Counterfeiting: How A Company Can Protect Its Brands. The Case Of Chinese Imitations In The Luxury Items Industry

MB03-07
INTERNATIONAL BUSINESS MANAGEMENT



Instructor: Raphaelle PANDRAUD



FINAL PROJECT

Counterfeiting: how a company can protect its brands. The case of Chinese imitations in the luxury items industry.


Asis BASTERRA
Jens BECK
Laura HERRERO
Denitsa VASILEVA





December 7th 2006
Introduction

How many times have you seen someone wearing a Cartier watch, orshowing with a brand new Louis Vuitton bag and wondered to yourself if those are real? Basically anything can be copied and passed off for the real thing, which makes counterfeiting such a wide-ranging problem. Copying or imitating an item without having been authorized to do so and passing the copy off for a genuine or original piece makes globally known original brands lose billions in sales everyyear. In fact, fakes are not just theft from corporations. Consumers have no option when the products they bought under false facade fail to meet their standards, turn out to be defective, or cause them harm. It can harm the image of the luxury house as well. Lately, it has become even harder to distinguish the difference between original and fake items.

Today, counterfeiting is one of the majorwhite collar crimes that affect companies worldwide. It is not only luxury brands that are copied and traded for less money than originals as it used to be few years ago, but there is a wide spread trend to forge basically any item that has a potential demand in the market. From prestige apparel, to music, software and prescription drugs, counterfeiters make their profit by illegally “outsourcing”their R&D and market research resources, profiting from the good reputation of original brands and concepts that other people built from scratch. Even when they sell fake items in a lower price than original ones, sometimes the amount of their margins can reach the original brand ones, or surpass the overall (aggregated) profit because of the volume sold.

The intention of this project, called“Counterfeiting: How a company can protect its brands. The case of Chinese imitations in the luxury items industry” is to analyze in a brief way what legal and strategic ways exist and can be improved to protect a company’s original brands. It is mainly focused in luxury items such as apparel, watches, handbags, and jewelry. Therefore, in order to have a better view and to better understand theideas exposed, this project is divided in seven main parts:

1. Definition of Counterfeiting and Intellectual Property (IP) protection (legal bases outlook)
2. Brief history of counterfeiting
3. Why China? Actual situation, practices, and factors behind the raise of piracy in China?
4. Public policy in China
5. Gains and loses from counterfeiting: Different points of view
6. Brandprotection strategies
7. Survey on the streets of Paris, France
To complete this project, there will be used several press articles and research papers related to the topic. In addition, a survey performed on the streets in Paris, France, and the opinion and knowledge of an expert in the field will be pursued to complete the overall framework.


















1. Definition ofCounterfeiting and Intellectual Property (IP) protection (legal bases outlook)

“A counterfeit is an imitation that is made usually with the intent to deceptively represent its content or origins. The word counterfeit most frequently describes forged currency or documents, but can also describe clothing, software, pharmaceuticals, watches, or any other manufactured item, especially when thisresults in patent infringement or trademark infringement.” (Wikipedia, 2006)
“In law, intellectual property (IP) is an umbrella term for various legal entitlements which attach to certain types of information, ideas, or other intangibles in their expressed form. The holder of this legal entitlement is generally entitled to exercise various exclusive rights in relation to the subject matter of the...