Putting the Brakes on Gray Market and Counterfeit Goods

Completely stopping the flow of fake or illegally obtained high-tech products may not be possible. But Cisco’s Ram Manchi, through his work at AGMA, is doing what he can to slow it down.

January 10, 2008 — CSO — Collaboration with outside organizations doesn’t strike most people as the best way to protect intellectual property. But Ram Manchi’s goal is to convince you otherwise.

Manchi, director of global business controls at Cisco, is president of the Alliance for Gray Market and Counterfeit Abatement (AGMA), whose founding members include Cisco, 3Com, HP, Microsoft and Nortel. In this new role, which he assumed in November 2007, he is charged with increasing awareness of gray market and counterfeit goods, boosting membership in the organization and fostering collaboration among members.

Manchi recently spoke with CSO’s Katherine Walsh about his vision for AGMA, some successful investigations its members have launched, and what companies in all industries can do to combat the problem.

CSO: What’s a bigger concern--counterfeiting or gray market goods?

Ram Manchi photo Manchi: Gray marketing is generally defined as products (very likely genuine) that are transacted through unauthorized channels and/or markets. Counterfeit refers to a non-genuine product traded with breach of brand and trademarks; it’s a deliberate attempt to deceive consumers by copying and marketing goods. Sometimes, the whole product is illegally manufactured, and sometimes, a part of the original product is contaminated with non-genuine components.

Both are significantly detrimental to the high-tech industry as well as to its channels and its customers. Gray marketing impacts the financial health of manufacturers and distribution channels through price destabilization, and it could also eventually impact the ability of manufacturers to make investments in future technologies. Counterfeiting, in addition to impacting manufacturers and channels, also impacts customers and their infrastructure with illegally produced and possibly inferior products.

Both of these issues have broader implications to society. Most of the time this money is not officially on the books and could fund undesired and unlawful activities. It could also contribute to money laundering, national security and other evils.

CSO: Do you combat gray market and counterfeit differently? Does addressing one tend to make the other become either less or more of a problem?

Manchi: Both gray marketing and counterfeiting are many times found to be blended. As individuals and entities that are engaging in gray marketing find easy ways to make money, it could tempt them to explore selling counterfeit to gain more easy money, and so on.

CSO: Can you give a couple examples that illustrate how AGMA enables companies to share information and best practices with each other?

Manchi: AGMA provides a forum for information sharing. This is enabled through best practice sharing at our