apple Store
Sony Adding Eight Car Receivers
Sony Wednesday announced the launch of eight new receivers for the mobile audio market. Four of the models are compatible with Pandora, and four are Sirius XM-capable.
The receivers will debut in September, ranging in price from $70 to $280.
Consumers want their audio choices personalized to match their individual needs and preferences, especially while they are in their cars," Mike Kahn, director of the Audio Product Division at Sony Electronics, said as part of the announcement. "Sony is redefining content selection in the car."
