OUR RECOMMENDATIONS TO COMBAT THE GLOBAL COUNTERFEIT PROBLEM

1. Handbag manufacturers need to build even closer relationships with the various distribution channels in the industry.

• Because brands share only a limited amount of information, it is extremely difficult for their supply chain partners (including suppliers, retailers, and wholesalers) to implement effective controls to protect them from counterfeits entering their inventory.

• In the past, brands could focus their efforts on maintaining product integrity by tightly controlling distribution, but this is no longer effective. Today's consumers are able to determine their own trade channels, including through secondary market platforms, and as long as they can trade through other channels, they will. Brands must increase cooperation with these other networks, regardless of their official relationship status, to protect consumers from the increasing trade in counterfeits on these platforms.

• A more effective, scalable solution is one that focuses on bilateral information sharing. By building closer, multilateral relationships with supply chain actors, brands will empower retailers, resellers, marketplaces, and other trade channels to independently detect counterfeits, conduct investigations, and take enforcement action when corruption occurs.

2. Brands must increase their commitment to consumers

• Traditionally, luxury brand marketing has focused on origin, quality, and exclusivity, but the profile of the luxury consumer is changing rapidly, particularly as awareness of fashion's impact on the environment grows.

• It's becoming increasingly important for these brands to adapt their messaging to appeal to this new audience, many of whom shop on the secondary market. While we've seen brands adopt messaging emphasizing sustainability and the circular economy, most still don't consider the large and growing number of enthusiasts shopping through resale channels.

• To improve relationships with customers who shop in the primary market and at the same time forge new bonds with those who currently shop secondhand, brands should extend their after-sales service and support to customers regardless of where they purchased the product.

• Brands should also strengthen cooperation with industry associations and use customer contact points to educate them about the personal risks and societal costs of counterfeiting, thereby deterring further trade in counterfeits.

3. Industry players must work together to introduce new standards for combating counterfeiting

• While advanced anti-counterfeit technologies such as IoT-enabled product security solutions and blockchain-based digital traceability platforms are increasingly being deployed, this is primarily at the brand level. Other parties in the supply chain that could benefit from these initiatives are unable to do so, either (a) due to a lack of multilateral information sharing (as mentioned above) or (b) due to a lack of industry-wide technology standards, making adoption difficult or unscalable. Furthermore, counterfeits, as well as anti-counterfeit technologies, are constantly evolving and improving in quality, making enforcement difficult.

• Currently, artificial intelligence-based solutions are proving effective in keeping ahead of counterfeits, but wider application across the industry is needed to slow the production and sale of counterfeit products. According to Ahmad Almheiri, Senior Manager of Trademark and Commercial Agencies Disputes at the Dubai Department of Economic Development (DED), "Technology can serve as a reliable intermediary between authorities and trademark owners or their representatives by establishing a platform for asserting infringement claims, allowing rights holders to file a lawsuit against counterfeiters. Furthermore, the continuous development of AI technology is helping detect counterfeits and assisting websites in identifying counterfeit goods based on various characteristics."

• Simply put, the tighter the enforcement net, the more difficult it becomes for counterfeiters to sell counterfeits, and once profitability becomes difficult, counterfeiters will be deterred from producing them at the current scale. Creating the tightest possible anti-counterfeiting net will require stakeholders on all fronts to collaborate on developing industry-specific technology standards that can be widely adopted without compromising trademark confidentiality or exposing trade secrets.

4. Authentication must be solved in the world of resale

• As the resale industry has grown, we've observed several platforms touting their authentication processes as a key differentiator. While this may help achieve marketing and customer acquisition goals in the short term, it can be detrimental to the overall industry's growth in the long term.

• A healthy and thriving resale ecosystem depends on consumer trust. Any claim to "the best authenticators" insinuates competing platforms as unreliable, reducing trust in the entire ecosystem. Furthermore, over-promotion of authentication features can lead to lawsuits, which also impact the reputation of the entire industry.

• To truly boost consumer confidence and keep counterfeits out of all markets, a joint approach is needed. Instead of trying to compete with competitors, all players should collaborate, share information and best practices, and work together in the fight against counterfeiting.

5. International authorities must be provided with stronger laws, tools and resources to enforce intellectual property rights.

• The lack of a generally applicable and uniform regulation of trademark rights throughout the world hampers the enforcement options of authorities in the various legal systems.

• This is gradually changing. In China, for example, export controls on counterfeit goods are an active focus, and there are concerted efforts to strengthen border enforcement.

• To achieve broader success and curb the counterfeit business, initiatives like these must be expanded and greater collaboration is required. Working together, international legislators, brands, and industry associations can ensure that authorities have the legal tools they need to combat counterfeiters at manufacturing and distribution sites, as well as at borders.

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