As a manufacturer, you work hard to
protect your supply chain and your brand. Contracting production to CM's can add a whole new set of
challenges.
In addition to the risk of CM's purchasing counterfeit components for use in your products, you may also need to
consider the risk of your CM's over-producing and diverting finished product to the counterfeit market. Such
goods may be impossible to distinguish from legitimate products once they reach the market.
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The ABC's of Slowing Counterfeits from your Contract Manufacturers
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A. ESCS recommends you get your trademark recorded with U.S. Customs and Border
Protection (CBP). It is inexpensive and will give the CBP the legal ability to seize products deemed to bear
counterfeit trademarks.
B. Have a close partnership with your contract manufacturer. Don't just sit
back and say, "Company XYZ is making my components". Make sure it is a reputable company and complete
appropriate due diligence before you commit to production.
C. Companies should verify the validity of a overseas manufacturer or vendor before
procuring products, possibly by doing a source inspection at the port. Audit the factory or try to develop a
relationship with the manufacturer.
D. If warranted, have a representative on-site at the factory. You may want to
make a source inspection or do an unscheduled vendor audit.
E. Look at your contract manufacturer's quality management system to make sure the
components it buys are legitimate. Demand that your purchase order conditions are flowed down to your contractor's
suppliers. Put the conditions on your orders and audit your suppliers to verify they are doing the same.
F. Do inquiries as to how many Supplier Corrective Action Reports (SCARS) they have
identified per quarter. Police them often and, if they refuse, find another supplier!
G. Keep an eye on orders. If your manufacturer usually buys 12,000 semiconductors
per month and suddenly that figure drops to 3,000, find out where the other 9,000 are coming from. The back of a
truck is not a good place to buy components.
H. Practice zero tolerance. If you find that your products contain counterfeit
goods or that your goods are being counterfeited, take appropriate legal action.
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The Global IP Center
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The U.S. Chamber of Commerce sponsors The Global Intellectual Property Center at
www.thetruecosts.org, actively supporting government and
industry efforts to combat counterfeits and protect intellectual property.
Stay abreast of changes in the law and resources available to you, both domestically and internationally.
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