If another company steals your intellectual property, they may use it to begin making knock-off products that appear to be yours. In some cases, the IP in question is simply the design of the product itself. In other cases, they replicate the branding and other distinctive marks to make it appear that the products did come from your company.
Either way, the goal is simply to sell these products at a lower price than you would, scamming people who believe they are real.
1. Lost sales
The first way that this costs you money, if you’re the owner of the original company that suffered the IP breach, is that some customers are going to make purchases that they believe are legitimate. They would’ve purchased from your company, but you lose those sales because there are now fake products in circulation. But how else can this harm you?
2. Damage to your reputation
The second way that something like this can cost you money is that it damages the reputation that the company has.
For example, the knock-off products are probably not made nearly as well as your products. If someone buys one and is unsatisfied with what they get, they do not know that they have a fake. They believe that your company simply makes an inferior product. This can lead to negative reviews, bad publicity or just inaccurate word-of-mouth complaints. All of these things can devalue your brand. Even the mere fact that consumers know fakes exist can help to lower the perceived value of your genuine products.
As such, it’s very important to know how to respond to IP violations and to know what legal steps you can take to protect your property and your brand.