What Is Brand Piracy?
Brand piracy occurs when a product features a name or logo similar to another well-known brand or product. It is common among products that are easily replicated, and consumers will often mistake a counterfeit product for the original brand name.
Brand piracy occurs because companies attempt to take market share from their more popular competitors. Brand piracy is illegal because the practice infringes on trademark laws.
- Brand piracy occurs when a company copies a well-known brand in some way and features the same name or logo.
- Companies use piracy to steal market share from competitors.
- Brand piracy is illegal because the practice infringes on trademark laws
Understanding Brand Piracy
Companies that commit brand piracy design their products to resemble the original products of other companies to mislead consumers and gain market share. Brand piracy comes in many forms and can be difficult to control.
Types of Brand Piracy
There are three main categories of brand piracy: outright piracy, reverse engineering, and counterfeiting:
- 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 are copied, manufactured, and then sold on the market, often at very low prices. This happens primarily in the electronics industry.
- Counterfeiting: In this case, 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—"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 by stealing the efforts of recognized brands. Knockoffs can also erode and tarnish the reputation of a brand name because the pirated goods are typically inferior and of cheaper quality.
Brand piracy is most commonly seen in countries like China and India, where an emerging middle class with more disposable income has an appetite for brand names sold at a lower price. Lawsuits by major companies have been filed in these countries to protect their brand names.
Why Do Consumers Buy Pirated Goods?
Many consumers believe that buying pirated goods is harmless. In fact, the reverse is true. Piracy is against the law and can erode the profits of major companies and their brand names. So why would do consumers buy them?
Some consumers like the idea of a brand name but don't want to pay the high price for the genuine product. Other consumers don't realize they are buying a pirated product. In some cases, only an expert can identify a pirated product from the real thing.
Piracy causes the market to be flooded with cheaper goods. According to a report from Frontier Economics, the consequences of counterfeiting could drain the global economy of approximately $1.9 trillion and place 4.2 million jobs at risk by 2022.
Fighting Brand Piracy
The best way to identify a pirated good is to examine the product's packaging, quality, and construction. Some vendors may forgo charging sales tax as an incentive for consumers to purchase their goods. Therefore, authorities suggest making purchases at authorized retailers.
There are many ways that people can help fight brand piracy. Consumers can report suspected goods (and vendors) to their local law enforcement agencies. Agencies that investigate and prosecute piracy include the FBI and the Department of Justice.
Example of Brand Piracy
There are many examples of pirated brands including clothing, handbags, electronics, and toys. Even everyday items like batteries and flashlights are counterfeited by manufacturers. Luxury handbag makers, such as Hermès, Burberry, and Coach, are often the victims of piracy. Because there is such a high demand for these luxury brand names, counterfeiters will often produce cheaper purses and wallets that can be easily mistaken for the original, which is the whole idea.