The Commerce Commission has recently cautioned consumers to be
alert to the sale of possible counterfeit clothing and footwear on
the Trade Me website after issuing more than 70 warnings. The
traders have been warned that they risk committing an offence under
the Fair Trading Act if they are selling or offering for sale goods
that are not genuinely manufactured 'labelled' items.
"Selling counterfeit goods harms both the consumer and
legitimate businesses," said Adrian Sparrow, Commerce
Commission Director of Fair Trading. "Consumers have a role to
play and should exercise caution if offered a well known brand at a
low price. If you are paying $50 for a brand name item that usually
retails new for $200, instead of getting a prestigious label at a
bargain price, it is more likely that you are paying over the odds
for a cheap knock-off. The best way to ensure that you are getting
the genuine article is to buy from an authorised dealer."
The Commerce Commission sent the warnings in response to a
complaint laid by Trade Me after Trade Me's security tools had
identified a number of potentially counterfeit items on offer via
the website. The identified traders have been banned by Trade
There are competing views as to the social and economic impact
caused by the sale of counterfeit product. From a social
perspective, much organised crime is funded from counterfeiting
activities, and there are public safety issues involved with
counterfeit drugs, car parts and toys. From an economic
perspective, right holders object to third parties free riding on
the effort that they have made in developing and promoting a
product or brand, which costs can often only be recovered via the
premium prices genuine goods can sometimes command. They also claim
that cheaper (often inferior) copies denigrate the value of the
original - a problem particularly pronounce when a product relies
upon cost and limited supply to enhance its desirability (think
Hermes' Birkin Bag). On the other hand copying has been shown
in some cases to increase the market for the original product. When
US3 illegally sampled Herbie Hancock's Cantaloupe
sales of Hancock's back catalogue increased exponentially.
What do you think about counterfeiting? Is it wrong for me to be
able to buy a fake Rolex when I can't afford the original? If
my fortunes change and I can afford the genuine product am I more
or less likely to by a genuine Rolex having become accustomed to
the look and design ie can counterfeiting actually grow the market
for genuine product? Is an action under the Fair Trading Act
appropriate when most consumers are aware by the price that they
are paying that the product is not genuine ie does counterfeiting
meet a market need the original can't? What other responses
from the Government or right holders might be appropriate?
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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