INTA 2019: Fighting fakes with fixed funds
In-house counsel from Hallmark, Bose, Maus Frères and Epson talked about the tools and cooperation required to combat counterfeiters on a budget
Justify the budget
The first step to managing a budget is having one to begin with. In order to justify continued funding from the business, Paola Piccoli, head of brand enforcement at Maus Frères in Paris, recommended tracking carefully and communicating regularly what the brand enforcement team is doing. For example, Piccoli said that her team re-balances the global budget allocation of Maus Frères-owned brand Lacoste every three months.
This re-balancing relies on tracking certain metrics, including quantitative measures such as the number of counterfeit products, manufacturers, and transit points identified, but also qualitative measures like visibility of the goods and related to tourism trends. When weighted by importance, these metrics paint a picture that serve the dual purpose of prioritising the team’s budget allocation, as well as providing a tool to justify that budget to senior management.
“The business is very demanding, so it’s important to communicate with them about our successes,” Piccoli said. Involving distributors directly in anti-counterfeiting efforts can help them understand their importance, as well as back up the legal team on a practical level. In the Lacoste brand, for example, distributors are involved in covering some of the costs, conducting market surveys and test purchases, and testifying in court. “We lawyers are not the only ones who should be doing this,” Piccoli explained, “because they also know the products.”
What if your budget were halved?
The in-house panel, speaking at the INTA Annual Meeting on May 20, revealed their priorities in a discussion about what they would do if their budgets were slashed by 50%.
Remote training: Michelle Brownlee, trademark counsel at Bose in Massachusetts, said the first thing she would do is conduct remote training. Effective brand enforcement relies on regular training with local customs agents and law enforcement officials around the world, and the costs in travel and materials can rack up quickly. “Of course it’s nicer to meet in person,” Brownlee said, “but webinars are a great tool that can save you a lot of money. I just did one with US customs and it was fantastic.”
Cut training: Angela Wilson, assistant general counsel at Hallmark Cards in Kansas City, Missouri, suggested cutting some training entirely. By looking at the relationship between training and seizures of goods based on past data, she recommended calculating the return on investment (ROI) and keeping only the most effective training programmes based on that measure.
Trim recordals: Customs’ recordal programmes can be quite expensive in some countries, so Wilson advised brands to narrow their list of trademarks to only the most necessary – those for new and upcoming products and the core brand.
Company-led investigations: Additionally, Wilson said that proactively conducting targeted, company-led investigations has turned out to be cheaper than reacting to local prosecutors’ reports of counterfeits and calls to raid. “We would spend money on travel and investigators,” she said, “but it wasn’t a great benefit to us because only some of the counterfeits would be our products.”
Ditch proactive measures: Piccoli, of Maus Frères, went a step further than Wilson, and said that proactive measures such as company-led investigations should be dropped entirely in a severe budget-squeeze. Instead, she prioritises maintaining relationships with law enforcement and motivating them by reacting quickly to their reports of counterfeit goods.
Invest in key relationships: Bose’s Brownlee pointed out that these relationships can be difficult to maintain when the low number of counterfeit goods they sometimes report is not worth pursuing due to the expense of many enforcement actions. Piccoli shared that when that happened to her in South Africa, she explained to law enforcement that the company needed to implement a temporary minimum threshold for budget reasons, but that the company greatly appreciated the update. “The relationship stayed positive,” she reported. “We regularly send thank you letters.”
Drop memberships: Hallmark’s Wilson also recommended evaluating the value-add of memberships, and cutting costs by dropping the least valuable ones. “Many organisations support anti-counterfeiting in some way, but which ones get the best ROI?”
Work with investigators directly: This recommendation comes with a serious caveat: not in corrupt countries! It it cheaper to work with investigators directly rather than using a local law firm as a broker, but law firms charge for a reason: they speak the local language and can be a liability buffer. Brands must comply with certain ethics and compliance standards, so when working in areas known for corruption, “law firms can [act] like a filter between us and the investigation,” explained Piccoli. “Ideally, have a primary point of contact in each country for an investigator and law firm, and choose one depending on the specific actions you want to take.” If using a law firm is necessary, negotiating a flat fee ensures there are no surprises for the budget.
The panel also recommended a number of tools to use in anti-counterfeiting.
301 report: The US Trade Representative’s (USTR) office publishes an annual report on “notorious markets” for illicit trade and counterfeiting. This year, 36 countries made the list. Wilson said that the “most colourful discussions” at Hallmark centre around where to enforce, so the 301 report helps her team anticipate where there are likely to be issues. Also, if the business intends to expand into one of the listed countries, “we can use that list to manage the business’ expectations,” Wilson explained. “Using this data helps the business buy into the enforcement programme.”
Case management tools: Jennifer Dirks, IP protection manager at Epson in Long Beach, California, observed that all the resources in the world are useless without an effective case management system. From data related to prosecution and oppositions to customs and litigation, Dirks said that it’s important to keep all the relevant information in one place because new information being entered has the chance to match up with old data. “Linking that information helps build really strong cases against counterfeiters,” she said. “Take advantage of your own intel.” What are the best tools? Dirks uses WebTMS. At Hallmark, Wilson shared: “We used to use Anaqua, but I’m still looking for a platform that’s just right for anti-counterfeiting and will help trace where products are coming from.”
Training apps: Hallmark’s Wilson praised the International AntiCounterfeiting Coalition’s (IACC) law enforcement training app, in which brands may upload images of their products for customs agents to review in real-time. “I’ve done trainings in Latin America,” said Wilson, “and there’s a parade of brand owners talking about all their products, but these guys see thousands of marks per day.” The app is a practical tool they can use so they don’t have to remember thousands of images offhand, and a tool for brands to keep their information reviewed at the border up to date.
Amazon: The e-commerce platform currently offers three brand protection programmes: Brand Registry, Project Zero, and Transparency. “Having direct relationships with the marketplace is super important,” said Dirks. “We have a key contact at Amazon, and I feel like he’s part of our internal team; we talk on a daily basis.”
Uniting against a common enemy
Many international groups have formed to combat the growing global problem of counterfeiting – the IACC, INTA’s anticounterfeiting committee, and Interpol’s illicit goods unit among them. However, “some companies don’t want to cooperate with their competitors,” said Piccoli of Maus Frères, “and it can be difficult to explain to senior management.” She emphasised that “we’re not working with our competitors; we’re reducing our costs and fighting a common enemy”.
REACT is an international, not-for-profit anti-counterfeiting organisation that coordinates enforcement with customs, in the market and online. The advantages of partnership with other brands under REACT include a bigger impact, shared costs, and flat fees, according to Piccoli.
The Pharmaceutical Security Institute (PSI) is an industry-specific anti-counterfeiting group dedicated to sharing information. While business interests often require keeping private data and strategies secret, the public health issue of counterfeit medicines supersedes some competitive concerns. Wilson said it has been a great resource for her: “At PSI, we talk openly about which law firms and investigators we use. Who’s the best? Can we share costs? These external stakeholders can help, because we have a common enemy.
Wilson shared an incident: “An investigator in Latin America called me and said if you give me six thousand dollars, I’ll tell you where the warehouse is. If I have an issue like that in one country, I’ll talk with the others about attacking the problem together, and make sure we’re all on board to support local authorities.”
The panel was called “The Cost of Combating Counterfeits: How to Maximise Your Return on a Limited Budget”.