The Industry Fight
Counterfeiters are remarkably resilient folks," says David L. Plaster, global aftermarket marketing manager for Eaton Corp. and RoadRanger Marketing. "As soon as you bring one group to a stop by putting a corrective measure in place, it doesn't take very long at all for another group to get around it. For example, ship-from and ship-to points are constantly being changed as soon as we identify a counterfeiting problem."
The parts industry has mobilized in recent years to fight counterfeiting, as companies try to protect their brand names, goodwill and profits and keep unsafe parts out of the marketplace.
The Motor & Equipment Manufacturers Assn. has set up a Brand Protection Council to help address and set the association's priorities in the areas of counterfeiting, diversion, noncompliant products and intellectual property rights.
One of the things MEMA is doing is trying to get federal legislation passed to increase penalties for counterfeiting. In May, the U.S. House of Representatives unanimously passed "The Stop Counterfeiting in Manufactured Goods Act" (H.R. 32). The bill would increase the penalties for criminals who distribute counterfeit products by closing existing loopholes in federal law and granting trademark owners similar remedies already provided to copyright and trade secret owners. In addition, it mandates the destruction of counterfeit goods seized and the forfeiture of any assets traceable to illegal counterfeiting activities.
It also would permit the seizure of any property or equipment used to make counterfeits, such as tooling, raw materials and packaging supplies.
MEMA is optimistic that a similar bill will be passed in the Senate this session, according to Neal Zipser, vice president of marketing and communications. "I guess you could say we're halfway there," he says, reporting good reception from senators the group has talked to. "Really, nobody's going to be against a law that's going to help stop counterfeiting."
Manufacturers are already doing what they can under the law. Companies such as Eaton are developing internal, security-type teams that include legal people to fight the counterfeiters. At Federal-Mogul, for example, actions might include sanctioned raids of counterfeit factories/distribution centers, and working with various countries' Customs agencies to prevent the import or export of counterfeit products.
Suppliers are working to educate their sales forces, distribution channels and customers about the threat of counterfeits. Webb Wheel Products, for instance, is running ads in trucking magazines advising customers what to look for to ensure they're getting a genuine Webb brake drum. Bendix offers a DVD explaining the differences between genuine Bendix valves and knock-offs.
Many manufacturers have plants or import from overseas, and are able to use those relationships to their advantage. "Our overseas vendors are really good partners," says Phillips Industries spokesman Travis Hopkey. "We've had a couple of cases where they've brought some counterfeit goods to us and we've been able to go back and find out where they were coming from and stop that leak."
Some companies are using special antitheft and unique identification technology, such as holograms, color shifting inks, and inks that scratch off to reveal a message. And they are taking what legal action they can against counterfeiters they can identify.
"It's a tough battle," says Eaton's Plaster. "Some counterfeiters are doing a remarkable job as far as copying the appearance of our products. We're seeing more and more cases where the counterfeit parts look identical to a genuine part. The more sophisticated counterfeiters are even going so far as to copying our packaging. We've had cases where the only way to identify the part as counterfeit was through metallurgical testing, or putting it under an electronic microscope."
In some cases, distributors are being prosecuted for reselling counterfeit products if they had knowledge, or had reason to know that the products were counterfeit. "Knowledge" can be demonstrated by several factors, such as the quality, price, and manner of distribution of the products. "Knowledge" can also include "willful blindness," where the reseller fails to inquire about the authenticity of the products he's getting for such a great price because he suspects he might not like what he finds out.
Last fall, the Bush administration announced a coordinated crackdown on the theft of U.S. intellectual property, including counterfeit parts. Officials call "Strategy Targeting Organized Piracy," or STOP, "the most comprehensive effort ever launched to stop the trade in pirated goods." That includes not only pirated goods such as illegal music downloads and unauthorized copies of movies, but also counterfeit products.
Among other things, it is educating businesses about how to protect themselves and what legal options they have; publishing the names of firms that produce or trade in fakes; targeting large-scale criminal organizations through the Justice Department; working to update criminal penalties so they are an effective deterrent; implementing new procedures to allow the Bureau of Customs and Border Protection to better identify firms regularly trafficking in fake goods; and empowering U.S. District Courts to issue injunctions against pirated and counterfeit goods entering any U.S. port.
The tightening of borders after 9/11 has given the government more tools to battle imports of counterfeits.
"Before 9/11, we didn't know what was crossing our borders," Doug Doan with the U.S. Department of Homeland Security, told a gathering of MEMA members last fall. "Now it's seen as important, where it wasn't before. There are things we can do now that we couldn't before."
One problem is that counterfeit parts have not been on the government's radar screen. In 2003, while the federal government seized counterfeit cigarettes, apparel, handbags, software, videos, cellphones and more, there weren't any counterfeit auto parts seized - not because they weren't there, Doan said, but because "we didn't know what to look for. If you can help the government understand the counterfeit parts problem, we can do some good."
