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Global warming and counterfeiting: one and the same fight...
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Global warming and counterfeiting: one and the same fight (II)

Friday, 19 June 2009
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Christophe Roulet
Editor-in-chief, HH Journal

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Like climate change, a global threat whose effects can already be felt, counterfeiting has consequences on a worldwide scale. Marc Frisanco, a specialist with the Richemont group, talks about the measures that must be taken.

You recently told an audience in Hong Kong about feeling somewhat powerless in the face of counterfeiting. What action do you recommend?

Marc Frisanco: When a company that is one of the main victims of counterfeiting decides to counterattack, there can be no half measures. This means, among other actions, getting to the source of the financial networks behind counterfeiting. A few years ago, the US authorities were able to seize, in Manhattan, bank assets worth US$ 1.5 million. They belonged to a company whose records revealed it had made revenues of US$ 52 million in two years from sales of fake watches. This is an enormous amount at retail prices and shows how counterfeiting can thrive even in a country with adequate legislation. It doesn’t take long to realise that counterfeiting is a “marginal” activity that generates maximum profit. Clearly we need to act in accordance and make a real impact on mentalities. Whatever action we take, we have to think big and demand compensation on a par.

Are these the only available measures?

Not by any means. We need to think outside the box and develop alternative solutions to this global scourge. Take the example of the Silk Market, a vast indoor market in Beijing that sells nothing but fakes on four floors. Brands including Louis Vuitton, Chanel, Prada and Bulgari have taken legal action against a number of vendors in this market, but in vain. Attempts to close down this or that store frequently end in skirmishes, with vendors chanting slogans such as “we want to eat,” which goes on to fill the pages of the local press. Incidents such as these are counterproductive for the brands.

This is why we thought it wiser to talk directly with the owners of the market, with the aim of reaching a transactional agreement rather than taking further court action with no guarantee of success. After all, the owners are fully aware of the type of goods being traded on the market, and take their share of the profits in the form of rent. We were further convinced that this was the right approach as they had recently registered the “Silk Market” name with the clear intention of protecting it from any breach of intellectual property rights. It was some time before we were able to arrange a first meeting, but with promising results. In exchange for the guarantee that we would take no legal action, they agreed to take measures against the selling of fakes. They have set aside an entire floor for vendors trading in authentic products, with lower booth rents. They have also instated a sellers’ charter with a prize for the most worthy vendor. In a word, we made it crystal-clear there were to be no more fake Cartier or Panerai watches for sale on the market. And indeed they are no longer to be seen…

Tackling online trade in fakes appears an altogether more difficult task…

Once again, solutions exist. It’s true that auction sites, for example, refuse to take their share of responsibility by saying they are merely intermediaries while hiding behind claims of what is and isn’t technically possible. None of which prevents their business model from permitting the sale of fakes. Fortunately, not everyone thinks the same. PriceMinister, eBay’s main competitor in France, has formally undertaken to prevent the selling of counterfeit goods on its site. Of course the site had to invest a certain amount to set up adequate procedures, but it has reached its goal and removed 98% of counterfeit items from its listings. If PriceMinister can succeed, why can’t others? Particularly as everyone stands to gain, from consumers to the brands to the site itself, which attracts good publicity. In other words, there is always an alternative, even online.

What about the customers themselves?

The law as it stands allows us to take action against counterfeiters but makes insufficient provisions for action against the people who buy and own fakes. Yet the truth is we can only successfully continue this fight if we can take the end customer to task, even if this is an issue many would rather not address. We need to be thinking along these lines and make consumers aware that when they buy a counterfeit product, they are behaving like crooks. Ultimately it’s a moral issue. For Al Gore, the planet is at stake. For us, it’s about jobs. The purpose of intellectual property rights are to define the rules whereby brands can develop, manufacture and sell products to customers who must have a choice. Counterfeiting is the biggest obstacle to this.

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