When people think about counterfeit goods, things such as pirated DVDs and knock-off name brand clothing are the items that most often come to mind. The problem, however, extends well beyond these superficial goods and has crept its way into life safety and security products. During a recent educational session at ISC West, Michael Davis, director of intellectual property for HID Global, said that counterfeiting costs the U.S. economy an estimated $250 billion in annual revenue.
Davis said this aforementioned lack of knowledge by consumers about the scope of counterfeiting combined with a lack of significant consequences for perpetrators have only made the problem worse. From a manufacturer’s point of view, Davis said that counterfeit products pose a big liability risk in the event that one of these cheap, knock-off products fails during use. For example, more than 18,000 smoke detectors in Atlanta were recalled two years ago after they were found to be counterfeit. In some cases, Davis said that security executives that purchase counterfeit security goods could be held liable for personal damages.
Of course, Davis said there is a perception versus reality issue when it comes to counterfeiting as the number of the counterfeit products discovered by authorities only scratches the surface when it comes to the amount of bogus goods that are available on the market. “We could go out of business because our margins go down,” Davis said. “It affects the whole ecosystem.”
Counterfeit products have also permeated every level (federal, state, and local) of the government procurement process and pose a threat to public safety. In fact, in 2008, the FBI seized phony Cisco routers purchased by U.S. government agencies that could have provided backdoors to hackers. The routers were reportedly purchased through an authorized Cisco retailer, but the reseller bought them from a Chinese vendor. Davis said the FBI estimates that one out of every 10 IT products is counterfeit.
The biggest game changer for the delivery of counterfeit goods has been the Internet, which makes it very easy for perpetrators to hide. If one website is shut down, there are others ready and waiting to its place. “They move around… it’s whack-a-mole,” Davis explained.
Even though they may cheaper to purchase initially, Davis said that counterfeit products wind up costing end-users more in the long run as they are not built to same quality standards of genuine products. According to Davis, counterfeit security products run the gamut of the industry and include everything from access control readers and cards to CCTV equipment and fire extinguishers.
Despite the pervasiveness of the problem, Davis said there are things companies can do to protect their products and their brand. This includes:
Working closely with U.S. Customs and Border Protection and spending the time and money to register Intellectual Property Rights (IPR) with them.
Working with Underwriters Laboratories (UL), which enforces standards on the behalf of manufacturers.
Using technology that makes it harder for counterfeiters to reproduce.
Providing guidelines on how to detect counterfeit products.
End-users can also protect themselves against bogus security products by purchasing through a trusted source and making sure that the manufacturer of the products they buy is diligent about enforcing its IPR.
“This is an industry problem, not just an HID problem,” Davis said. “And the industry needs to do education. Other industries have done it, other companies have done it, why can’t we?”