NYT Conflates Counterfeits and Unauthorized Copies

The NYT reported on the Immigration and Customs Enforcement Agency's seizure of unauthorized copies of goods, which it priced at $77 million. (It's not clear whether this is the value of the copies or the price of the goods that were being copied.) The piece repeatedly refers to these goods as "counterfeit."

It is not clear from the article that the goods were in fact counterfeit. If they were counterfeit, then consumers were deceived into believing that they were getting the brand product that was being copied. Often consumers know that they are getting copies of the brand product, not the actual product produced by the company. In this case, the product cannot properly be termed "counterfeit."

This distinction is important because the consumer is being ripped off in the case of an actual counterfeit item. They would presumably cooperate with law enforcement in efforts to eliminate counterfeit items. However, consumers are often happy to buy unauthorized copies of brand products because they sell for much lower prices than the brand product. In this case, consumers will be allied with the sellers in trying to evade law enforcement, since both are benefiting from the transaction.

This piece provides no indication that the products seized were in fact counterfeit. It is only clear that they were unauthorized copies. Reporters should be careful to note this distinction.

counterfeit propaganda
written by frankenduf, December 22, 2011 8:26 AM

the irony is that globalization fosters breakdowns in trade barriers and regulations, and so on the one hand is touted as progressive when capital interests exploit the system to lower labor costs, but on the other hand is touted as the wild west when consumers exploit the system to lower copyright costs- my favorite part of the article is the propaganda line that "literally everything is being counterfeited"!?- talk about a postmodern concept of branding!

Get used to it
written by S.P.A.D XIII, December 22, 2011 4:55 PM

"Counterfeit" sounds much worse, and makes the public think of the Secret Service running Reserve Notes through their lab or the bad guys in Beverly Hills Cop III. Product counterfeiting does not occur much because most product supply chains don't have much incentive to introduce counterfeits. The exploitable markup only hits at the retail-to-customer transaction, and retail workers are too diffuse and lack the wherewithal to commit widespread fraud.

Like the word "piracy" (which involves the sale of a copied work) misapplied to free file sharing, the copyright/patent/trademark rent-seekers try too hard to evoke the worst imaginable criminality in describing something most Americans wouldn't rate any higher than "naughty".

Shopping for knockoffs is a visit to the speakeasy. File sharing is smoking in the school bathroom.

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written by makarov, December 22, 2011 10:53 PM

A good example of what this article talks about is the "grey market" for sports team jerseys. Since the jerseys are nearly all made in China, now, contract manufacturers apparently ship some products out the side door, direct to consumers or middlemen.

These jerseys are authentic in the sense they have both the licensee's logo (Reebok, etc) and even tags of various professional sports leagues (MLB, NFL, etc). However, they haven't gone through the markup process and the licensee isn't getting their share of the $. These "grey market" jerseys sell on the internet for as low as $20-$35, versus a more typical retail price of $100 or more. I'm speaking, of course, of "replica" jerseys, with sewn-on names, numbers, and patches.

question for makarov
written by Ken, December 23, 2011 6:41 AM

makarov -- That's fascinating, really interesting. Do you have any references to research or reporting that's been done to document this? I'd like to read more about it. Thanks, Ken

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written by makarov, December 23, 2011 3:40 PM

I don't have any reporting information about it, but I do have one of the jerseys I received as a gift last year. The person who bought it for me got it from one of the domains, or a similar one to those, seized by ICE in advance of cyber Monday this year:

http://torrentfreak.com/feds-seize-130-domain-names-in-mass-crackdown-111125/

This kind of thing, though, is as old as contract manufacturing. At least as far back as the 90s, "grey market" computer components (RAM, hard drives, video cards, even microprocessors) were common.

Every market is a little bit different, though. From a logical perspective, not everyone (possibly few, in fact) who purchases a grey market jersey would have been willing to spend $100+ for an "authentic" one.

When it comes to IT-related products, the grey market is much smaller than it was 20 years ago due to numerous factors (the biggest being much smaller margins).

It's very profitable in sports apparel because the markup on things like jerseys is so huge (500% or more).

This year, I think the same person is getting me a baseball jersey. They're buying a bunch at one time to cut shipping costs. They originate in China.

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written by Ken, December 27, 2011 4:44 PM

thanks for the reply, much appreciated.

NYT Conflates Counterfeits and Unauthorized Copies

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