Aston Martin recall shows all firms must be wary of counterfeiting

However, Aston Martin?s announcement this week that it will recall 17,590 of its cars shows that the problem is not confined to designer goods and sportswear: counterfeiters will copy anything where there?s a chance of making a decent margin.

Automobile parts are in fact a classic area for counterfeiting, which carries a real risk of serious injury or even death. Garages that fit counterfeit parts, even if innocently done, also risk product liability claims. 

According to the Trading Standards Institute, police in Dubai arrested a gang planning to flood the UK market with 45,000 oil and fuel filters last year. These were counterfeited to look like genuine General Motors, Honda, Mazda and Toyota parts.

The principal cost of counterfeiting is normally reckoned to be brand and reputational damage, especially where it involves brands as synonymous with luxury as Aston Martin. But the Aston Martin recall also shows how counterfeiting can give rise to massive direct costs too.

While there is a flourishing domestic counterfeit manufacturing sector, the vast majority of counterfeit goods come from overseas. The European Commission’s most recent customs report says that over ?900million worth of goods suspected of infringing intellectual property were seized on EU borders in 2012, with China being the leading country oforigin for such products.

Do the short term savings gained by parts manufactured in low-cost jurisdictions which are also, typically, those with major counterfeiting problems and weak IP enforcement outweigh the increased risk of counterfeiting? Aston Martin?s decision to move the supply chain back to Britain following recent events suggests not, at least for them.

All businesses need to be on guard for counterfeiting risks, whatever their sector.

Though the risks are different for retailers, wholesalers and manufacturers, the following points should assist in combating counterfeiters:

• Supply chain management is crucial. This may mean more investment up-front in sourcing components and monitoring suppliers, but it?s worth the cost

• Review contract documentation for IP indemnities

• Be very wary of any deals which seem too good to be true; this may indicate counterfeit product

• Rapid action needs to be taken on discovering a counterfeiting issues; brands in particular cannot afford to be seen as ?soft touches? for counterfeiters

• Use a ?mix-and-match? anti-counterfeiting strategy; techniques like customs seizures and private prosecutions are useful supplements to suing for trade mark infringement or informing Trading Standards.

Susan Hall is a Partner in the Intellectual Property team at national law firm Clarke Willmott LLP.

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