Counterfeits harm the economy
Ani Khachatryan, 2023 – JD, 2Pepperdine University School of Law. “The Digital Dilemma: Counterfeit Culture And Brand Protection Reform In The ECommerce Era”, 43 Loy. L.A. Ent. L. Rev. 247 (2023). Available at: https://digitalcommons.lmu.edu/elr/vol43/iss3/2 //DH
Counterfeit goods impose several harmful costs to manufacturers.92 First, they devalue manufacturers’ investments in innovation and infringe their intellectual property rights.93 Sellers providing counterfeit products charge lower prices, resulting in the “perceived devaluation of the real products.”94 In addition, counterfeits damage brand names and business reputations by infringing trademarks and confusing consumers with respect to the quality and source of products and services.95 The presence of counterfeit goods forces businesses to expend valuable resources on “policing platforms” and brand protection, which diverts funds from product improvement, technological development, wage growth, and job creation.96 Consequently, several luxury brands have stopped selling their products directly to online marketplaces like Amazon. As a result, Amazon now relies on thirdparty vendors to stock these products on its platform instead.97 Most importantly, counterfeiters become competitors of legitimate businesses, slicing up their sales and market shares by freeriding on investments in research and brand development.98 For example, the presence of counterfeit Nike goods on Amazon was financially damaging because counterfeiters profited from undercutting the company through the extensive sale of popular shoes such as Air Jordans, which cost $200 a pair.99 As such, counterfeit goods threaten to diminish U.S. economic growth.100