When we talk about counterfeiting, we do not mean the scenario whereby an individual makes an unauthorized copy of an item in the comfort of his home. While this may well be a blatant infringement, the end result is that a lone item has been created for use by its maker (indeed, this convergence between manufacturer and consumer is one of the defining characteristics of 3D printing). Seen in this way, such unauthorized copying is simply the most recent manifestation of the time-old question: how do we deal with technological advances in our ability to make reproductions? Rather, the question addresses a very different issue: how do we understand the economics of counterfeiting and how does 3D printing fit into this economic ecosystem?
This Kat’s hands-on experience with counterfeiting focuses on frequent interactions with the local customs authority on behalf of various clients. From this perspective, we see the finished product, in transit from its overseas manufacturer and assorted middle men, on its way to the local distributor, subject to the vigilance of customs. If we are lucky, we can obtain information from the local distributor about the identity and location of the overseas manufacturer. Otherwise, we have to satisfy ourselves with information about one of the overseas distribution middle men, if at all. What we never encounter is the underlying business infrastructure by which products and product designs are identified and then manufactured abroad; the means by which prospective customers for these counterfeit products are put into contact with the manufacturer; and how payment is made and shipping arrangements are dealt with.
While we may not like the counterfeiting business, it cannot be gainsaid that it is a complex enterprise, both organizationally and logistically. Underpinning all of this is the need for extremely tight cost controls to support the counterfeit version of economies of scale. Counterfeit products have to be price-competitive with the original product. How much the price differential needs to be will depend on the nature of the particular product. But, whatever the pricing, the counterfeiter will likely work on the basis of a small profit margin. It does not pay to maintain a counterfeiting operation in order to make a single copy of an item, but it also does not pay to set up a counterfeiting operation unless a critical mass of items can be cheaply made and distributed, usually to other countries.
Perhaps, however, this Kat is ultimately not asking the right questions. First, maybe the real inquiry is whether a counterfeiting model based on wide-scale distribution of unauthorized production files is possible (keeping mind the convergence between the manufacturer and consumer in the 3D printing world). Secondly, product counterfeiting depends in significant part upon whether brands will continue to be commercially relevant. If the answer is “no”, the results could be devastating for both the genuine brand manufacturer and the counterfeiter. Stay tuned.