Fakes on the German market: this is how big the burden is in 2022

Oct 28, 2022

Berlin,October 2022. When the days get longer again, counterfeiters get going: In the months of September, October and November, legal disputes on the subject of counterfeiting increase by 60 percent. But to what extent are brands and products made in Germany affected?

In a qualitative survey, the provider of anti-piracy software Sentryc asked 547 decision-makers about their current counterfeiting situation. 112 of them, i.e. 20.48 percent, had been directly affected by product and/or brand piracy in the last five years and thus qualified for the further survey. A particularly large number of experts from the IT, software and hardware sectors took part in the survey, but representatives from the construction, industrial, automotive and financial services sectors also revealed their justified interest in combating counterfeiting. Apart from the slightly larger proportion of B2C companies in this survey, all participants are united by their online product sales: all companies offer their products for sale digitally.

The main findings

- The survey participants rated the danger posed by plagiarism to the German economy at 4.96 and to their own industry at 4.66 on a scale of 1 to 6.

- Only 37.5 percent secure their brands and products in China, while 55.4 percent of counterfeit sales take place in China.

- 44.6 percent of respondents find the most fakes in direct competition.

- The annual damage caused by counterfeiting is between 1 million and 50 million euros for the companies surveyed.

- 65.2 percent confirmed that copies of their products were already in circulation that posed an increased risk to users. 40 percent discovered counterfeits whose production or distribution posed a risk to the environment.

- The majority of fakes found are discovered by companies through the active use of brand protection software.

Many affected
The urgency of taking active action against fakes is shown by the damage done by the survey participants: 20.48 percent of all respondents had been affected by product and/or brand piracy with their companies in the last five years. The multiple answers of the respondents show the situation of those affected. Thus, 54.5 percent report brand piracy, 47.3 percent report unfair copying and 46.4 percent report patent infringements. All other results relate to this group of people and companies affected by product piracy.

In these cases, 50 percent of the criminals copied the external appearance, 43.75 percent components and 40.18 percent the entire product. However, spare parts (31.25 percent) and advertising materials (26.79 percent) are also among the plagiarists' favorites. Even packaging, with 21.43 percent, is not immune to imitation.

Protecting rights
81 percent of those surveyed stated that they had trademark rights - quite a large proportion, which means that they have the basic rights to protect Brand and differentiate it from the competition. 72 percent hold patent rights, which primarily protect technical inventions such as innovative products or processes. This creates a monopoly of use that is limited in time and space. Less than half of the respondents hold unfair imitation rights, which relate to protection against imitation under competition law and supplement the protection provided by trademark registration. Even fewer of the respondents hold licenses for designs, utility models or other rights such as copyrights.

Regional or international?
93.8 percent of respondents registered their intellectual property rights in Europe. This is an important step to protect the local clientele and the company's own image, especially since 61.6 percent of counterfeits are sold in Europe. But most plagiarists work abroad. 49.1 percent of those surveyed secure their rights in the USA. Only in third place, with 37.5 percent, do German companies protect their brands and products in China from unfair copying. The majority of all fakes still come from the Land of the Rising Sun. And according to the survey, 55.4 percent of the counterfeits are sold in China.

25.9 percent fear for their competitiveness in South America, 20.5 percent in Australia. Applications in Africa, Russia and the remaining Asian countries are below 20 percent. Incidentally, Turkey is also high up in the league of plagiarists - but the country does not belong to the scope of theEUIPO , the European Union Intellectual Property Office, which is whyEU rights do not apply here.

Responsible for Brand Protection and product protection
For54.5 percent of the decision-makers, the brand and its image have the greatest impact on the success of the company - the higher the fear of misuse with economic consequences: On a scale of 1 to 6, the respondents rated the fundamental danger posed by plagiarism to the German economy with a score of 4.96. They rated the danger for their own industry as 4.66.

67 percent see an increase in the damage caused by counterfeiting in their own industry since the start of the corona pandemic in March 2020. Only half of the respondents rate the effectiveness of the current laws and regulations in Germany and the EU to combat product and brand piracy as sufficient.

In 23 percent of cases, general management is responsible for counterfeiting and brand protection, in 18 percent the legal departments are responsible. Large companies have their own Brand Protection Unit. In this survey, 11.6 percent assumed this responsibility.

Who is behind the plagiarism?
44.6 percent stated that most plagiarism comes from direct competition.The pressure to innovate seems to drive market competitors to unethical means. In the business sector, customers also plagiarize the goods they need - 36.8 percent of all the companies surveyed said they had identified their customers as product pirates.

In most cases, the damage caused by counterfeiting is extremely high: 24.1 percent report annual losses ofEUR 1 million to50 million. 23.2 percent named a loss of 500,000 to1 million per year, and 21.4 percent of respondents currently expect to lose 100,000 to500,000 euros due to fakes.

In addition to the economic consequences for the company, 60.7 percent of those affected are concerned about the dangers for consumers. 65.2 percent confirm that copies of their products were already in circulation, posing an increased risk to users. Almost 40 percent also state that they have discovered counterfeits whose production or distribution poses a risk to the environment.

Online as the main hub
The participants stated that most fake sales take place on online marketplaces. Wild websites, i.e. online stores that belong neither to a marketplace nor to a company, are also becoming a problem and take second place. Social media now also provide many counterfeiters with a large sales market.

33.9 percent of the fakes, and thus the majority of the fakes found, are discovered by companies through the active use of brand protection software. This is closely followed by time-consuming manual searches with 29.5 percent, which are carried out by internal employees in over 75 percent of cases. However, 25 percent of the unfair copies are still found by chance by customers who inform the company - too high a proportion, which also leads to loss of reputation.

More than 10 percent of those affected do not yet take active action against counterfeiting, despite the horrendous losses caused by it. The most common reason given by respondents for not taking action is the high cost. They pass on the majority of plagiarism cases to their own legal department or file criminal charges, but by then the copy has already been on the market for a long time. Nevertheless, 61.5 percent did not take any action at all against copies and product pirates in the past - today, over 88 percent stand up for their rights. The results of the study show a huge rethink in the management of German companies, both in the examination of the market situation, in the follow-up and in the enforcement of product and trademark rights. Counterfeiting and Brand are coming into sharper focus in terms of profitability and responsibility - to customers, society and the environment.



About Sentryc
Sentryc GmbH is a Berlin-based technology company founded in 2019. The current35-strong team led by managing director Nicole Jasmin Hofmann offers companies a digital solution with its proprietary brand protection software that can be used to detect and stop product piracy and brand abuse on online marketplaces. The online experts provide their customers with a cloud solution that scans websites for products, identifies and documents potential counterfeits, and then automatically reports them for deletion. Renowned companies trust Sentryc's product protection made in Germany. Prioritizing data protection, the company hosts in Germany and operates in a DSGVO-compliant manner. For more information, visit sentryc.com.Follow Sentryc on LinkedIn.