What is 'Brand Piracy'

Brand piracy is when a product features a name or logo similar to that of a well-known business. It is common among products that can easily be replicated, and consumers will often mistake these products for the actual brand name. 

BREAKING DOWN 'Brand Piracy'

Companies that commit brand piracy often want their products to resemble the original products of other companies in order to mislead consumers and gain market share. Brand piracy can come in many forms and can, at times, be difficult to manage. 

Types of Brand Piracy

There are several different categories of brand piracy that are common in the market, including: 

  • Outright piracy: Here, a product is exactly the same as the brand name and uses the same trademark. Unlike the original, the trademark is false. 
  • Reverse engineering: In this type of piracy, the product’s construction and composition is copied, manufactured and then sold on the market, often at very low prices. This happens primarily in the electronics industry. 
  • Counterfeiting: In these instances, product quality is altered, even though the same trademark is on the label. This is one of the most common types of brand piracy. 

Brand Piracy and the Law

Brand piracy and the products it produces — or "knockoffs" — are illegal, as they are an infringement on trademark laws. Companies spend years and millions of dollars building and vigorously protecting their brand names. Those who commit brand piracy try to capitalize on this success, and therefore try to steal the efforts of companies that offer recognized brands. Knockoffs can also erode and tarnish the reputation of a brand name because they may be of an inferior and cheaper quality. 

Brand piracy is most commonly seen in countries like China and India, where an emerging middle class with more disposable income may have a big appetite for brand names but does not necessarily want to spend a lot of money for them. Lawsuits by major companies have been filed in these countries in order to protect their brand names. 

Why Do Consumers Buy Pirated Goods?

Many consumers believe that buying pirated goods is harmless, but in fact, the reverse is true. As mentioned above, it is against the law and can erode the profits of major companies and their brand names. So why would consumers buy them? Some people want to buy brand names but feel that prices are too high for the original product. Others say they want the same quality but at a lower price. All of this has helped flood the marketplace with cheaper goods. Sometimes these products are so good that only an expert can tell them apart. 

According to a report from Frontier Economics, the consequences of counterfeiting could drain the global economy of about $4.2 trillion and put about 5.4 million jobs at risk by 2022. 

Fighting Brand Piracy

The best way to tell a pirated good is to examine the package and the quality and construction of the product. Some vendors may also not charge sales tax as an incentive to purchase their goods, so authorities suggest making purchases at authorized retailers. 

There are many ways that people can help fight brand piracy. Consumers who are concerned about brand piracy and counterfeiting can report suspected goods (and vendors) to their local law enforcement agencies. Other agencies also investigate and prosecute piracy, including the FBI and the Department of Justice. 

Example of Brand Piracy

There are many examples of pirated brands out in the market including clothing, handbags, electronics and toys. Even everyday items like batteries and flashlights may be counterfeited by manufacturers. Luxury handbag makers like Hermès, Burberry and Coach are often the victims of piracy. Because there is such a high demand for these brand names, counterfeiters will often take advantage of that and produce cheaper purses and wallets that can be easily confused with the original. 

  1. Brand Management

    Brand management is a function of marketing that uses techniques ...
  2. Brand Extension

    Brand extension, also known as brand stretching, is the use of ...
  3. Cult Brand

    A cult brand refers to a product or service that has a loyal ...
  4. Trademark

    A trademark is a recognizable insignia, phrase or symbol that ...
  5. Online Shoplifting

    Online shoplifting is the theft of goods from an Internet-based ...
  6. Halo Effect

    The halo effect describes a consumer's bias toward a maker's ...
Related Articles
  1. Tech

    How Blockchain Can Fight Piracy

    Piracy could cost the television and movie industries $52 billion by 2022.
  2. Financial Advisor

    Why These Are the Most Valuable Brands of 2018

    A company's brand value can translate into billions of dollars. Creating an emotional connection is key. Here are the most valuable global brands in 2018.
  3. Small Business

    Top 100 Most Valuable Global Brands 2016

    A look at the BrandZ 100 Most Valuable Global Brands Report
  4. Insights

    7 Iconic Brands That No Longer Exist

    The value of branding differentiates what makes good brands great. Seven iconic brands failed to survive and no longer exist, yet their names live on.
  5. Tech

    Why Alibaba Is on America's 'Notorious' List (BABA)

    Alibaba blames the current political climate for the USTR's decision.
  6. Insights

    Tech and Auto Companies Dominate World's Most Valuable Brands List (AAPL, GOOG)

    Brand consultancy firm Interbrand released its 2016 ranking of the most valuable brands in the world, and technology and automotive brands dominated by holding a combined 29 positions. According ...
  7. Insights

    HBO's Game of Thrones Was the Most Pirated TV Show Last Year (TWX)

    Illegal distribution of HBO's successful fantasy drama series continued online despite the network's intensified efforts to fight piracy.
  8. Investing

    Alibaba Blames Lax Enforcement for Counterfeits

    Alibaba has blamed lax laws and penalties for the counterfeit items that show up on its websites.
  9. Small Business

    9 Brands Resurrected Into Household Names

    All of these brands saw a dip in their popularity, only to have a revival to even greater heights.
  10. Insights

    4 Addictive Brands Consumers Crave

    Many product brands breed loyalty and obsession. Discover which ones people can't seem to live without.
  1. What are some of the benefits of positive brand equity?

    Learn how having positive brand equity enables companies to make a higher margin on sales and spend less money on marketing ... Read Answer >>
  2. How do tangible and intangible assets differ?

    Tangible assets are physical assets that are used in a company's operations. Intangible assets are nonphysical, long-term ... Read Answer >>
  3. What are the most popular companies in the automotive sector right now?

    Learn about the largest global automobile manufacturers, including the most popular automakers by sales volume and companies ... Read Answer >>
  4. Which economic factors most affect the demand for consumer goods?

    Understand how key economic factors such as inflation, unemployment, interest rates and consumer confidence affect the level ... Read Answer >>
Trading Center