The downside to trademarks: the remarkable counterfeit risk

As all IP managers know, one of the biggest downsides to trademarks is counterfeit risk because the bonafide trademark owner loses rightful sales to fake products

What is mind-numbing is the extent to which counterfeit items touch every major part of the economy, Mike Pellegrino, president and founder of Pellegrino & Associates told those in attendance at his recent Valuation of Early Stage Technologies workshop in San Jose, CA for Management Roundtable. Counterfeit products affect the luggage, software, medicine, cosmetic, shampoo, tea, music, apparel, and even airline parts markets. “Three percent of all airline part replacements are counterfeit goods,” he said, making people think about just how safe their airplane ride home was going to be.

And since counterfeits can destroy trademark value, companies go to great lengths to try to prevent them. Pellegrino added that Tiffany & Co., for example, budgets $3.5 million per year on counterfeit tracking, and that doesn’t include the cost of market share losses and litigation expense.

Be sure to join Mike Pellegrino on Valuing Early Stage Companies in a BVR webinar on Thursday, April 26, 2012, 10:00am - 11:40am Pacific Time.