Foul Play

T he production of counterfeit merchandise is a $600 billion per year industry that has grown 10,000 percent over the past two decades, according to the International AntiCounterfeiting Coalition. Fueled largely by consumer demand, it costs U.S. businesses up to $250 billion annually and has been responsible for the loss of more than 750,000 domestic jobs.

Counterfeiting is a particularly troublesome issue for sports leagues, which constantly have logos, colors and rights stolen and replicated on apparel. For more than 15 years, Major League Baseball (MLB) has partnered with OpSec Security to protect its brand and intellectual property around the world.

Impacting the entire retail chain
Counterfeiting impacts the entire retail spectrum, from manufacturers and distributors to stores and consumers. Local jurisdictions also lose out on taxes.

Ethan Orlinsky, senior vice president and general counsel for Major League Baseball Properties, says the league is most focused on apparel because it has the greatest financial consequence. From the counterfeiters’ perspective, barriers to entry are minimal and the payoff is high.

“As the brand owner, we take it upon ourselves not just to impact our own economic interests but all of those constituents,” Orlinsky says. “We concentrate our efforts on the areas where they are the most effective and our impact is the greatest.”

MLB first turned to OpSec Security in 1994 to develop a hologram for all of its official merchandise. Hologram security tags provide effective security at a reasonable cost because they offer a readily identifiable sign that a product is authentic — and because the tags themselves are difficult to reproduce.

OpSec uses holograms as a key tool in its brand protection operations. Its proprietary optical imaging equipment allows it to deliver cost-effective and secure product authentication to protect against counterfeiting and tampering. OpSec vice president of global licensing Bill Patterson says that as technology has advanced and more business operations have moved to the web, so has the need to stay ahead of the counterfeiter’s technology.

“The equipment we had 20 years ago you can now buy on the Internet and set up in your garage,” Patterson says. “Our goal is to stay at least five years ahead of where we know the counterfeiting technology is.”

OpSec’s holographic technology, equipment and process are proprietary and secretive for security reasons, but Patterson says it has grown more complex. Holograms often have hidden images or keys only known to the client. MLB has gone a step further by implementing a red stitch into each hologram, and by adding a unique alphanumeric combination on each product.

“As counterfeiters have gotten more sophisticated, we’ve had to make changes and add components that make it even harder to replicate,” Patterson says.

All MLB licensees are required to attach an authentic hologram to each item they produce. Should a problem arise where an authentic hologram is found on a counterfeit product, OpSec and MLB can use the hologram number to trace the root of the problem.

“We know exactly where every hologram they produce goes and we track that information so we know which licensee got which product,” says Orlinsky says. “It helps address backdoor sales and products that shouldn’t have ended up in a particular location.”

Ensuring it’s authentic
Game-used merchandise — including everything from bats and gloves to balls and signed items — is also very popular with MLB fans. As the market for such merchandise has grown over the years, so has the desire to counterfeit such products.

In 2001, MLB introduced the Major League Baseball Authentication Program to authenticate all game-used merchandise and autographs and permanently apply a hologram to all products. These holograms cannot be removed from the item in one piece. Since the program’s inception, more than three million items have been certified.

By using an objective third-party system that guarantees memorabilia, the program gives sellers, buyers and merchandise collectors confidence that they are buying an authentic item. “People can track those items so they know its history, who authenticated it and it gives them a greater level of confidence,” Orlinsky says.

Patterson says that OpSec is currently making more than two billion holographic images per year. Most are made in labs in the United States and the U.K.; the company does not manufacture any labels in Asia because it is such a hotspot for counterfeit manufacturing.

Online brand protection
Although MLB is not yet employing OpSec’s Internet monitoring capabilities, Patterson says monitoring the web is becoming an increasingly important part of the fight against counterfeiting. Along with retailer sites, OpSec monitors auctions on eBay. With the cooperation of eBay, OpSec can develop and deploy complex algorithms that can flag auctions in which merchandise suspected of being counterfeit is being offered.

“It allows our clients to take quick action and fill out all the paperwork on eBay in the click of a button,” Patterson says. “It archives all of that and takes photos that allow the clients to have evidence if they want to take legal action [over] what was being offered online.”

OpSec can also increase online brand protection by detecting intellectual property infringements of trademarks and logos, and can gather intelligence on brand image from blogs, chat rooms and message boards.

Patterson says that no brand is going to be 100 percent effective in preventing all counterfeiting and copyright infringement; it is about using the technology to stop as much of it as possible and maximizing efforts where they can have the greatest impact.

“We try to prioritize where the most problems are and create hurdles,” he says. “The more roadblocks I can put up, the more effective we’ll be in protecting the client’s brand.”