While having your product counterfeited is confirmation that it’s a success, it’s a serious problem for some businesses and one where we have devised a number of creative ‘clean up’ programs to tackle the issue. This case study describes a program we ran for a client with a novel product in the homeware sector. The product is well designed and efficient, allowing our client to sell at a healthy profit margin and enjoy sales in many overseas markets.
When the client came to us, large amounts of counterfeit product were being made in China and sold in the UK and a number of European Countries. Our client wanted to tackle the problem effectively and quickly in order to be able to proceed with the founder’s plan to sell the business to an international conglomerate. It knew that the presence of counterfeits would depress any price offered for the business and aside from that fact, day to day counterfeit activity was impacting sales to such an extent that it could not be ignored. A major concern however was that the sheer number of infringers to tackle meant that a program would be costly.
To devise a viable program, we agreed that while the client would provide some initial funds for disbursements such as trap purchases from infringers, we would aim to create a program that was self-funding, meaning we would approach the work in a way that would generate revenue from settlements and reinvest those in the program. Once we had studied the genuine products, their price and legitimate distribution channels we used this information to undertake a thorough online survey of the market and infringing activity. We identified targets by country and size of trader, ordering targets into groups according to the level of activity. Distributors and trade importers were top of the list and tackled first on the basis that the scale of the infringing business they were doing held the promise of greater monetary compensation for the fighting fund.
To ensure European reach we teamed up with several intellectual property law firms we know in other countries, each of whom had the flexibility and confidence to work for a self-funding program. Together we agreed on the target priority list and worked through it. We built up funds from the larger scale infringers quickly and then moved to the smaller scale operators.
For the smaller operators, while we still demanded information as to their source of supply and financial compensation in exchange for agreeing not to issue proceedings, we were able to compromise on what was acceptable as a settlement sum in exchange for their agreement to provide more detailed information on suppliers and, in some cases, agreement to a Court Order that they would cease their activity.
The Court Orders were useful tools and persuasive in negotiations with any larger entity that did not accept their wrongdoing was actionable or considered it worthwhile to resist court action. The detailed information as to source allowed us to trace goods to numerous factories and from there decide on effective action to block trade routes for counterfeits by filing notices at Customs authorities, which would lead to the seizure of counterfeit goods before they reached the market.
After some months we achieved our client’s objectives. Counterfeits across Europe were largely removed from the market and any continued activity was caught at Customs authorities before reaching the market. This was all done at very little cost to the client who then sold their business at the best possible price and one that could not have been achieved when the market was flooded with counterfeit product.
We are keen to find a way of working that suits the task at hand and which can deliver what you need within your budgetary constraints. We work with many associate law firms worldwide who have a similar approach, allowing us to partner up on cross-border programs where necessary.
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