AGMA Global 4 Pillars Overview:

An effective intellectual property (IP) protection program will vary according to industry, products, route-to-market, and strategy—as well as the geographical areas in which a company conducts business. However, all effective IP protection programs are well-tailored to the specific brand protection risks a business face. A brand owner’s program may address the four distinct threats—gray marketing, counterfeit, service & warranty abuse, and digital IP theft—differently or to varying degrees. A comprehensive brand protection strategy will address exposure of the brand and provide for aggressive defense against perpetrators of fraud, abuse and illicit schemes.

AGMA Global’s charter focuses on 4 distinct threats, called ‘pillars’: gray marketing, counterfeiting, service and warranty abuse, and digital IP theft. Below is information related to those 4 pillars.

4 Pillar Infographic

Grey Marketing

Gray marketing is the sale of genuine branded products that have been diverted from authorized distribution channels or imported into another country/ territory without the consent and knowledge of the brand owner. In contrast to black market goods, which are stolen or counterfeit, gray market products are not necessarily illegal—although trading in goods can violate laws, including infringing on trademark rights. The gray market can also contribute substantially to lost revenues and damaged brand reputations.

Due to the nature of gray marketing, taking decisive civil and/or criminal actions can be challenging, especially in certain geographies. Additionally, the detrimental effects of gray marketing on brand value can be difficult to accurately measure and calculate. Gray marketing is a huge, billion dollar-plus global issue, and a very real threat to AGMA members. The most commonly gray marketed products are small, valuable and standardized goods—commoditized products of widely recognized value that can be cheaply moved and sold anywhere. These attributes make items such as ink and toner cartridges, hard drives, switches, servers, memory modules, and other technology products among the products that appear in the gray market most often.

Gray marketers exploit pricing differences, control weaknesses, and lose discount practices to make profits at the expense of brand owners and their authorized partners/customers.

Counterfeit

Counterfeits are non-genuine goods that infringe on the intellectual property of rights holders. Counterfeiting is a deliberate intent to deceive buyers by copying and distributing goods bearing trademarks without authorization from trademark owners. The act of counterfeiting is often carried out as a deceptive practice to benefit from another’s belief that imitation is real.

From a legal perspective, such reproduction/imitation is illegal when an Intellectual Property Right (IPR) is infringed. Typically, there is an IPR violation when a registered trademark or trade name is used. Counterfeiting can occur on products, labels, packaging, or anywhere there is a trademark violation. Counterfeits lead to monetary losses and degraded brand equity for manufacturers and can harm their customers as well. Counterfeit is more than the theft of a company’s intellectual property: counterfeit products are often substandard and can pose health and safety risks. They also carry the potential for financial losses to the (unsuspecting) customers who purchase them.

Counterfeit goods generally fail to meet the full range of product specifications and performance standards. All these factors combined point to counterfeits as a real danger to all AGMA member companies and their product ecosystems.

Service and Warranty Abuse

Service and warranty abuse is defined as the sale or use of services and support without proper entitlement or authorization, including actual equipment replacement, technical support and/or software without proper warranty or entitlement contract—generally with the intent of benefiting from defrauding the provider. In other words, service abuse is service usage by a party that is not entitled to receive the service. Every brand-owner company or Service Provider Company is at risk for warranty and service abuse and should be prepared to protect itself from the negative impacts of such activity.

The consequences of service abuse include decline in customer confidence and company reputation, increased service costs, loss of service revenue, increased gray market activity, loss of new product sales and increased R&D costs. The real impact or cost of service abuse is difficult to quantify, and the absence of real efforts to mitigate the threat appears to encourage more audacious fraud schemes. Moreover, impacts to brand reputation, customer service, intellectual property, and other less tangible or quantifiable business assets further complicate total loss estimates.

The abuse can be simple (e.g. a customer demanding warranty service on an expired service plan) or very complex. The submission of fictitious warranty claims is the most common fraud scheme and is used to get free spare parts or undeserved labor payment from a service provider or manufacturer. Companies relying on aging infrastructures with vulnerabilities and lack of control are particularly exposed to it. Other factors that increase risk are incomplete records, business systems and processes that are not fully integrated and/or are inadequate.

Digital IP Protection

World changes particularly over the last decade have led organizations to build more of their offerings to be delivered online, especially in the technology industry. Even physical hardware products often rely on online services or digitally delivered software to gain full access to functionality. Over the same time, not surprisingly, attacks on the internet and other methods of digital delivery have grown exponentially.

This reality means every company must stay vigilant in protecting their digital intellectual property. More than just a cornerstone of innovation and technological advancements, digital IP represents the most rapidly growing portion of the global economy— making it an especially attractive target for criminals. In 2021, Cybersecurity Ventures estimates that cybercrimes will impact businesses across the globe to the tune of $6 trillion annually—the University of Maryland calculates that as one malicious attack every 39 seconds. Every company with digital assets— from software to music to firmware, and everything in between, is at risk. Due to digital IP’s intangible nature, protecting it is an especially difficult task that comes with its own unique challenges.