Developing Anti-Counterfeiting Strategies for a Global Environment Peggy Chaudhry Assistant Professor of International Business Villanova University – College of Commerce and Finance Victor Cordell Professor & Director of International Business Planning Program Fisher Graduate School of International Business – Monterey Institute of International Studies Alan Zimmerman Associate Professor of International Business City University of New York – College of Staten Island

IPR Commodities Seized Commodity 2003 % Total Value Commodity 2002 % Total Value Cigarettes44%Cigarettes38% Wearing Apparel15%Media29% Handbags/Backpacks12%Wearing Apparel9% Media8%Consumer Electronics5% Consumer Electronics4%Watches/Parts4% Watches/Parts4%Handbags/Wallets/Backp acks 3% Footwear3%Toys/Electronic Games2% Toys/Electronic Games2%Cigarette Rolling Papers1% Sunglasses/Parts1%Sunglasses/Parts1% Headwear1%Headwear1% All other commodities6%All other commodities8% Source: International Anti-Counterfeiting Coalition, 2002 and 2003

U.S. Customs Service IPR Seizures by Country of Origin Country 2003 % Total IPR Seizures Country 2002 % Total IPR Seizures China66%China49% Hong Kong9%Taiwan27% Korea3%Hong Kong4% Pakistan2%Pakistan2% Mexico2%Korea2% Malaysia1%Indonesia1% Philippines1%Switzerland1% Canada1%France< 1% Switzerland1%Malaysia< 1% Thailand<1%Kazakhstan<1% All other countries 12%All other countries 11% Source: International Anti-Counterfeiting Coalition, 2002 and 2003

Key Research Questions How do managers conceptualize the intellectual property environment? How does the intellectual property right environment affect the market entry decision? What anti-counterfeiting strategies are most frequently used? How effective is each anti-counterfeiting tactic?

Consumers Distribution Channels Host Governments International Organizations IPR Actions Mode of Entry IPR Environment Level of Consumer Complicity Level of Host Country Enforcement Conceptual Framework Level of Market Commitment Level of Pirate Activity Pirates

Summary of Anti-Counterfeiting Strategies Targeted at ConsumersTargeted at Host Country Governments -Use special packaging and/or labeling -Emphasize benefits of genuine product -Provide lists of legitimate channel members -Emphasize warranties and after-sale service -Offer site licenses -Register trademarks and patents -Educate local law enforcement -Lobby for more stringent laws/enforcement -Seek assistance from tax authorities Targeted at Distribution ChannelsTargeted at International Organizations -Educate channel members about copycats -Provide warnings to distributors/retailers -Give financial incentives to reject counterfeits -Solicit dealer suggestions to develop tactics -Use RFID Technology -Monitor and investigate retailers and distributors -Monitor policy of UN/ECE Advisory Group -Participate in IACC actions -Use the TRIPS of WTO -Monitor the actions of WIPO -Participate in multilateral organizations -Lobby for stronger global IPR protection

Summary of Anti-Counterfeiting Strategies Targeted at Pirates - Establish internal enforcement team -Use surveillance program in retail outlets -Pursue injunctions against counterfeit goods -Warn counterfeiters of possible legal action -Use acquisition and/or joint venture strategy -Use covert actions -Obtain local police support

Based on your experience in many countries, overall how would you rate the effectiveness in reducing counterfeiting of any of the following actions you may have taken?

Most effective anti-counterfeiting strategies directed at channel were: Educate channel members about counterfeit products Encourage distributors to notify manufacturers that counterfeit goods are in the market Provide warnings to distributors/retailers of possible damages from selling counterfeit Monitor and investigate retailers and distributors

Most effective anti-counterfeiting strategies directed at: Home/Host Country Governments: Encourage enforcement of existing laws Lobby for stronger global intellectual property protection International Organizations: Participate in International Anti-Counterfeiting Coalition actions

Most effective anti-counterfeiting strategies directed at pirates are: Establish enforcement team within the company Monitor information sources for general anti- counterfeiting developments Pursue injunctions against counterfeit goods Obtain local police support

Conclusion Need to evaluate why some strategies did not appear to be effective? For example, why did the respondents not give tactics targeted at consumers an effective rating? Further data collection is required to provide better insight into managerial perceptions.