SEMA News—August 2015

LEGISLATIVE AND TECHNICAL AFFAIRS
By Ashley Ailsworth

Put the Brakes on Fakes!

Branding, Consumer Awareness and Packaging Solutions to Combat Counterfeiting

Putting the brakes on counterfeiting may be achieved through more creative, less conventional measures.

For SEMA-member companies putting out great products these days, the challenge of illegal unauthorized copies is almost unavoidable. While some companies turn to the courts, federal agencies and law enforcement to confront counterfeiters, these avenues are frequently too expensive, ineffective or both. With the pervasive culture of counterfeiting in today’s global marketplace, SEMA members may be best served by also pursuing creative solutions that focus on branding, consumer awareness and unique packaging.

Brand Everything

One of the most effective means of communicating to customers that a product was actually produced by a well-known source is by using the company name or logo on everything that goes out the door. Once this branding becomes common practice, consumers begin to recognize that products without the company’s name or logo are not genuine.

One SEMA member that takes branding very seriously is instrumentation manufacturer Auto Meter, whose high-quality gauges almost always bear the distinctive “Auto Meter” logo. The company works hard to make sure its logos are accurately represented in the marketplace because consumers recognize those logos and demand them when seeking out Auto Meter products.

	The distinctive Auto Meter logo helps consumers identify the company’s products.

When the company name or logo is not printed on a copy, a deceptive seller could play dumb and claim that their products are legal knock-offs rather than illegal counterfeits. A legal knock-off looks like a well-known product already in production, but does not copy any protectable aspect of an existing product. While unbranded copies may be construed as legal knock-offs, a seller making unauthorized use of another company’s registered trademarks, such as a company logo, is engaged in illegal counterfeiting. Recognizing consumer demand for the Auto Meter logo, counterfeiters have brazenly ripped off the company’s trademarks. Since the company’s registered trademarks are being copied, Auto Meter is able to easily prove to e-commerce sites and courts that an unauthorized user of the logo has committed a crime.

Some companies choose to forego printing their name or logo on products and claim trade dress rights on a unique feature of a product. Trade dress is a subset of trademark law that protects unique aspects of products or packaging when consumers use the unique feature to identify the source of the product. While relying on trade dress is a valid strategy, a company would be forced to prove in court that consumers use the unique feature as a source identifier in the marketplace. Instead of having to provide this proof every time a company goes to court, it is far easier to register a logo as a trademark, print that logo on the product and watch as the counterfeiters illegally start stamping that logo onto their copies. If victims whose products are being copied then choose to seek help from the courts, their case will be far easier to prove.

Make Consumers Aware of the Problem

Aeromotive’s online consumer awareness efforts warn customers that knock-offs of the company’s popular fuel pressure regulator kits often come packaged in cheap white styrofoam.

If consumers see a product that looks similar or identical to the products from a well-known source, they are likely to associate the goods with that company unless they are educated about the differences. It is important that consumers know what to look for when shopping for products. SEMA businesses can help educate their customers on how to identify their products and, more importantly, how to spot a knock-off.

Consumer awareness campaigns that help customers identify fakes may be more beneficial than taking action after the customer has already been duped. These campaigns can be rolled out on the company’s website, in the media or company-sponsored advertisements.

Kansas-based SEMA member Aeromotive communicates with its customers via its website (www.aeromotiveinc.com/buyer-beware-genuine-aeromotive) to inform them about the prevalence of counterfeiting in the automotive aftermarket and caution consumers against inadvertently spending their hard-earned money on knock-offs.

Consumer awareness campaigns should also involve cooperation throughout the supply chain. For example, SEMA member Weld Wheels recently strengthened its distributor program to certify dealers that sell genuine Weld wheels and provides consumers with a list of certified dealers on its website (www.weldwheels.com/dealer-locator).

Important features of any consumer awareness campaign may include the following components:

• Your company’s logo and specific aspects of that logo that you have seen misrepresented by counterfeiters.

• Features of your product that are difficult to reproduce or commonly reproduced inaccurately by counterfeiters and that consumers can check to identify a fake.

• Prices that are significantly lower than the average price for your company’s products are likely not produced by your company.

• A list of your products that are most frequently copied.

• A caution against purchasing from unauthorized web retailers.

• A list of authorized retailers where consumers can purchase genuine products.

• A help line, webpage or contact person for consumers to inquire about the authenticity of a product before buying.

Stay One Step Ahead

Counterfeiters thrive best when they attempt to sell a product that does not change from year-to-year. They can make one mold, focus on developing a single manufacturing process, and keep the copies coming. To make it more difficult on them, many companies rely on innovation and the introduction of new products. “Part of that entails evolving the product design where possible to maintain product differentiation that is visible to the consumer and distributor,” said Aeromotive President Steve Matusek. The problem is exacerbated when a particular product becomes so popular that private brands begin selling knock-offs sourced from offshore. “Once the offshore vendor is aware of unit volume and has production in place, it’s a simple step to start counterfeiting the branded product,” explained Matusek.

Another way to outsmart the bad guys is to sell very application-specific products rather than focusing on universal parts that can be used interchangeably on a wide range of vehicles. “We have a proliferation of part numbers with subtle differences to achieve different results on different makes, models and model years,” explained Borla Vice President of Sales and Marketing David Borla. Producers of counterfeit product tend to copy units they can sell in bulk, and Borla admits they have seen their universal mufflers copied over the years. Even where a manufacturer is selling a part in high volumes, skilled craftsmanship and high-quality materials can differentiate authentic product from the cheap knock-offs. “Our products are manufactured from aircraft-quality T-304 stainless steel with complex, patented internal technology,” said Borla. “An installer or other trained eye would certainly be able to tell the real thing from the knock-off,” he added.

Use Packaging Features That Can’t Be Copied

Products can be reproduced, even if the result is a poor-quality knock-off, but some packaging solutions involve features that cannot be copied. Holograms, specialized seals, labels, wraps and tracking and tracing tools can all be used to ensure product authenticity. Numerous vendors offer these solutions and can be researched online. Companies may also choose to develop unique packaging features in-house that are difficult for counterfeiters to copy. Cheap packaging materials can be a sign of cheap products, and consumers should be made aware of the packaging to expect when purchasing genuine products.

On the flip side, make consumers aware of the packaging commonly used by known counterfeiters, since it may be easier to identify fakes by inspecting the package rather than the product itself. For example, Aeromotive informs consumers on its website that genuine Aeromotive products do not come packaged or displayed in white Styrofoam.

Shut Down the Counterfeiters

Although branding, consumer awareness and packaging solutions are all valuable tools in a company’s intellectual property toolchest, shutting down the counterfeiters and keeping fakes from crossing the borders remains the ultimate goal.

SEMA members can utilize a variety of tools to help enforce their rights within the United States, ranging from issuing cease-and-desist letters to obtaining court rulings. It is also possible to stop illegal imports from entering the United States. For rights that have been registered with the U.S. Patent and Trademark Office (trademarks) or Library of Congress (copyrights), record those registrations with the U.S. Customs and Border Protection. Customs can then assist in seizing merchandise that is counterfeit or confusingly similar to a recorded trademark or copyright.

SEMA maintains a strict policy on intellectual property rights and works to resolve legitimate claims of intellectual property infringement at the SEMA Show and throughout the year. The SEMA intellectual property rights policy is available in the Exhibitor Services Manual section of the SEMA Show website at www.SEMAShow.com. Under the policy, no exhibitor may sell, advertise or display counterfeit or illegal knockoff products. If SEMA is unable to make a determination on a particular complaint, the complaining exhibitor is encouraged to submit its claims to a court of competent jurisdiction and obtain a court order against the wrongdoer.

A recent success story from the SEMA Show involves Aeromotive, which served court papers on an exhibitor showing counterfeit product online. “The defendant was served on the Show floor and a default judgment was recently awarded based on the complaint,” said Aeromotive Director of Business Development Kyle Fickler. “We feel that SEMA’s intellectual property rights policy and attorneys hired to enforce it are significant member benefits that are often underutilized,” added Fickler.

More detailed information on protecting your company’s intellectual property can be found on SEMA’s website at www.sema.org/ipr.