Counterfeit Items Cause Economic Damage

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Everyone has seen the sidewalk vendor hawking a too good to be true designer handbag. The clues to counterfeit luxury items used to be so obvious that most people knew exactly what they were buying. This sadly is no longer the case. The production of counterfeit items causes American manufactures to suffer about $200 billion in losses each year according to the International AntiCounterfeiting Coalition (Freedman, 1999). A large part of counterfeited items are fashion goods. They are usually easily recognizable, especially at the designer or luxury end of the market. The more exclusive a brand is, the more likely it is to be counterfeited (Lai & Zaichkowsky, 1999). As these goods are also high value, there is considerable profit to be made from counterfeiting these brands.

In recent years counterfeiting has become a major headache for designers, consumers, and the government. Manufacturers, mostly in Asia, create knockoffs of popular fashion items in order to sell to unsuspecting consumers at a cheaper price than the originals. While there are a few government agencies devoted to catching these criminals, most are never caught due to the huge demand for these items. Due to the popularity of the Internet and online shopping, the problem is only getting worse. In this paper the research indicates that the production of counterfeit luxury goods has caused significant economic damage by competing with legitimate businesses, eroding the value of the brands that they counterfeit, and by causing the loss of American jobs and preventing the United States from collecting taxes on the counterfeiter’s sales and profits.

The business of counterfeiting makes it harder for genuine retailers to compete in the marketplace. Legitimate businesses...

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...993). USA Today Magazine, 122(2579).

Freedman, D.H. (1999). Fakers' paradise. Forbes, 163(7), 49-54.

International AntiCounterfeiting Coalition. (2005). The negative consequences of international intellectual property theft. Retrieved from http://www.iacc.org

Lai, Kay Ka-Yuk and Judith Lynne Zaichkowsky (1999), Brand imitation: Do the Chinese

have different views? Asia Pacific Journal of Management, 16(2), 179-192.

McCausland, C. (2010, April 26). Counterfeit goods: Designer handbags, Rolex watches, and now airplane engine parts. Christian Science Monitor.

Parloff, R., Chandler, C., & Fung, A. (2006). Not exactly counterfeit. Fortune, 153(8), 108-116.

Roth, J.S., & Jacoby, D. (2009). Fashion, copyright, and the proposed design piracy prohibition act. IP Litigator, 15(6), 1-8.

Sommers, M., & Kilaru, N. (2008). Counterfeit corner. IP Litigator, 14(1), 41-42.

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