Businesses love the plan – counterfeiting hurts sales and reputation

C. The Damage to Brands Caused by Counterfeiting As the internet aids and abets the sale of counterfeit goods of all types to American consumers, the actual and potential damage to brand owners and their reputations grows more severe. Fraudulent goods are now competing for sales directly with the genuine product, so brand owners are suffering quantifiable revenue losses. Small businesses in particular can suffer massive drops in sales and fall into a death spiral once counterfeits start appearing on sites like Amazon. 35 [*1206] When consumers receive fake products, and are inevitably disappointed in their performance, it erodes the reputation of the counterfeited brand. Since consumers may not recognize the counterfeit as a fake, when it fails to work properly, or falls apart quickly, or does not meet their expectations, they are likely to blame the authentic brand owner. 36 Dissatisfied consumers may spread their view by word of mouth and/or by leaving negative reviews online. 37 Companies that sell to businesses should also concern themselves with counterfeiting because counterfeits have infected the B2B 38 online marketplace. 39 The damage is even more severe when the counterfeit goods result in harm to health or welfare. The threats posed by counterfeits include defective airbags, fake airplane parts, copycat medications with no active ingredients, and contaminated baby formula. 40 Those industries where consumer trust is vital are particularly vulnerable to brand destruction from counterfeits. 41 With counterfeit goods so widespread, and the harm to brands so damaging, it is incumbent [*1207] on trademark owners to be more proactive than ever in policing their brands.