Counterfeit goods continue to plague industries worldwide. High growth in counterfeiting over the next few years is expected to drive significant expansion in the anti-counterfeiting market, especially as governments implement new global enforcement measures.

Counterfeit goods pose a serious threat to a company’s bottom line, siphoning sales and profits, but they can also present a wider danger to the public, particularly when the products being faked are vital to consumer health or security. Counterfeiting has been on the rise in recent years, and new research suggests that continued increases in forged goods will lead to corresponding growth in the anti-counterfeiting market.

According to a report last month from industrial research firm ARC Advisory Group, the anti-counterfeiting and brand protection (ABP) market is expected to expand globally between 2010 and 2015. Although the ABP market has already experienced significant expansion over the past few years, rising demand for ABP software and services is likely to yield 15 percent annual growth over the next five years.

The forecast for rapid growth in security methods indicates that counterfeiting is also likely to continue rising at its current rate. This means that many companies, especially goods manufacturers, must not ignore the potential risk of having their products forged or copied.

A 2009 study by the Organisation for Economic Cooperation and Development (OECD) estimates that the value of counterfeit and pirated goods in international trade totaled more than $250 billion in 2007, up significantly from about $100 billion in 2000. As a percentage of world trade, counterfeit goods increased from 1.85 percent in 2000 to 1.95 percent in 2007.

“Manufacturers cannot afford to take a chance on counterfeit products infiltrating the supply chain,” Janice Abel, a principal analyst at ARC Advisory Group, said in an announcement of the company’s findings. “This is especially important if the counterfeit is a risk to safety, health or liability. Manufacturers must secure their supply chains to deter counterfeiting; it’s not worth the risk not to.”

The ARC report explains that among the major factors in the current proliferation of counterfeit goods are websites and other cyber-security elements that enable counterfeiters to both access sensitive information and distribute their forged products through a wide range of channels.

“The Internet has fueled the counterfeit market which in turn has stimulated the demand for ABP solutions,” Abel added.

Counterfeiting methods are becoming more complex and difficult to track, spreading through the supply chain into nearly every industry and product category. “Almost no product or nation is immune to this phenomenon,” according to the report.

“Some counterfeit products are packaged and labeled or re-labeled to look like real brand-name and generic products to deceive consumers into thinking that they are buying the authentic product — be it medicine, food or fertilizers,” ARC Advisory explains. “Counterfeit products are a real and growing threat for almost all manufacturers.”

However, anti-counterfeiting technology is also becoming more sophisticated to help meet the new series of threats. The ABP market now encompasses human-readable markers, machine-readable markers, printers, applicators, authenticators, track and trace software, serialization and e-pedigree software.

“The Internet and the increase in counterfeit products will continue to stimulate the market to employ ABP technologies and deter counterfeiters,” Logistics Today reports. “This will be especially true as government regulations and requirements are standardized for compliance and supply chain visibility.”

Earlier this week, negotiators from nearly 40 countries finalized the text of an international agreement to help coordinate efforts in fighting counterfeit and pirated goods. Known as the Anti-Counterfeiting Trade Agreement (ACTA), the new initiative aims to set clearer standards for intellectual property rights across borders and establish better enforcement policies between signatory nations.

In addition to the United States (which this year introduced a set of domestic anti-counterfeiting measures), ACTA measures are being enacted by Australia, Canada, Japan, New Zealand, Singapore, South Korea, Switzerland, Morocco, Mexico and the 27 member states of the European Union.

“The current text still needs approval and ratification by each of the negotiators’ legal teams, assemblies and, in the case of the EU, member states — a process that may take until late 2011 to complete,” Reuters reports. “The countries hope large trading nations such as China, India and Brazil will eventually join the pact.”

Earlier

Counterfeit Parts Infiltrate Aerospace Projects

U.S. Unveils Plan to Combat Counterfeit Goods

Protecting Your Business from Cyber Threats

Resources

Anti-Counterfeiting and Brand Protection Market to Grow About 15% Annually
ARC Advisory Group, Oct. 29, 2010

Magnitude of Counterfeiting and Piracy of Tangible Goods: An Update
Organisation for Economic Cooperation and Development, November 2009

Anti-Counterfeiting Market Will Grow 15% Annually
Logistics Today, Nov. 8, 2010

Anti-Counterfeiting Trade Agreement
Office of the U.S. Trade Representative, Nov. 15, 2010

Countries Finalize Anti-Counterfeit Trade Pact Text
by Juliane von Reppert-Bismarck
Reuters, Nov. 15, 2010