Counterfeiting is a persistent drawback confronted by Canadian customers. In response to Canadian producers and exporters, counterfeiting — or the sale of merchandise that purport to be one thing they aren’t — prices Canada between $20 billion and $30 billion yearly.
Canada just isn’t the one nation fighting counterfeiting — the apply is prevalent in lots of different international locations and throughout completely different industries. A 2017 World Well being Group research discovered that round 10 per cent of medicines offered in growing international locations could also be deceptively counterfeit.
Equally, the U.S. Authorities Accountability Workplace discovered that 20 of 47 objects bought from third-party sellers equivalent to Amazon, eBay and Sears Market had been counterfeits. Examples included counterfeit variations of 3M N95 masks on Amazon.
Given the dimensions of this ongoing situation, Canadian governments and industries should come collectively to design new methods that can shield Canadians whereas sustaining the nation’s aggressive benefit within the international market.
Contributing components
A number of various components contribute to the persistence of counterfeit items in Canada. The primary pertains to shopper behaviour, as some consumers could deliberately purchase (or fail to keep away from) counterfeit items out of shrewdness or financial necessity.
Second, when it comes to product high quality, fakes will be similar to the true factor. For instance, the Canadian Mental Property Council reported {that a} counterfeit model of a specific Procter & Gamble shampoo was so near the unique even the corporate’s personal gross sales power couldn’t inform the distinction.
Third, Canadian legal guidelines on counterfeit items are notoriously lax, hindering efficient enforcement. In truth, the Workplace of the USA Commerce Consultant has positioned Canada on its watchlist of nations providing the weakest mental property (IP) protections.
A fourth issue stems from outsourcing manufacturing to abroad suppliers. This results in a type of counterfeiting known as the “third shift.” After a enterprise outsources manufacturing, the provider makes use of the enterprise’ IP rights to supply counterfeit merchandise in the identical manufacturing facility the unique product is made.
Canadian residence product producer Umbra has been stricken by quite a few suppliers utilizing a 3rd shift to breed its merchandise.
Lastly, though some clients could depend on evaluation programs to evaluate the authenticity of things they purchase on-line, these programs are removed from dependable. Counterfeit sellers have discovered methods to control the evaluation system — by buying fraudulent five-star critiques, for instance.
In mild of those difficulties, Canada wants a fastidiously thought-out strategy to mitigate counterfeiting.
Combating counterfeits
As a result of the supply of counterfeit merchandise is commonly the identical manufacturing facility that produces the unique product, one treatment is to supply provider factories with restricted portions of uncooked supplies. Hewlett-Packard does this by offering its suppliers with a sure variety of printheads which might be used to fabricate ink cartridges for the corporate.
One other answer is to allocate elements to completely different suppliers in order that nobody provider has all of the elements wanted to construct a specific product.
On the similar time, many rising market governments are stepping up enforcement efforts to strengthen IP protections. In 2020, China’s State Administration for Market Regulation launched an IP enforcement plan known as Iron Fist to raised shield the IP rights of assorted producers.
Equally, India’s IP technique is to “put larger emphasis on trademark enforcement.”
The Philippine authorities’s latest IP laws goals to “guarantee environment friendly and expeditious adjudication of IP instances” and make “IP litigation more cost effective and quicker.”
For these governments, addressing IP safety is crucial to making sure producers proceed to really feel snug outsourcing operations to their international locations. As such, Canada ought to prioritize and incentivize outsourcing to international locations that embrace IP protections.
Utilizing know-how
Companies may also use applied sciences, equivalent to radio-frequency identification or holograms, on their merchandise to assist clients establish counterfeits.
Just lately, blockchain know-how has been thought-about as a promising answer to counterfeiting. A number of blockchain-based functions have been launched with the intention of tagging merchandise with distinctive identifiers that may’t be duplicated.
Blockchain answer supplier BlockPharma helps sufferers verify the authenticity of their medicines, whereas luxurious items large LVMH Group has partnered with blockchain agency ConsenSys and Microsoft to authenticate merchandise.
This tech-focused technique aligns with the truth that governments world wide are more and more encouraging blockchain adoption. The U.Ok. authorities, by means of Innovate UK, has pledged the equal of C$24 million to fund blockchain corporations and the European Union Mental Property Workplace makes use of blockchain for anti-counterfeit.
A joint strategy is essential
The numerous components that improve Canada’s danger regarding counterfeits, together with weak legal guidelines and IP protections, make this a difficult coverage situation.
Nevertheless, anti-counterfeit methods and the arrival of recent applied sciences like blockchain current alternatives for Canadian policymakers and business leaders to develop an efficient plan to fight counterfeiting.
Collectively, Canada’s enterprise and political leaders can construct shopper belief whereas additional constructing Canada’s international benefit.
This text is republished from The Dialog underneath a Inventive Commons license. Learn the unique article.
*** Professional Perception displays the angle and scholarly curiosity of Western college members and isn’t an articulation of official college coverage on points being addressed.
