10,000% more counterfeits in two decades

When products are numbered they are, as a rule, especially valuable and have to be protected against counterfeits. This applies to high-quality artworks just as much as it does to autographed one-off pieces by world-famous stars. In 2013 David Wong, the Project Director of the world’s biggest supplier of pearl nuclei - Fukui Shell Nucleus Factory – hit the headlines with his story. He had started implanting RFID tags as nuclei into pearls. This allowed him to trace back every single piece any time. By means of a password additional data such as authenticity certificates, selling and re-selling dates are also accessible along the supply chain.

The situation with packaging is quite similar. Especially in the medicines sector where counterfeits can mean not only a loss of money but also loss of life, Track & Trace technology as provided by serialised packaging has already been used successfully. Here each product is labelled with a unique identifier.  

Brand and product piracy has indeed exploded on a global scale. In as little as two decades the percentage of counterfeits has soared by 10,000%. In the US alone it is said to have increased hundreds of times over between 1990 and 2010.

Economic damage is enormous. The European Union Intellectual Property Office  (EUIPO) and the OECD (Organisation for Economic Cooperation and Development)have raised the goods value of global losses caused by counterfeits to US$ 461 billion in a study published in 2016 – amounting to the GNP of Austria or Norway.  

For Germany the German Engineering Federation VDMA expects the losses for machinery and plant manufacturers to total Euro 7.3 billion in 2016. According to a survey among the 3,100 members, 

• 70% of companies are affected by product piracy,
• Roughly 50% sees their plant business endangered,
• 40% attach great importance to the potential health risks involved for customers (food and industrial fittings),
• 80% stated China as being one of the major importers of counterfeits and bootlegs. Source: one-identity-plus.com/wp-content/uploads/2017/03/vdma-studie-produktpiraterie-2016.pdf

A wide variety of products are affected here. Luxury watches, fragrances, leather goods, technical and spare parts, even food is an attractive merchandise for this lucrative secondary market business. According to estimates from the EUIPO (European Union Intellectual Property Office) and the ITU (International Telecommunication Union), counterfeits in the smartphone market alone caused losses amounting to Euro 45.3 billion in 2015. Approx. 14 million illegal copies were sold over the same period in the European Union.

Around the world legislators try to cut the losses. Legal provisions for the traceability and serialisation of products already exist not only in the pharmaceuticals sector but also in other industries. These include tobacco and genetically modified food and feed.

The great potential of serialisation as a tool for protecting against counterfeiting, product and brand piracy identified by companies was revealed by the recently published Track & Trace-Study by Mettler-Toledo PCE. In Europe and North America, the Swiss group of companies polled consumers over several months. A total of 37 companies from the agricultural, chemical and food industries as well as branded products manufacturers from the consumer goods industry and third-party service providers from the field of packaging and logistics took part in the survey conducted between July 2016 and March 2017.

The key findings in a nutshell:

• Over half the companies or half their sector had already been affected by counterfeits and have taken a closer look at this issue.
• The cosmetics industry seems to fall victim to counterfeiters most frequently.
• The majority of enterprises polled see new serialisation requirements coming and are aware of how important appropriate software solutions are for serialisation. However, the time and money required by a correct interplay of IT, manufacturing and quality management are often underestimated.
• Roughly one third would welcome a legal framework for serialisation for their industry.
• All companies mentioned protection against brand and product piracy as well as greater supply chain transparency as major advantages of serialisation.