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Essay: Counterfeiting in Fashion: An Overview of the Growing Market

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In practice, fashion brands and companies release their product that characterized by their authentic design and features. This objective is to make their brand or company positioning consistent in the market and gain positive responses from their consumer (Kotler and Keller, 2012). However, the market competition is not only limited between brand-and-brand competition of the related brand, but also with the counterfeiting of the brand’s product itself. This is, of course, might bring so many disadvantages for the brands in many aspects. This report will discuss about the overview of counterfeiting in fashion, the type of intellectual property in fashion counterfeiting, and also the innovation approach to prevent the counterfeiting practice. In the end of this report, there is an infographic that summarize the whole report comprehensively.

II. Counterfeiting in Fashion Overview

Major famous fashion design firms, such as Gucci, Prada, Armani, Ralph Lauren, and Chanel, repeatedly produce originating creative content for their product (Raustiala and Springman, 2006). Even though those brands register their company and products to the Intellectual Property organization or authorities, not a few of them often found the fraudulent of their product, which is counterfeited by particular individual or organization (Barrere and Delabruyere (2011).

The counterfeited product is defined as the identical copies of an authentic products (Lai and Zaichowsky, 1999) and it is offending the regulations of the intellectual property (Benghozi and Santagata, 2001). This practice can affect brand as it can on the market of the brand and also on profit of the luxury brand (Sims and Keon, 1999). However, the severely disadvantaged are the related to the company eventually (Cheung and Prendergrast, 2006). Moreover, since there is the easiness with the copies can be made with new technology, it is found that the counterfeiting products are able to reach the market before the originals release (Hilton et al., 2004).

In 2013, the counterfeited product amounted to up to 2.5 % of world trade (OECD/EUIPO, 2016). Moreover, the statistic shows the percentage of UK counterfeited product was approximately reaching 15% in the same year with half proportion of its survey indicates that the majority of the product category is clothing and accessories (Statista, 2013).

The counterfeit production and consumption can be practiced consciously or not (Carpenter and Lear, 2001). The reason behind the availability of fake product is varied. According to OECD/EUIPO  (2016), the counterfeit motivations can be possessed by the demanders and suppliers side such as:

Demanders: Suppliers:

• The counterfeit products provides the similar quality as the authentic one

• The budget constraints motivate them to buy the counterfeit product

• The less risk of discovery in jurisdictions where penalties of the availability and ease of acquisition of counterfeit and pirated products • The market size of counterfeit product are promising

• The production and distribution of a counterfeit and pirated product are technically feasible

• The unstable environment of the legal authorities to control the counterfeiting product in their jurisdiction

In current situation, Internet is the primary source for the consumer to browse their desired product (Mintel, 2016). The result, the rise of the ecommerce also contributes to make selling and transporting fakes much easier (Economist.com, 2016). The control of the imitation product flow in Internet is extremely difficult (Hilton et al., 2004) due to its free accessibility for the supplier and consumer to distribute and obtain it. In addition, with the emergence of social media, it makes the counterfeiter move freely to trade the fake product since the social media is owned as the personal online media.  Consequently, the distribution imitation product of social media channel is worth for £10 billion annually in the United Kingdom (Barnett et al., 2014). Therefore, the counterfeiting product in online platform should be considered more serious by concerning the easiness of product distribution and the after effect of its practice.

III. Intellectual Property in Fashion Counterfeiting

There are many forms for counterfeiter to produce the fake product. However, in daily life, it is often found the two type of infringement intellectual property in fashion industry. Those are including the counterfeited of the logo of the brand and also some character of the design that is imitated to the fake products.  The following section will explain both aspects in more detail.

3.1 The Copy of the Brand’s Logo

In order to make the consumer believe that the dummy product has the same originality with the authentic one, the counterfeiters often copy the brand logo to the fake product. In the first case, the counterfeiter can produces the same or different product design and then attach the logo onto the product such as Figure 3.1 demonstrates.

Original Logo

Source: Burberry.com


Source: spotfakehandbags.com


Source: spotfakehandbags.com

Figure 3. 1 Burberry Logo Copy

Figure 3.1 illustrates the significant difference between the Burberry fake product and its original product that is observed from the type of the font that is attached on each logo. However, it will be still difficult to distinguish the original product with its imitation in a perfect resemblance of the design and the brand logo. In addition, with current advance technology, it may help the counterfeiter to produce the imitation product (Hilton et al., 2004) and logo as closely as possible with the original product.

In the other case, there is the advance way for the counterfeiter to make their business sustain.  It is the counterfeiting practice of the logo, which is applied in the product that has never been established by the related brand. One of the example is the Burberry socks that the brand itself has never released the product until nowadays. This is often found in the online shopping media as Figure 3.2 shows.

Figure 3. 2 Burberry Counterfeited Socks

From the mentioned cases, the counterfeiters take the advantage from without having the promotional cost or effort to sell their product. The brand name and logo that is attached in their product will result the consumer attracted to the fake products (Wilcox et al., 2009). Especially when the counterfeiters offer the low prices, the consumer will have more willingness to buy the imitated product. For the consumers who is being as pride oriented, they will possibly to purchase those products since they do not really aware to the price and quality but they only concern about the brand label name that is hanging on the product or packaging. However, for the consumer who is aware to buy the original product, it will endanger them if they purchase the counterfeited product in the same price as the genuine but the grade of the quality is low.

According to Intellectual Property regulation in Gov.uk (2017), the usage of the brand’s logo copy without owner permission is the form of the infringement of the trademark. Worcestershire (2017) explained that a trademark is “used to indicate a connection between goods and a person/company having the right to use the mark – many famous household brand-names are trademarks, and may be a logo, name, word or signature”. With the availability of the trademark, the fashion brand is able to differentiate the original and many multiple copies and so as the premium and the masses (Raustiala and Springman, 2006). However, the trademarks basically protect the connection between the product and its source, not the product entirely (Cox and Jenkins, 2005), particularly it is as regards the protection against copying (Barrere and Delabruyere, 2011). Therefore, in the case of the logo copying, the brands, which are registered for its trademark, can file the lawsuit to the legal organization as their rights.

3.2 The Copy of Part of the Character Design

The practice of faking the fashion product is expanding from copying the logo of the brands to something that is more detail in the product. The counterfeiter also becomes more creative and takes the opportunity to make the fake product through the established design of the brand. In many cases, it is often found the copy of part of design that is applied in different product. The most often found is in the children fashions that copy the character design of their favorite cartoon or fan fiction character (Judge, 2009). Figure 3.3 illustrates the example of fan fiction copy in children clothing.

Figure 3. 3 Disney Character Design Copy

From this case, since the children are likely collecting fan fiction characters, as they are the big fans of them (Reeves and Greenberg, 1977), it becomes an opportunity for the counterfeiter to produce fashion product by attach the cartoon character to attract the children market. By offering the cheaper price, it makes the consumer more interested to purchase the products (Wilcox et al., 2009). However, even though the end consumers are the children, the decision maker to purchase children’s product is on their parents generally (Solomon, 2017). The adults typically consider the functionality (Atkin, 1978) and will think rational to buy the original cartoon character product in which extremely expensive. Hence, the adult will tend to purchase the fake one to make their children happy to have the cartoon collection in their wardrobe.

The result of this type of counterfeiting is not only damaging the profitability of the animation company but also the reputation of the movies of its animation (Reeves and Greenberg, 1977). It is, again, that the counterfeiter is taking the advantage from the promotional cost since the fan fiction character is already famous among the children environments. Moreover, the children are not really concern with the brand of the product (Grossbart et al., 1991) because all that they really prioritize is the availability of their favorite cartoon character attached in the fashion products.

According to Intellectual Property regulation in Gov.uk (2017), the usage of the design copy without owner permission is the form of the infringement of the copyright. Worcestershire (2017) explained that the copyright is “a property right whereby a person assumes rights to original literary (including computer programs) dramatic, musical or artistic works (including graphic works such as painting, cartoon characters, drawings or diagrams) sound recordings and films”. In addition, it is also intersected with the trademark right since the design of the character is commonly being part of the design of the trademark of the related corporation (Leaffer, 1994). The type of this copyright is classified as the character merchandising right because it applies in the image of animation for merchandising purpose (Li and Li, 2011) in the form of fashion product. Therefore, the counterfeiter that is implementing this type of production will be subjected to the article of copyright and trademark at once.

IV. Innovative Approach

There are many innovative solutions against the counterfeiting practice. Some of the brand them put the technology such as RFID and other electronics element in their product (Narimanova, 2015). However, the new technology requires much more capital and also keeps developing so that the counterfeiter can emulate the technology immediately (Yang et al., 2008).

In the prevention effort of counterfeiting product, the company or the brand is not merely focus to combat the counterfeiter side only, but also the company is suggested to embrace the consumer. This is because the distribution of counterfeiting products is available since there are also the markets that consume them (Yang et al., 2008). Therefore, the approach to combat the counterfeiting product is suggested to have dual effect that is worked for the counterfeiter and also the consumer.

Harvey (1978) introduced the comprehensive preventive way to avoid counterfeiting as Figure 4.1 demonstrates. The model covers the whole aspect to combat the counterfeiting from the consumer to the root of counterfeiters.

Figure 4. 1 Harvey (1978) Counterfeiting Prevention Model

The first stage that the company should approach is the awareness of the counterfeiting problem in the society. Harvey (1978) argued that the company should publicize the company legitimacy of its product and provide the information about the differentiation between original and fake products. The strategy can be as the advertising or public relation campaign regarding counterfeiting activity topic. In addition, the company can collaborate with anti-counterfeiting organization and government to create the campaign. The content activity might mention about the consumer as the victim of the low quality and not guaranteed product and also the penalty of the counterfeiter that distributes the fake product. The expected result of this strategy is it can makes the consumer understand the effect of the counterfeiting activity to them and also the counterfeiters will be reluctant to do their practice.

The next stage is the company should have to take the prevention action to fight directly with the counterfeiters. The company might develop its personal team or department to detect the counterfeiting activities that is deploying in the market as the strategy. Since the fake product is many distributed in online media (Economist, 2016), the company team can detect the counterfeiting activities through the keywords of the brand name and its product in Internet searching engine and also make the list of the counterfeiter. If the lists of the counterfeiters are being part of the online retailer (such as the eBay, Amazon, etc), the brand company should have the collaboration agreement with the online retailer to combat counterfeiting practice to give the detail of the counterfeiters that sell the brand’s product. Furthermore, the company also might make the list directly of the counterfeiter if they have personal website or social media. Moreover, the company is suggested to have this team regionally since the media that counterfeiters utilize to sell their product might vary in every region in the world (Evans, 2011).

The last stage is the assertion that involves the pursuance and prosecution of the counterfeiter as offenders (Harvey, 1987). After collecting information and evidence of the counterfeiter from the detector team, the company can trace backward the main actor (producer and distributor) that is doing the counterfeiter practice. This will involves the law organization to indict the counterfeiter upon their business activities. The company also can file the loss that the counterfeiters should pay as their actions. Moreover, The imitation products that have been distributed in the market have to be retracted by the counterfeiter. In addition, in order to makes the counterfeiter feel more deterrent, the social punishment can be implemented by publishing them through the media as crime actor (Garland, 2014).

V. Conclusion

The counterfeiting in fashion is practiced everywhere and it is including the United Kingdom since there are some reasons that come from the supplier and the consumer. This activity is categorized as the Intellectual Property violation. The effect, of course, is more felt on the fashion brand company as the profit and reputation loss. Moreover, the fashion counterfeiting becomes easy to be distributed since the emergence of the Internet that reaches broad market. In this report, the most often fashion-counterfeiting practice is the copy of the brand logo that infringe the trademark rights and the copy of character design that infringe the trademark and copyrights. As the solution to combat the fashion counterfeiting, the company might utilize the Harvey (1987) model that is started from campaign the counterfeiting issues to the society. The company is also suggested creating the personal team to detect the counterfeiting activity and collect the evidence of it as the action. Finally the company can file the lawsuit to the law organization to obtain the fairness as it acquires much loss from the counterfeiting activities.

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