By Gary Symons
TLL Editor in Chief
The recent seizure of 3,000 fake Gibson guitars highlights the need for IP security measures, says JPatton Business Development Manager Franco Diaz.
The counterfeit guitars, had they been genuine, would have been worth $18.7 million, which would put a sizeable dent in the revenues of the legendary American guitar producer.
“Brand owners should be performing a risk assessment as a first step,” Diaz says. Specific to those results, the application of distinct anticounterfeiting features to their product/product packaging in a layered format. Overt, covert and forensic (measures) should be considered.
“Another tactic that can be utilized, especially for high risk products/industries like golf clubs, spirits and so on, is to be involved with the specific industry’ anti-counterfeiting working groups and coalitions,” Diaz adds. “The purpose of these groups is to learn from each others experience, devise mutual anti-counterfeiting initiatives and to make the public aware of their efforts to protect them and make them aware of the problem.”
JPatton is a top provider of licensing software, with a strong focus on IP protection measures that combine both physical protection measures and software solutions. Those types of solutions are increasingly used in the brand licensing industry due to organized crime organizations running massive counterfeiting operations.
In the United States alone, in 2023, CBP seized 19,724 shipments containing goods that violated Intellectual Property Rights (IPR). Those resulted in the seizure of nearly 23 million counterfeit goods. The total manufacturer’s suggested retail price (MSRP) of the seized goods, had they been genuine, was over $2.7 billion (USD).
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It’s not known how many counterfeit goods successfully make it into the US and global markets, but the total impact on the brand licensing industry is known to be tens of billions of dollars at least.
That makes it particularly important for brand owners and their licensing partners to protect themselves from damage to their reputation, Diaz says.
“The licensing industry is especially susceptible to counterfeiting and other similar illicit activities such as grey market (items) and product diversion,” he explains. “This is because strong brands with consumer good offerings tend to be high volumes, culturally popular, and at an acceptable price point.”
Officials involved in the Gibson guitar operation say it is the “largest counterfeit musical instrument seizure on record.”
The operation was conducted by U.S. Customs and Border Protection officers, assisted by Homeland Security Investigations special agents and Los Angeles County Sheriff’s Department detectives. The agency announced Tuesday, December 3, that they seized over 3,000 counterfeit Gibson electric guitars.
“These fraudulent guitars may look and feel legitimate for unsuspecting consumers buying them from third party online sources, street markets, unauthorized retailers, and person-to-person transactions,” CBP Los Angeles Field Operations Director Cheryl M. Davies said in a statement. “As we approach the busy holiday shopping season, consumers should pay attention on where they are buying these goods and how much they are paying, and if is too good to be true it probably is.”
Federal officials say they have seized thousands of counterfeit Gibson electric guitars at the Los Angeles-Long Beach Seaport.
Officials involved in the operation says it is the “largest counterfeit musical instrument seizure on record.”
The operation was conducted by U.S. Customs and Border Protection officers, assisted by Homeland Security Investigations special agents and Los Angeles County Sheriff’s Department detectives. The agency announced Tuesday that they seized over 3,000 counterfeit Gibson electric guitars. Authorities said those counterfeits, had they been authentic, would have had a value of more than $18.7 million.
“These fraudulent guitars may look and feel legitimate for unsuspecting consumers buying them from third party online sources, street markets, unauthorized retailers, and person-to-person transactions,” CBP Los Angeles Field Operations Director Cheryl M. Davies said in a statement. “As we approach the busy holiday shopping season, consumers should pay attention on where they are buying these goods and how much they are paying, and if is too good to be true it probably is.”
At a news conference Tuesday, authorities displayed some of the counterfeits on tables while others remained in boxes stacked in dozens of rows inside the warehouse. The seizure was a result of a multiagency investigation, in which federal and local authorities intercepted the suspected cargo that was arriving in ocean containers from Asia, according to CBP.
CBP officers in coordination with HSI special agents and LASD investigators caught the cargo arriving in ocean containers from Asia. CBP’s Consumer Products and Mass Merchandising Center of Excellence (CPMM) assisted in estimating the MSRP of the shipment. Gibson confirmed that the guitars intercepted were in fact counterfeit, noting that authentic Gibson guitars are made in the U.S.A. only.
Homeland Security says the seizure of counterfeit goods not only protects companies, but also consumers and workers, as well as denying illicit revenues for criminal gangs.
“Intellectual property theft is not a victimless crime. Victims are American consumers, businesses, trademark holders and people who manufacture and sell legitimate products. Often, the illicit proceeds resulting from the sale of counterfeit or unlicensed products are funneled back to support a broad range of illegal activities,” said HSI Los Angeles Deputy Special Agent in Charge John Pasciucco.
The bust was extremely important for Gibson. The American brand, along with Fender, is at the very top of guitar brands globally, and among the top brands for musical instruments in general. The Les Paul model in particular is legendary for its quality since it was designed and introduced in 1952.
Gibson says the seizure strikes a blow against counterfeiters whose crimes damage the company’s brand.
“We are grateful for the hard work that our U.S. CBP officers, HSI special agents, and the Los Angeles County Sheriff’s Department investigators are doing to stop counterfeiting,” adds Cesar Gueikian, CEO of Gibson. “Our partnership is designed to help every agency work together to protect consumers and our fans from being misled into counterfeits.”
“This is really emotional and personal for us not only because of the protection of our players, but because of our Gibson team at large, including the artisans at our craftories in Nashville, TN and Bozeman, MT, who are generations of American families that have dedicated their entire lives to handcrafting Gibson instruments,” added Beth Heidt, Chief Marketing Officer at Gibson. “As Gibson celebrates its 130th anniversary this year, we are proud of our legacy of quality and craftsmanship, legendary music partnerships with our artists, and our efforts to promote and create more musicians that continue to shape the sounds of generations of musicians and music lovers across every genre.”
Diaz notes that neither American law enforcement nor brand owners have the ability to stop counterfeiting at source, as the vast majority of counterfeit items are produced offshore.
The CBP notes that criminal organizations from two countries in particular have been an issue for IP violations. Seizures of counterfeit goods from China and Hong Kong accounted for 46% of counterfeit seizures and an astounding 84% of the value of counterfeit seizures.
Instead, companies need to fight to preserve their brand value at the retail level, with technologies that ensure the real products can be easily and definitively identified as legitimate.
“The technologies that help deal with counterfeits are numerous, but the resulting effects are classified as ‘overt’, or visible to the naked eye; covert, or visible with minimal training and the use of simple tools like a magnifying glass or flashlights of varying wavelength, for example;, and forensic, which requires high level training and the use of laboratory-level equipment,” Diaz says.
“Furthermore, the technologies can be broken down as physical and digital. Physical anti-counterfeiting features are often applied via printing / prepress with in-house technologies like micro or nano text, varnish knockouts, security inks or taggants,” he adds.
Taggants are chemical or physical markers added to materials to allow various forms of testing or detection.
In more recent years, advances in digital technology have given the IP security industry new tools that simplify the task for brands.
“From the digital perspective we are speaking of smartphone capable authentication technologies that utilize proprietary apps to authenticate invisible marks applied during the prepress stage, or even authenticating microscopic physical features on the packaging substrate,” Diaz says. “As well, since we are speaking about digital technologies, one must include “online” brand protection, which monitors and detects IP infringements and counterfeiting worldwide.”
Gibson makes its electric guitars exclusively in U.S. factories in Nashville and Memphis, Tennessee, and its acoustic guitars in Bozeman, Montana. None of its products are made outside of the United States. It sells more than 170,000 guitars annually in more than 80 countries.
At the news conference, Heidt provided tips on how to spot a fake guitar. Heidt noted that the logo placement on a counterfeit may look off or that the logo may have a bleed.
“We can pick it up immediately and tell,” Heidt said. “If you can pull up a picture of it, Gibson, look at the site. If you’re going to compare: They don’t have correct inlays. The weight of them, it feels more flimsy. There’s finish issues.”
Diaz says that type of information is an important part of the security plan for companies. He advises against including information about security measures being used, as that can tip off the counterfeiters.
“It has to be implemented without alarming, scaring customers away from your product, because it “might” be counterfeit,” he adds. “Furthermore, you can’t provide information that can help counterfeiters get around the features you are alerting customers about.
“Instead, the brand needs to stress through marketing that the customer should only buy from legitimate distributors/resellers.