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The most brazen counterfeit products of the year

Jörg Höltje was appalled.

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The most brazen counterfeit products of the year

Jörg Höltje was appalled. A large furniture retailer in Germany advertised for customers with the slogan “beautiful design, affordable for everyone”. Among other things, there was a wall shelf that Höltje designed and for which his Hamburg furniture company Studio Hausen has a property right.

"The design, concept and proportions are copied clumsily one-to-one," describes the entrepreneur and designer. “If you look closely, however, you can see that low-quality tropical mango wood was used and cheap frames that warp easily. The replica of our 'Link' shelving system was probably manufactured in the Far East."

The furniture retailer showed understanding and apologized, stopped the sale, destroyed the remaining stock and named the sales achieved. With that the case is closed. But it could not have been the only one by a long shot, believes Höltje. "It's a very questionable business model," he says angrily. "The dealers make a quick buck off of creative designers and then back out if they get caught."

The fact that the case is now becoming public is due to the “Plagiarius” abusive prize, which has been awarded to manufacturers and dealers for particularly brazen imitations and counterfeits since 1977. The negative award is given in the form of a small black dwarf with a golden nose - as a symbol for the exorbitant profits that the imitators generate at the expense of creative designers and innovative manufacturers.

"Global and digital distribution, professional and criminal structures behind it - product and brand piracy is a lucrative billion dollar business. The perpetrator structure ranges from uninspired competitors to ruthless traders to organized crime. We want to draw attention to that,” says Christine Lacroix from the Plagiarius campaign.

In total, this time there are three main prizes and three special prizes, awarded on the sidelines of the Ambiente consumer goods fair in Frankfurt/M. The affected products come from a wide variety of areas.

In addition to the wall shelf, there is, for example, an SD card for the navigation of Volkswagen cars, components such as brackets and connectors, drinking glasses or the vehicle diagnostic system "Xentry Diagnosis" for the so-called on-board diagnostics in cars from Mercedes Benz.

For the latter, there has already been a civil conviction by the Stuttgart Regional Court for infringing on the Mercedes-Benz trademark. Criminal proceedings were also opened against the counterfeiter OBD Diagnostic Tools from Fellbach near Stuttgart. “Not only can counterfeit vehicle diagnostic systems be misused, for example to disable seat belt reminders or the maximum speed limit, they also usually use outdated software without updates. Repairs and maintenance are then not state-of-the-art and do not offer the highest level of security," says the jury in its rationale for awarding the Plagiarius.

The award itself says nothing about whether the counterfeit product is legal or illegal. The aim of the campaign is rather to raise public awareness of the unscrupulous business methods of product and brand pirates and to sensitize industry, politics and consumers to the problem.

Because this awareness seems to be missing in many places. "The greater the demand, the greater the success of the counterfeiters," says expert Lacroix. "Buyers thus have the power, but also the social responsibility, to deprive counterfeiters of their business basis."

But that power is not being used in the way it could be. On the contrary: More than one in three consumers in Germany has already accessed counterfeit jewellery, clothing or technology, according to the "Product Piracy" study by the consulting firm EY, for which a good 1000 Germans were surveyed.

And almost half of them were aware that they were buying a fake. Men are significantly more likely to buy counterfeit products: 44 percent say that they have bought a copy at least once – for women, on the other hand, the figure is only 32 percent.

The motive for buying fakes is primarily the low price. In any case, 72 percent of those surveyed named this as the reason for the purchase. Added to this is the easy access to the counterfeits.

With a few clicks, you can order all sorts of fakes from anywhere in the world. "We are observing a long-lasting trend towards the online sale of counterfeits," says Volker Bartels, chairman of the action group against product and brand piracy (APM).

According to a study by the Organization for Economic Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO), 56 percent of all seizures by the customs authorities are related to online mail order.

The dimensions of the counterfeiting business are gigantic. According to the latest available data, the EUIPO and OECD estimated international trade in counterfeits at an alarming 412 billion euros in 2019, which corresponds to around 2.5 percent of total world trade.

Europe is an important sales market. According to the Plagiarius campaign, around 86 million counterfeit goods were confiscated in the EU in 2021, which is 31 percent more than a year earlier.

"And these are just the demonstrable seizures, the tip of the iceberg," says club representative Lacroix. In 2022, the number is likely to increase again given inflation and reluctance to buy. Experts predict the same for 2023.

In any case, furniture designer Höltje notices the reluctance to buy in everyday life. “People save. At the same time, they still want to consume. So the time has come for counterfeiters,” the Hamburg native is certain.

And there are enough opportunities. “I see many models from the usual furniture dealers that come from catalogs that we also regularly receive from China, because we are obviously also perceived as dealers there. It offers products from across the entire furniture world, which certainly have a similar history to our shelf.”

He is now hoping for a more consistent implementation of inspection and due diligence obligations by the dealers, who must ensure that the health, safety and environmental standards applicable in the sales area are complied with and that the products are free of third-party rights with regard to trademarks, design, patents or copyrights.

At the same time, Höltje hopes that critical customers will question overly cheap prices. “It is completely incomprehensible: practically everyone says that they want to live more sustainably. In the end, however, the price beats all good intentions. That's a bit sad."

And expensive. “The supposedly low price that customers pay for counterfeits is costly to others: the companies, some of which have built up their brand and reputation over decades. Employees who work day after day to improve existing products or develop new ones. In addition to the commitment and energy of each individual, this also costs money. Billions are lost every year by companies and their employees through counterfeit products,” says Michael Renz, Head of Consumer Goods and Retail at EY Germany.

The fight against the counterfeiters is now at least intensified. "Fortunately, there are signs that the problem is now being taken more seriously," says APM boss Bartels.

Product and brand piracy are now among the priorities in the fight against organized and serious crime within the framework of the European EMPACT platform (European Multidisciplinary Platform Against Criminal Threats).

This platform is used, among other things, to organize training courses for law enforcement agencies and transnational operational measures against criminal networks and structures. In addition, the German Patent and Trademark Office now has extended powers to educate consumers in this area.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 5 a.m. with the financial journalists from WELT. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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