By Paul Wiener
Product Line Manager, Digital Systems, JDSU
Counterfeit goods pose a threat to the health and safety of Americans. They can find their way into manufacturing processes and goods, military systems, and a wide variety of consumer products. The U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) continue to step up enforcement each year. They estimate that the number of IPR seizures has increased about 325% over the past decade.
According to a report released in January 2012 by CBP and ICE, the number of Intellectual Property Rights (IPR) seizures increased by 24%, from 19,959 in FY 2010 to 24,792 in FY 2011. The estimated Manufacturer’s Suggested Retail Price (MSRP) for all FY 2011 IPR seizures is $1.1 billion.
The top 10 categories of IPR-infringing products seized in FY 2011 were pharmaceuticals, health/personal care, eyewear/parts, critical technology components, electronic articles, cigarettes, perfumes/colognes, batteries, exercise equipment and transportation/parts. For the first time since FY 2005, footwear was not the top commodity seized. Consumer electronics led, and about one-third of the total was IPR-infringing cellular phones. Two areas grew notably: counterfeit pharmaceutical seizures increased almost 200% over FY 2010, and the number of consumer safety and critical technology seizures increased by 44% compared to FY 2010.
As volumes increased, however, the domestic value of all IPR seizures decreased 5 percent from $188 million in FY 2010 to $179 million in FY 2011. CBP and ICE attribute this to more counterfeiters using international mail, express courier and consolidated shipping services to ship smaller amounts of goods with smaller values. This is supported by the fact that the number of low-value (under $1,000) IPR seizures is now 80 percent of the total increase in seizures.
Driving factors behind the increases include growth in direct-to-consumer sales, as well as an increase in the number of rogue websites. Behind the growing number of illicit pathways to market, however, is a more serious issue: the increasing number of consumers who don’t care about authenticity and are satisfied with owning fake merchandise.
The U.S. government and law enforcement officials are bringing more resources to bear each year to help brand owners, but more needs to be done.
JDSU promotes a layered solution for a variety of labels, seals and sleeves, where overt, covert and digital elements are blended together to make it difficult for counterfeiters to copy, easy for consumers and field investigators to check information. A unique element, such as the brand owner’s logo, can be embedded to appear when the image is tilted. For greater protection a variety of covert and forensic taggants can be included. Each label, seal, or sleeve can also be encoded with serialization registered on a JDSU on-line database called AuthentiTrak. This allows manufacturers to track products through their distribution channels to their end users. Serialization can be adapted for use by field investigators to verify products, by customs officials to inspect products, and by consumers who wish to participate in loyalty programs. All of these activities can be supported by a smart phone with a native matrix code scanning application.
JDSU has the experience, the track record, and the breadth of relevant technologies. This gives us the ability to ask the right questions and explore options with customers before advocating solutions.