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A brief history of counterfeiting

Posted by Gordon Mcconnell on Tuesday, Aug 16, 2016

Counterfeits manufactured in mass scale is not a new phenomenon and has its roots in Europe. What parallels can we see in counterfeiting techniques used today and that of 200 years ago?

counterfeitindustryhistory

Counterfeiting has its origins in a time when Europe ruled most of the known world and a handful of countries competed for the top dog position. They were will willing to do anything to gain or keep a commercial edge, so counterfeiting became widespread and even an encouraged form of enterprise.

The history of trademarks

The Netherlands were, for many years, the world leader in the technology of machine production. However after having a markedly open-door policy to foreign workers and technology-sharing the country began to see its competitive edge slowly being filed away. In 1751 the government finally implemented a law prohibiting the export of machinery and emigration of key skilled workers, but much of the damage had already been done. The U.K., the most powerful country in the world at that point, had been more wary of losing it's advantage over rivals. It had created a string of laws from 1719 to protect machinery and keep hold of skilled workers; in fact there was an outright emigration ban on high-value workers until 1825.

The empires of Europe grew increasingly competitive, in some cases allowed key technicians to leave their countries as industrial spies, with the offer of large rewards for securing specific technology. Most countries had patent laws, however they either usually required little proof of originality or deliberately didn’t recognise foreign technology. In fact, the U.K., France, The Netherlands and Austria all explicitly condoned the practice of patenting foreign technology until 1852. The U.S.A. didn’t acknowledge foreign patent rights until 1891.

A good example of this copyright mess can be seen in the invention or rather the patents held for the light bulb. Thomas Edison held all the relevant American patents however there were also multiple British, Italian and other American inventors who arguably created aspects of the light bulb. There were extensive disputes over whose patent infringed on whose, and to settle eventually Edison merged his company with that of British chemist Joseph Swan, to combine their Intellectual Property (IP) claims.

The history of counterfeits

From this point counterfeiting and IP theft became more widespread, as opportunistic "inventors" discovered the gap in the market for ripping off others' work. The increasing cost of the Empire and strained international relationships meant that international cooperation was in a slump and industrial espionage was the norm. During the 1890's, Germany were about to overtake Britain as the world leader in technology, and British companies regularly complained about seeing their technology used in German manufacturing. However the Germans complained that there was still no patent law in Switzerland, where the industries were regularly stealing German industrial chemical technology and as you can imagine, the list goes on.

This happened in spite of the fact that since 1862 Britain had the “Merchandise and Mark Act”, the first trademark law, and an addition in 1887 added that products must detail their country of origin. This was aimed at German manufacturers who for years had been creating fake Sheffield cutlery, complete with fake trademark. This law made it illegal to essentially, what we now call, counterfeit a product and mislead businesses and consumers. However the German industries were quick to create workarounds in order to gain access to one of the richest and biggest consumer markets at the time. One of the first cases was the placement the country of origin only on the packaging, meeting the trading standards but when the product was removed it was impossible to tell where the product was from. Companies would also have some minor construction of an almost completed product done in the U.K. so they then warranted the “Made in England” stamp, popular in bicycles for example. Even more inventively, the “Made in Germany” stamp, would be placed in such a difficult position that it was practically impossible to see; “North British Sewing Machines (a German company) placed the country of origin stamp underneath the object which would take 4 people to lift. 

We can draw many parallels to modern day practice, with the main perpetrators today Chinese firms. They account for over 80% of all counterfeit good production. The pattern reveals itself in a very similar format as before: From Chinese companies with Italian-sounding names to products falsely stamped with Made in Italy, some practices have lasted the test of time. There are also outright accusations of industrial espionage form multiple western countries, the U.K. most recently.

Conclusion

There are huge similarities but there are also stark differences. Counterfeited version of nearly every type of product are now available almost immediately. We live in a digital, globally-connected age where e-commerce is growing at almost 20% per year. Consumers now purchase directly from the manufacturer in many cases, mailing single item purchase directly to their home. There’s little customs and border controls can do short of searching every package to stem the flow of counterfeits. The creation of international counterfeit law and enforcement has taken hundreds of years for Europe, but the question now asks, how long will it take China? The internet accelerates the pace of change and the severity of impact, only time will tell as to how this counterfeiting saga will play out. However one thing we know for sure is that the only real preventative measures must adapt with the times; relying on border seizures is a little 1800's. 

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About the author

Gordon Mcconnell

Post Written by Gordon Mcconnell

Gordon leads our content team as editor but considers himself a data journalist, who probably has a high midichlorian count. Gordon loves all things inbound-marketing and enjoys talking about the latest tools or changes in the SEO world, much to the irritation of his team.