117 difficult situation in terms of defraying the myth that ‘fakes are fun’ with consumers and will continue to face difficulties in litigation across global markets. Brand owners, such as Burberry are losing their cachet in places like London since the wrong consumer is sporting their fake Burberry’s in the clubs reinforcing the fact that even though this consumer cannot afford the genuine product, the company is suffering revenue losses from brand dilution of its products. The recent divergent outcomes of the litigation filed against EBay for selling counterfeit goods at its internet auction site by both Tiffany’s and Louis Vuitton is testimony to the legal quagmire facing brand owners. In July 2008, after 4 years in the U.S. court system, a U.S. judge declined the liability of EBay regarding counterfeit jewelry sold at its site. However, in June 2008, a French court awarded Louis Vuitton €38 million for failure to block the sale of this luxury goods manufacturers items on EBay. Dr. Stumpf As a result of our recent publication, “Getting Real with Fakes,” in the Wall Street Journal, we were contacted by the Public Relations staff at Hearst Magazines, who informed us about the advent of “Fakes are Never in Fashion” campaign launched in Harper’s Bazaar. Their goal is to raise consumer awareness about identifying a fake and to educate consumers about the human cost of obtaining counterfeit products, such as using child labor, funding terrorist activities, and losing tax dollars and jobs. Their advertisement is very creative, such as their current “Crimes of Fashion” and I understand that they held a successful contest to encourage their readers to send a fake purse to them in exchange for the chance to win a real luxury handbag. Hearst Magazines hosts an annual Anti-Counterfeiting Summit in New York City and provides the “Luxury Report” in its January Issue to further bolster awareness of the key issues. Generating peer pressure to diminish consumer complacency about counterfeits and exposing the unethical practices associated with this market could help luxury brand owners decrease demand for their fake counterparts. You have also studied executive perceptions of counterfeit trade in several different countries. How do company leaders perceive the problem – do they think consumers are aware a product is counterfeit before becoming complicit? What product cues do they think 'tell' a consumer a product is counterfeit? What do executives think drives consumer complicity? What anti-counterfeiting actions do they think will be successful—and might this vary by country or product? Dr. Chaudhry In 2009, I published a book (with Dr. Alan Zimmerman), The Economics of Counterfeit Trade: Governments, Consumers, Pirates and Intellectual Property Rights that provides an in-depth review of a survey we conducted regarding US managerial views of the counterfeit problem, which includes an analysis of the efficacy of an array of anticounterfeiting tactics targeted at governments, pirates, and consumers. One of our major findings in the U.S. study was a difference in anti-counterfeiting stratagems directed at pirates in terms of the level of counterfeiting activity in the country where the firm was experiencing the highest level of illicit trade. In markets where managers perceived a high-level of piracy, firms were more likely to employ tailor-made actions designed to combat the pirates in that foreign market. In addition, the companies were more likely to use lobbying tactics targeted at both the foreign and U.S. government to alleviate the problem of this type of crime. The firm was also more likely to participate in an international organization, such as the World Trade Organization (WTO). Overall, there was a strong indication that managers do not perceive curbing the demand side of the problem as effective. That is, consumer complicity is not regarded as an actionable item warranting significant management behavior. However, the managers do view deterring the pirates to be an actionable item warranting proactive behavior. They are statistically more likely to use the following tactics: lobbying the U.S. government, lobbying the host country government, participating with international organizations, using company enforcement teams to curtail indigenous pirates, and educating their employees about the counterfeit problem. Dr. Stumpf I have interviewed over 300 managers in Australia, New Zealand, Tahiti, South Africa, and the United States about their views of the mounting counterfeit problem. Executives
Villanova School of Business 2009 Media Report