The recent closure by the US Attorney General of a whopping 82 Web sites for selling counterfeit goods has shone a bright new light on the issue of counterfeits and the Internet.
Since its inception in 1995, the online auction site eBay has been criticized by some as being too lax in policing against those trafficking in counterfeit goods.
The action of the Attorney General on Nov. 29, 2010 emphasizes how bogus goods are a much wider problem, and how China is central to it.
The US government went after Web sites peddling products purported to be made by Nike, Walt Disney, Timberland, and the makers of other well-known and lesser known brands. Undercover purchases revealed that the goods were fake, knockoffs made by counterfeiters. Of the 82 sites shut down, 77 were based in China.
China is a great country with an honorable heritage. But along with emerging as an economic power, China has also emerged as the biggest source of counterfeit goods in the world.
The International Intellectual Property Alliance (www.iipa.com) has designated China as the worst country in the world in terms of counterfeiting, with Russia, Italy, Mexico, Brazil, South Korea, Canada, India, Taiwan, and Portugal following in order. The US Customs and Border Protection Agency (www.cbp.gov) indicated that China is the source of about 80 percent of all counterfeit goods seized at US ports.
Many authentic goods are made in China. But Daniel C.K. Chow, a law professor at Ohio State University, has estimated that 15 to 20 percent of all goods made in China are counterfeit.
It appears that China has chosen counterfeiting as one way to economic prosperity. When Japan was transforming itself into an industrial power in the years following World War II, it also competed by making low-cost goods. But for the most part it didn't try to deceive by putting fake labels of companies from other countries on these products and trying to create the impression that these goods were of the same quality as those made by these companies and were warrantied by them.
Chinese officials have been quoted as saying that counterfeiting is the cost that Western companies must pay to be able to do business in China.
Counterfeit goods result in billions of dollars in lost revenue for legitimate companies and taxes for the government. The government's action won't solve this problem, only temporarily disrupt the flow of money to the fakers. Some if not most of the sites that were shut down will likely emerge under different names.
One way consumers can go a long way to avoid buying from a peddler of fakes inadvertently is to stick to the Web sites of manufacturers or to well-known e-commerce sites such as Amazon.com (www.amazon.com), Yahoo Shopping (www.shopping.yahoo.com), and Overstock.com (www.overstock.com).
eBay can also be a great way to shop, with bargains to be had, as well as a great way to sell, with its massive reach. But unless you're an expert in a particular area or with eBay itself, it's safest to buy there from sellers you know or who have been recommended to you by a reliable source.
The experiences of the jewelry maker Tiffany exemplify the frustration of many legitimate companies. Some observers believe that as much as 70 percent of the Tiffany products sold on eBay are bogus. Tiffany has battled with eBay for years to try to stop the selling of these fakes. The US Supreme Court recently refused to hear a case brought by Tiffany against eBay, a decision that other brand-name companies found disturbing as well.
On a more positive note for those opposing counterfeiting, the US government has recently shut down a number of "file sharing" Web sites where visitors could illegally download pirated copies of movies, music, books, games, software, and other intellectual property. The sites had such names as Torrent-finder.com, 2009jerseys.com, and Dvdcollects.com.
Other countries are also trying to slow the counterfeiting surge. A Swedish court recently upheld the conviction of the Swedish founders of The Pirate Bay, perhaps the world's best known, and most notorious, file-sharing site.
Piracy and counterfeiting are related and sometimes one and the same. Pirated music or software may be identical to what you'd buy in an online or bricks-and-mortar store, or it may be degraded or even laden with "malware"—viruses, spyware, and other destructive software.
Opponents of the crackdown against counterfeiting and pirating often rationalize that legitimate goods are too expensive. But if the makers of such goods aren't compensated, they'll stop making them.
Reid Goldsborough is a syndicated columnist and author of the book Straight Talk About the Information Superhighway. He can be reached at firstname.lastname@example.org or reidgold.com.