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.