COUNTERFEIT PRODUCTS:

According to Organization for Economic Co-Operation and Development counterfeit products are those which are manufactured very closely to imitate the appearance of another to mislead the customers solely for gaining profits. These can also include products which are very strictly protected by intellectual property rights such as trademarks, trade names and copyrights. It also addresses piracy and related issues such as copying of packaging, labeling and any other feature of the goods. The leading industries that have been affected by counterfeiting are software, music recordings, luxury goods, fashion clothes, sportswear, perfumes, spare parts and car accessories and pharmaceutical industry. A report by the United States Trade Representative (USTR) has named Nehru Place and Palika Bazaar in New Delhi, Richie Street and Burma Bazaar in Chennai, Manish Market, Heera Panna, Lamington Road and Fort District in Mumbai, and Chandni Chowk in Kolkata as markets that need to be watched out for this high-volume trade. India, in fact, continues to be on the "priority watch list" of the USTR's "Special 301" report, despite a detailed submission of the intellectual property rights compliance measures initiated by it in 2009.

The "Special 301" report is an annual review of the global state of IPR protection and enforcement. Priority watch list is a list of countries whose IPR compliance is not satisfactory from the US point of view. The report alleged that manufacturing and distribution of pharmaceutical products bearing counterfeit trademarks was a growing problem in India as well as Brazil. The Section 3(d) of Indian Patent Act prevents patenting of mere incremental innovations. The report wanted India to "improve its criminal enforcement regime by providing for expeditious judicial disposition of IPR infringement cases as well as deterrent sentences and to change the perception that IPR offenses were low priority crimes". The Special 301 Report categorizes countries under three separate heads - watch list, priority watch list and notorious - depending on how USTR rates the IP enforcement systems of its trading partner. India and 10 others - Algeria, Argentina, Canada, Chile, China, Indonesia, Pakistan, Russia, Thailand and Venezuela - are under the priority watch list for 2010.

Market for Counterfeit Goods:

Basically there are two types of markets for these kinds of goods; they are i) Primary market and ii) Secondary market. Primary market consists of consumers who unknowingly buy the counterfeit goods under the wrong notion that they are genuine goods. Generally in this market the goods are often substandard possessing risk ranging from mild to life threatening. In contrast secondary market consists of those consumers who know that they are buying the counterfeit goods but still they do so and support the companies that are manufacturing them. But here the true intention of that company is not known to the consumer. The capacity or the size of the secondary market largely depends on the price factor because if the counterfeit goods are priced same as the original genuine good then obviously people would go for the originals so for a huge demand the price of the counterfeit goods must be far less compared to the genuine goods. The other factor that contributes to the number of consumers in the secondary market is the characteristics of the product. For example if a consumer knowingly bought a counterfeit sportswear then you cant say that he might be interested in buying counterfeit medicines or drugs. Finally demand is also affected by socio economic factors which are different for different economies. What could be the reasons why a company is manufacturing counterfeit goods and why there are consumers for these types of goods?

IMPACT OF COUNTERFEITING ON INDIAN ECONOMY:

Counterfeiting has an economy wide effects which include: 1. Innovation is undermined: Companys growth majorly depends on the innovative ideas which they come out with for developing new products. These are protected by the intellectual property rights like copyrights, trademarks and trade names. If the company is not able to protect these, incentive to develop new ideas and products would be reduced and thereby weakens the innovation process. 2. Criminal networks gain financially: Counterfeiting transfers the economic rents to the parties which are involved in illegal activities and the amount is again used to support criminal activities through corruption in an illegal manner. 3. FDI: Many companies primary concern when investing abroad is the IPR. For some industries the level of counterfeiting may be relatively unimportant but for some it is of high importance. In fact in one of the surveys conducted by OECD it was proven that countries with lower levels of counterfeiting have higher FDI and those with higher rate of counterfeiting have lower FDI. Industries are losing a large amount of money to these counterfeiters. They not only affect the industries that produce the genuine items but also they involve social costs. Ultimately it is the consumers who are suffering because they receive poor quality goods and are sometimes exposed to safety risks and dangers. Governments loss out on unpaid tax and incur large costs in enforcing the IPR.

IMPACT ON BRAND:
Counterfeit goods damage the companys brand and reputation to a greater extent. Consumers after buying the counterfeit goods and later if they recognize that it is not a genuine product blame the producer of that particular genuine product if the product doesnt fulfill his expectations resulting in a loss of goodwill. In contrast if a consumer could not recognize the genuineness of the product and if it doesnt perform well he communicates to his peer that so and so companys products are not doing good so here the loss is not to the manufacturer of the counterfeit good instead it is the original company that would be blamed. So they may be reluctant to buy another product from that brand. Counterfeiting makes the genuine products less desirable to their traditional customers.

PROTECTION AGAINST COUNTERFEITING:

Companies now are well aware of the problems of counterfeiting and the seriousness of the problem. They should make sure that their intellectual property rights are adequately protected to implement anti-counterfeiting policies. There are number of technologies that the companies can employ against counterfeiting. Some of them may be holograms, smart cards, biometric markers and inks. These can be used to protect and authenticate genuine products. These technologies vary in respect to degree of sophistication and cost. The lack of information is often perceived as the major problem in fighting against counterfeiting. The World Customs Organization and the Interpol started to take this seriously and are now providing training to the officials in support with private industries. A number of policy initiatives exist at both private and the official level. Countries with strong IPRs formed their own anti counterfeit associations. Some of them are Business Software Alliance(BSA) and Global Anti- Counterfeiting Group (GACG). Comprehensive list of Anti- Counterfeiting Organizations worldwide: