SECUTAG
press report |
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PIRA
Profit through Innovation 2004
The
free market of product safety
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Every producer
of branded goods aims to place a new product on the market at the
right time. Inventing new products and designs improves both the
profit and the corporate image of a company. But there is a shadow
hanging over this success: if the new product is successfully established
in the market, almost immediately plagiarists will counterfeit it.
Behind the
introduction of a new product stands huge investment and the recognition
and implementation of market trends. These achievements are often
foiled by plagiarists who throw dumping-priced illegal copies
on to the market via grey channels. Customs authorities and economists
agree that product piracy and counterfeiting have negative consequences
on the economy, on fair competition and on the labour market.
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Differences
in counterfeiting
Product piracy means the imitating, copying or counterfeiting
of products. Trademarks, patents, copyright and other commercial
rights are systematically breached. Worldwide, there has been
an immense increase of these breaches during recent years.
In some countries, whole branches of industry only produce
cheap copies of branded goods.
This so-called
product piracy can be only roughly outlined. Experts agree
that product piracy infringes trademark rights in a commercial
and a criminal way. Such actions are committed in a purposeful,
prolific and profit-making manner. Product
piracy requires not only the infringement of branded labels
but also includes only slightly modified imitations of branded
goods |
In contrast, the
term 'counterfeiting' implies the intentional use of brand name
or packaging and the specific look of products by third parties.
Basically, one
can distinguish between three kinds of imitations. The slavish copy's
aim is to copy the original exactly. Packaging and brand name are
usually identical. In the case of cosmetic and pharmaceutical products,
even the ingredients can be the same. All the producer's investment
of time and money in research and development is exploited by counterfeiters.
Compared with
slavish copies, 'classical' copies have the same packaging and
the same name - but the ingredients are mostly inferior, or nonexistent,
or even harmful to health. Here the problem is not only that the
market is flooded with cheap copies, but that it's also dangerous
for the producers, because the consequences of substandard imitations
can be immensely damaging to the company's image and can even
result in product liability actions.
The third
kind of imitation is plagiarism. This kind usually uses a slightly
varied brand name. Sometimes the products hidden behind these
names do not even exist in the catalogue of the producer of the
original brands.
Economic damage
Product piracy is an acute and serious problem for the industry.
Meanwhile, according to the EU, ten per cent of world trade consists
of plagiarism, whether product piracy, illegal overproduction or
re-imports. That means an international economic damage of €200-300
billion. Entrepreneurs suffer greatly from this development. Besides
losses of sales and profit they also have to accept damage to the
company's image and, if the worst comes to the worst, even product
liability actions. Copies that are inferior in quality cannot fulfil
the expectations of the customers and so the reputation of a brand
name can be damaged irreparably. The new markets of the producers
of branded goods in Eastern Europe and Asia are especially imperilled
due to dramatic slumps in sales. According
to estimates by the German ministry of justice, about 50,000 jobs
have been lost due to piracy. Pan-Europe, approximately 300,000
jobs have been affected. One might also assume that the profit made
by the sale of counterfeit products goes towards the financing of
organised crime.
Micro-colour
code particles
In search
of solutions
Behind the scenes many people are working intensely on solutions
to the problem. On a European level, not only the governments of
the member states but also the European Commission; on a global
level even the UN is interested in a lasting solution. But the intensification
of laws and even stricter controls won't work if product labelling
isn't implemented. The industry has to introduce such labelling
and the security authorities have to control them continuously.
Security experts explain that co-ordinated methods and fast, effective
communication would even be able to stop car thieves and profiteers.
The affected
industries have to support the efforts of the authorities with
concerted action. They must not only rely on the sanctions of
the particular national governments or the EU to solve the problems
of organised product piracy. In the view of the VBP (association
to combat product piracy), the affected companies and their subsidiaries,
licensees and other affected producers of branded goods have to
co-operate.
By concentrating
expert knowledge and efforts in the battle against product piracy,
the actions that need to be taken can be co-ordinated in a better
way; the possibilities of exchanging data concerning counterfeiters
and so called 'piracy centres' can be advanced; already existing
sources of information can be used more efficiently; and defences
can be more successfully mounted. Moreover, the VBP's view is
that along with such methods one should be proactive in bringing
forward an effective legal framework that deals with trademark
rights. Adequate steps have already been introduced because the
VBP aimed to pass such a legal framework as quickly as possible.
The association already acts in the interests of its members by
co-ordinating with national and European public authorities.
Guidelines
for successful product safety
Concerning product safety, it is necessary to distinguish between
identification features and security features. A logo, for example,
is an identification feature, but doesn't provide any safety.
It can be imitated without great effort. The more difficult and
complicated it is to copy a security feature the more appropriate
it is to protect products. But in order to develop security features
that are difficult to copy, the industry needs new technologies.
Besides the
legal and organisational efforts to fight product piracy, experts
are working particularly hard on technical solutions including:
holograms, smart-cards, magnetic strips, special kinds of ink
and micro-colour codes, DNA codes, nano-particles, security foils,
ultraviolet varnish, database systems etc. The most important
ones are briefly discussed below.
Holograms
The hologram is one of the best known product safety systems.
It is applied, for example, on credit cards. Holograms are also
practical for labels. Their use is well established in the software
and music sectors. The merchandising products of Bavarian soccer
club Bayern München, labelled with a hologram, are a good
example of this system. Furthermore, the hologram is used for
advertising and marketing. But the great disadvantage of this
safety system is that customers usually don't know the specific
symbol on a hologram. So imitations are hardly recognisable for
lay people. The identification of such counterfeits is difficult
because they are made in a technically brilliant and professional
way.
VOID-foil
Void-foil is a self-adhesive security label made of polyester.
By stripping off the writing 'VOID' appears. But void-foils on
their own are no use because if they don't have additional security,
they can be counterfeited on a grand scale.
DNA codes
DNA codes assure the originality of a product 100 per cent. But
this security system is not only very elaborate, the control also
takes several days and is expensive.
Micro-colour
codes
The term micro-colour codes means tiny particles of colours that
can only be detected under a microscope. The colours are applied
in microscopic layers in a specific order. So each product has
its own colour code. The production of these tiny colour particles
is very complicated and can only be done with large machines.
The manufacturing procedure of the Secutag® codes, for example,
is top secret. In this size it can't be counterfeited anywhere
in the world.
Guidelines
for security features
The Orgalime-guideline to fighting brand name and product piracy
contains the following checklist for adequate methods:
It must be
exclusive;
It must be closely connected with the product;
It must contain visible and invisible elements;
It must be easy to control and to identify;
It must be impossible to copy, abolish or change;
There must be a rational cost to benefit ratio.
Out of these features the following guidelines arise:
A good security
feature requires that it can only be copied by third parties with
greatest effort and costs. If the effort to copy a product becomes
so immense that copying becomes inefficient, counterfeiters don't
even take copying into consideration.
It should be easy for examiners to identify a security feature.
To fight product piracy it is mandatory to check the security
feature on the products constantly. This can be done by employees
or by an authorised company. It is also possible to assign Customs
to do random sampling. The faster and easier it is to implement
such a control, the more inspections can take place and the more
intensive can be the fight against product piracy.
To use a security feature should be as cheap and economic as possible.
Finally, a security feature must be profitable for a company.
One must oppose the cost of lost turnover and damage to the corporate
image with the benefits of a security system.
Undoubtedly, each system has its advantages. But some of these
systems don't actually guarantee any safety, because they hardly
fulfil the above-named security demands. Nano-particles, holograms
or ultra-violet systems which are available over the counter don't
provide any safety. Even infrared systems aren't real obstacles
for counterfeiters. Companies that have suffered product piracy
are often approached with such identification features - but the
suggested safety doesn't exist. They recognise too late that these
security features as well as their products are imitated diligently.
A newer method
is DNA, which provides great security. Here, the problem is that
products which are secured in this way can only be analysed or
identified with great effort in a laboratory.
Micro-colour codes - the colours are applied in microscopic layers
in a specific order
The novel
security system Secutag® breaks new ground. It's very cost-efficient
and easy to apply on machines or any other material. It can even
be implemented in animal feed, explosives or toxic waste. Furthermore
it can be immediately identified to 100 per cent.
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