Brands should also look inwards to combat fake goods


    - by Haydn Simpson, Head of Brand Protection -

    The trial earlier this year involving former Hermès employees that were part of a counterfeit ring making fake Birkin bags (and an estimated €2m+ profit over 2 years) highlights that challenges facing brands owners in the fight against fakes also exist on the inside of an organisation.

    “Totally fake” finished products for sale, using materials that are not used in the legitimate production process and sourced from outside an organisation, are common. These are distributed through digital and other channels to the mass-market consumer.

    Perhaps less understood is the practice seen in this case, with materials, tools and expertise being used to create high-end fakes to sell to specific target markets. With years of inside experience allowing them to produce high-quality products, the gang was able to command upwards of €25,000 per bag.

    The case was resolved internally

    Hermès detected “abnormal behaviour identified through internal monitoring systems”, leading to the discovery of the activity. The organisation was alive to the possibility of internal malpractice and were able to report this to the authorities.

    Having spent some time helping brand owners to understand how individual items move through their supply chains from manufacture to consumer, I’ve seen the opportunities there are for theft of materials, processes, components, finished products and all kinds of Intellectual Property. Couple this with authorised facilities producing overruns of ‘legitimate’ products and it’s important to look inwards as well as out.

    Here are three ways brand owners can mitigate risks:

    • Educate employees to understand how these activities affect their employer, what signs to look for and how to provide confidential feedback
    • Implement external online monitoring – distribution of stolen or counterfeit products mostly occurs through online channels and these can provide important intelligence to identify unauthorised activities
    • Publicity surrounding the prosecution of employees or third parties for these activities serves as a warning to others and may prevent future infringements

    Brand owners that understand potential points of failure and implement the right kind of policies have a good chance of minimising the possibility of these events happening. Proper process and vigilance, coupled with effective incentives / punitive actions are key.