Counterfeit Components: Impact and Consequences

In any business setting, intellectual properties (IPs) are as important as the physical assets. Unlike the tangible assets such as office equipment, intellectual property is a collection of concepts and ideas. Intellectual properties comprise of assets such as trademarks, identities and brands and plays a significant role in business marketing. In fact, successful corporates are spending a fair amount of time, energy and resources to protect their IPs from counterfeiters. However, despite all this efforts counterfeiting remains a great challenge in the market. Counterfeit products are non-genuine goods produced to copy those of the trademark owners whose mark has been used unlawfully. Trade in counterfeits products have turned costly globally forcing a substantial number of governments to formulate policies to protect legitimate businesses and punish infringers. For example, approximately the American economy losses over $250 billion every year and about 750000 American jobs due to counterfeiting. The consumers and legitimate business owners are the other victims of use of counterfeit components.

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Definition of Counterfeit as Used in Machine Components

Any product is prone to counterfeiting as long as the illegitimate income is attractive enough. Counterfeiting of either mechanical or electrical parts is the unauthorized or unlawful simulation, alteration or substitution of a machine part that has been knowingly misidentified to be authentic from the original manufacturer (Lewis, 2011). The purported component may not be a convincing replica of the copied product but may vary on quality and deceptiveness. Also, counterfeiting of machine component may involve the use of direct written authority of the original manufacturer. The use of illegal part substitution includes representing used parts as new and giving false credentials of grades, lot number, serial numbers, or performance characteristics. Therefore, counterfeit components are those items manufactured and distributed against intellectual property laws such as trademarks and other international property rights. Mostly, the manufacturer or the resellers of these parts document the origin and the misleading characteristics of these components.

Effects of Counterfeit Components in Electrical Preventative Maintenance Programs

Electrical equipment failure accounts for massive monetary and business losses. The electrical infrastructures continue to age the problem is likely to worsen with time. However, the good news is that the implementation of routine preventative maintenance programs reduces the rate of machine failures. For instance, the use Electrical Preventive Maintenance (EPM) allows companies to schedule their system outage at the most convenient time rather than correcting problems resulting from ultimate system failure. Nevertheless, the success of EPM is a challenge due to the increased use of counterfeit components. Numerous companies have suffered from the use of counterfeit components through the intrusion of discrete electronic parts, microcircuits, and assembled circuit boards among other equipment. The counterfeits find their way into numerous products from aircraft to cell phones jeopardizing the lives of employees and those using electrical appliances.

Imitated parts also cause operation failure due to increased downtime. Every company has its target, and any shutdown, especially for a manufacturing line, will cost the business contra to the aim of the EPM. In most of the companies, external professionals are entrusted to carry out the checkup, preventative maintenance and implementation of EPM programs. Some of these specialists end up losing their jobs and contracts because the parts they end up replacing fails to meet the desired outcomes (The Global Impact of Counterfeit Electronic Components, 2015). Therefore, the entire EPM program loses its reliability and can no longer support the productivity of the business. Also, among the hard felt impacts of counterfeits components is negative cost and schedules. Since the EPM is a form of planned maintenance the time set up to carry out the inspection does not have any positive impact on the systems will eventually fail despite the efforts and the cost incurred to prevent system failure.

Incidents Where Counterfeit Components Were Used and the Consequences

In the fight against counterfeiting, the Abu Dhabi police with the help of the public arrested a gang of counterfeiters for selling fake electric water equipment and confiscated a lot of counterfeit products. Their agency was known for importing electric pumps, filters, and heaters. However, the gang decided to distribute counterfeit goods by posting fake trademark stickers on them as instructed by their manager in their home country. The agency used to import products from an Asian country and replace their brands with those from European countries. The consequences were significant sales of about Dh 3.23 million in a year (Khamis, 2014). However, the consumers were dissatisfied with the product raising concern, which leads to an investigation and eventually the arrest of the offenders.

In another case in Dubai, counterfeit car parts were seized in the year 2015 valued at Dh30million. The confiscated products were motor oil, lubricants, brake pads, discs, and fuel filters among other products with the Al Futtaim Motors trademarks (Hanif, 2016). The consequences of using fake vehicle parts are deadly as it endangers the lives of both the passengers and the drivers. Therefore, to counter this menace the Al Futtaim Motor have to spend large sums of money to conduct some of these raids. Also, educating and creating awareness to the public on the importance of using genuine and manufacturer approved parts on a vehicle is still costly. The success of this company to control its legitimate manufacturing rights received a boost from organized exhibitions and training government officials who remain keen in spotting fake products.

In 2011, fake electronic parts were sold to the U.S military. An investigation by the U.S senate revealed that there were about 1800 counterfeit electronic products that were sold ("Counterfeit Aircraft Parts Archives - Havocscope", 2017). Most of the counterfeit items (70%) were traced to be from China. They were used on aircraft such as the Air Force C-17 and weapons and they led to a decrease of the reliability of the military weapons systems of the U.S.

Importance of Knowing the Source and Manufacture of Items Used as Replacement Parts

Due to adverse impacts from the use of counterfeit goods and parts for replacement, businesses are emphasizing on ensuring that every consumer is using genuine products to meet their needs. It should start by learning the source and the origin of the manufacturer. The awareness of this essential information will help in facing the growing market of counterfeit goods. Second, the effects of counterfeiting affect both the individual firm and the society as a whole. As a consumer, you end up buying a fake product unknowingly but suffer from personal injuries and dissatisfaction. Also, if you are not keen, you end up confused on avenues for redress (Lewis, 2011). Therefore, having some elementary information regarding the manufacturer will save consumers from these misfortunes.

In conclusion, counterfeiting is depriving legitimate manufacturers their rights. They invest in research, development, manufacturing and marketing of quality materials but their entire effort ends up benefiting counterfeiters. In the global market, counterfeiters are the primary competitors of legitimate businesses after all the efforts in building brand recognition and good will with the consumers. The most discouraging thing is that despite suffering from direct loss of sales, they face irreparable damage to corporate reputation and trademark dilution, which ultimately lead to the collapse of some of the affected businesses. Therefore, governments should join hand to formulate and enforce anti-counterfeiting policies to protect legitimate businesses and consumers from deceitful investors.

References

Counterfeit Aircraft Parts Archives - Havocscope. (2017). Havocscope. Retrieved from http://www.havocscope.com/tag/counterfeit-aircraft-parts/

Hanif, N. (2016). More than Dh30 million worth of fake car parts seized during UAE raids | The National. Thenational.ae. Retrieved from http://www.thenational.ae/uae/courts/more-than-dh30-million-worth-of-fake-car-parts-seized-during-uae-raids

Khamis, J. (2014). Report traders of fake goods. GulfNews. Retrieved from http://gulfnews.com/news/uae/crime/report-traders-of-fake-goods-1.535631

Khamis, J. (2014). UAE News with in-depth reports from Dubai, Abu Dhabi, Sharjah and across the emirates.. GulfNews. Retrieved from http://gulfnews.com/news/uae?_refresh=true

Lewis, K. (2011). The fake and the fatal: the consequences of counterfeits. The Park Place Economist, 17(1), 14.

The Global Impact of Counterfeit Electronic Components. (2015). NTS News Center. Retrieved from https://www.nts.com/ntsblog/global-impact-counterfeit-parts/