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Brand Integrity: Counterfeiting, piracy, business espionage and other threats

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Counterfeiting, piracy, business espionage and other threats

For many companies, the greatest threats to their business aren’t natural disaster, theft or other physical incidents.

The greatest threat is to their brand.

Counterfeiters and pirates can ruin a company’s brand integrity and reputation, as well as affect its profits, almost before a company realizes it.

The scope of the threats

The threats to a company’s brand integrity vary by industry.

Manufacturers, for example, face ongoing threats from counterfeiters who can produce knock-off products at a fraction of the cost, and sell them openly on any one of a number of e-commerce or auction sites. Not only do these firms lose the revenue from a knock-off product being purchased instead of their original, but when the quality of the product doesn’t meet their standards, their reputation and brand also pay the price.

Counterfeiters are also an issue for pharmaceutical companies. Offshore companies can duplicate a company’s products and packaging so well that, to the casual observer, nothing will appear wrong. When safety and efficacy problems arise, the pharmaceutical company that manufactures the brand name drugs suffer.

Software and entertainment/media companies can also have their brand reputation, as well as their profits, compromised by pirates who copy and distribute software. With electronic distribution, software counterfeiters can disseminate their wares from hidden servers without having to transport any physical product, making them particularly difficult to detect and prevent.

Companies and consumers aren’t the only parties at risk. A number of high-profile cases, such as counterfeit bolts and other parts purchased by the U.S. government, not only cost taxpayers, but also endanger lives due to substandard quality. Falsified invoices and other documents, along with products that appear identical to the originals, make counterfeiting difficult to detect.

For security professionals, tracing the problem to its source isn’t enough. Even if a factory can be located and shut down, many of the people involved will simply open another factory elsewhere and resume operations. Authorities in other countries may have little interest in enforcing U.S. trademark laws, and in some areas counterfeiters can operate with impunity.

Proactive protection

Companies and security firms can help protect themselves by following these steps.

First, apply for patents, trademarks and other legal protections for every product and service that can be protected. Apply not only in countries where the company does business now, but also in countries the company might enter in the future. To be even more proactive, companies should register and patent products and services in countries where counterfeiting and other intellectual property crimes are common.

Second, security departments or experts should continually monitor e-commerce and other sites looking for knockoffs, counterfeits and look-alikes. If counterfeits or knockoffs are found, begin with a cease-and-desist letter to the site owner, as well as the party listing the item(s) for sale.

Third, enlist the assistance of law enforcement and other agencies. Depending upon the product and the country of origin of the counterfeiters, U.S. Customs, Homeland Security, the FBI, even the IRS (if tax laws are being broken), the U.S. Postal Service (if items are being mailed) or the U.S. Department of Agriculture (if agricultural products are involved). Federal and state agencies and law enforcement have resources that companies and security firms don’t.

Depending upon the circumstances, foreign embassies and the U.S. State Department can also be helpful.

Internal security

Because many brand integrity threats begin internally, internal safeguards are the first line of defense.

These steps are critical to protecting a company and its intellectual property.

  • Screen employees, even those who aren’t authorized to directly access sensitive material can be targets for pirates and counterfeiters.
  • Secure all physical and electronic documents, and limit access to those who have a business need to see them.
  • Secure all proprietary materials, such as spice mixtures (for food companies), as well as the recipes used to prepare them.
  • Follow the same security procedures at remote and overseas offices. Even if sensitive information is secured at headquarters, remote offices can offer “backdoor opportunities” for document theft.
  • Monitor the activities of employees who are terminated, whether that decision is theirs or the company’s. Terminated employees sometimes think about compromising the operations of their soon-to-be-former company.

Third-party assistance

To combat brand integrity threats, companies can enlist the services of third parties with expertise in design and implementation of intellectual property protection programs. These partners can conduct in-depth background checks for employees, or assist in developing a company’s internal screening program.

In addition, if a company suspects its “secrets” are being stolen, whether specific employees are suspected or not, these organizations can conduct discreet investigations that pinpoint the source(s) of the problem without affecting employee morale. Those investigations meet all applicable legal standards.

Finally, a skilled partner can provide global monitoring services to detect counterfeiting, piracy and other threats to brand integrity anywhere in the world, alerting the client to any intellectual property infringements and developing a strategy to combat the infraction.

Brand integrity is easy to lose and difficult, time-consuming and costly to regain. With in-depth knowledge of law enforcement and intellectual property protections and agencies around the world, as well as “boots on the ground” relationships, AT-RISK can partner with organizations in the United States and abroad to prevent and mitigate brand integrity threats.