Two thirds of consumers who have unintentionally purchased counterfeit goods have lost their trust in a brand. Modern labeling and printing technologies can come to the rescue. 

Trade in counterfeit and pirated goods has risen steadily in recent years – even as overall trade volumes stagnated – and now stands at 3.3 percent of global trade, according to a new report by the OECD and the European Union’s Intellectual Property Office.

Fake goods, which infringe on trademarks and copyright, create profits for organized crime at the expense of companies and governments. The value of imported fake goods worldwide last year based on customs seizure data has been estimated at 509 billion USD, up from 461 billion USD in the previous year, accounting for 2.5 percent of world trade. In the European Union, counterfeit trade represented 6.8 percent of imports from non-EU countries, up from 5 percent. To magnify the scale of the problem, these figures do not include domestically produced and consumed fake goods, or pirated products being distributed via the internet.

‘Counterfeit trade takes away revenues from firms and governments and feeds other criminal activities. It can also jeopardize consumers’ health and safety,’ said OECD public governance director Marcos Bonturi, commenting on the report.

Forged items like medical supplies, car parts, toys, food, cosmetics and electrical goods also carry a range of health and safety risks. Examples include ineffective prescription drugs, unsafe dental filling materials, fire hazards from poorly wired electronic goods and sub-standard chemicals extending from lipsticks to baby formula. In a recent survey, nearly 65 percent of consumers said they would lose trust in the original products if they knew it was relatively easy to buy counterfeit goods of that brand. Nearly three quarters of consumers would be less likely to buy products from a brand that is regularly associated with counterfeit goods.

‘Brand protection is a complex problem as it encompasses different publics, products and problematics,’ says Louis Rouhaud, global marketing director at Polyart. ‘Brands are not always ready to pay extra for additional layers of security or trust. It is a mix of marketing too: adding a security seal on a fancy organic drink will certainly drive the sales up, though there is no real challenge to the integrity or quality of the product.’

Opportunities

Digital printing and variable data have helped to more seamlessly include information such as unique identifiers in each label. ‘Flexo presses with digital stations allow for variable information printing with ease, whereas in the past this process would have had to be taken off-line and came with more limits as to what information could be unique,’ says Purdef. ‘The resolution of printing has also improved, allowing for techniques like microprinting that can aid in preventing counterfeit. Additional technologies are in development from several suppliers, many of which can be incorporated into labels. It is critical to stay aware of these and build layers of protection.’

Xeikon and HP Indigo both offer high-resolution digital printing systems, which can be used as the base for microtext, hidden patterns and guilloches.

‘Within our proprietary software – Xeikon X-800 – some unique features are possible, variable patterns, hidden coding and track and trace functionality,’ says Jeroen van Bauwel, director of product management at Xeikon Digital Solutions. ‘Printers can make use of several anti-counterfeiting techniques at low cost, since most of these techniques are part of the production printing process and don’t require extra investments or special expensive fraud detection systems.’

Microtext, particularly when used in conjunction with holograms or other overt security devices, utilizes print down to 1 point or 0,3528mm. This is virtually impossible to copy, duplicate or reproduce and can be used for specific hidden messages or codes introduced into the layout. Invisibility to the naked eye also makes it possible to introduce microtext in linear illustrations or text and other overt layout elements, without the consumer or potential counterfeiter’s knowledge. Using this method, covert messages can potentially authenticate the document or packaging by simple visual enlargement of the element with a magnifying glass. In order to further optimize this feature, microtext can also be used as a security raster in an image or design element.

What to expect?

‘Counterfeiting activities can never be fully stopped,’ says Kay. ‘It’s a “cat and mouse” game, but existing and new brand protection technologies will make it much harder for the counterfeiters to produce fake products that look and feel genuine.’

Brands are looking to take back control of their products and uniquely identify every item – but that is not easy to achieve, as NiceLabel’s Moir points out: ‘The much-heralded move to RFID has not fully happened yet. Businesses have been using more basic technologies like hidden watermarks. The future must be about RFID, enabled by the unique TID number, and fueled further by centralizing cloud environments.’

Cloud and RFID are developing quickly and in tandem. These are the two leading technologies in this space and are likely to continue to be so in the immediate future. ‘Often brands will start with watermarking and move over to cloud and RFID over time,‘ says Moir. ‘Blockchain also has potential, but while there has been much noise around the technology, it is uncertain how it will be applied over the longer term.’

‘Blockchain enabled brand protection technologies will develop with great speed when consumers learn the benefits and trust these new developments,’ argues Kay. ‘Also, a constant evolution of smart phones with better cameras will enable consumers to check the authenticity of products, new brand protection technologies will emerge, and existing ones will improve.’

Engaging with the consumer through smart labels promotes confidence and assurance in a brand. Once the consumer can confirm that the product they are purchasing is legitimate with a valid history, they are likely to purchase from that brand again.