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Richemont watch win is not the end of the luxury counterfeit battle

January 9, 2013


Luxury conglomerate Richemont’s recent legal battle with counterfeit watchmakers will not be the end of legal confrontations between counterfeiters and luxury brands, experts say.

Richemont brands such as Cartier, Alfred Dunhill and Roger Dubuis won $100 million Jan. 4 in their case against the Nanyang Technology Company for running Web sites that sold counterfeit watches. Although counterfeiting will continue, brands that actively combat it are likely to make a dent in the industry.

“What the Richemont case signals to the industry as a whole is that when luxury brand owners take a proactive role in combating counterfeiting, especially online and on social media, their efforts pay off,” said Alina Halloran, vice president of global online brand protection services at OpSec Security, Boston.

“This problem is pervasive, but this case proves that if luxury brands aggressively pursue counterfeiters, they will be successful in deterring a large portion of knock-offs from making their way to the market,” she said.

“This is certainly not the last high-profile case we will see this year, as Richemont has helped pave the way for other brands who will likely adopt a similar approach.”

Protecting your image
Luxury brands should incorporate various strategies into their branding efforts to help protect their brands from being counterfeited.

A multipronged brand protection program is critical. Brands should adopt strategies such as security technologies integrated into the product or label, as well as track and trace capabilities and online IP enforcement to monitor Web-auction sites, third-party Web sites, social media and business-to-business trading platforms, per Ms. Halloran.

Brands should also have a team to combat counterfeiting issues that are incorporated into every area of the brand and programs to monitor all production aspects, she said.

Swiss watchmaker Hublot is already taking similar measures to protect its brand by using Wisekey technology to protect products.

The brand is using Wisekey smartcards to provide authenticity assurance to owners who can then use their card to log on to a private Web site where they can read the background and specific details about the watch. The smartcard provides access to a community among Hublot customers who can contact each other through the private Web site (see story).

Hublot's Big Bang gold ceramic watch

Luxury marketers are making strides against counterfeiting, but the battle is likely to continue, especially in the watch industry since there are many high-ticket items.

“It is a battle that can never be won, especially in a category such as luxury watches – a $46 billion-a-year industry,” said Al Ries, cofounder and chairman of marketing strategy consultancy Ries & Ries, Atlanta.

“The biggest losses to companies like Richemont might not be the phony Web sites selling its brands,” he said. “It might be the legitimate retailers that cannot resist the temptation to sell counterfeit brands at enormous markups.”

Protecting your products
Affluent consumers should be encouraged by luxury brands to take a few extra steps when purchasing items to make sure that the product is real.

“Because luxury goods are so coveted and in such high demand, consumers are often willing to overlook even the slightest of red flags, the most common of which is price,” OpSec Security’s Ms. Halloran said. “If an item a consumer covets is found online or on a street corner for a good price and seems too good to be true, chances are it is.”

Luxury marketers should push consumers to their Web sites to do research before purchasing an item.

On the Web site, a brand should have information available so that consumers can easily look over the details of the brand's logo, aspects of the product itself and learn where the product is made since many counterfeit items may be printed incorrectly, Ms. Halloran said.

Brands should also entice consumers to purchase products directly from their Web site or an authorized retailer, so the shoppers know they are buying a certified product.

However, regardless of steps taken to prevent counterfeiting, it is something that luxury brands are likely to be dealing with for a while.

The high price of luxury items makes them desirable by many and seen as profitable by counterfeiters.

“Nobody sells counterfeit Swatch watches,” Ries & Ries’ Mr. Ries said.

“The higher the price, the bigger the opportunity for counterfeiters," he said.

“Consumers should always be careful when they buy expensive branded items.”

Final take

Erin Shea, editorial assistant on Luxury Daily, New York