Tis the Season to Counterfeit

The last may be as effective as the first two. Despite spending millions on technology and manpower and some anecdotal success, manufacturers cant quantify their efforts impact on the bottom line.

To truly thwart fakes, companies preemptively put people where counterfeiting might occur. Toss in the vagaries of international intellectual property law and corruption among local officials and pursuing offenders is a challenge at best, hopeless at worst

"We spent a lot of money on going after [counterfeiters]," says Killgallon. "And we cant do anything about it in China. Its a mess. Even if you can get the courts there to shut down, say XYZ Company, they just change their name to ABC Company and go back to doing the same thing next week."

Killgallon says Ohio Art controls the supply chain for its Etch-a-Sketch by using a limited number of U.S. component suppliers as the exclusive source of materials for its Chinese assembly plant. If the plant were to order more materials from the raw materials provider than required, Killgallon would hear about it.

Although Killgallon says Ohio Art has a long-standing relationship with its Chinese manufacturer "built on mutual trust," he admits he cant prevent other manufacturers in China from copying his product, despite patents and trademarks. "And (U.S.) Customs has been little help," he says. "Theyve never stopped a shipment [of counterfeit product] for us yet."

At least Ohio Art isnt alone. Counterfeiting is rampant in the toy and game industry, especially overseas. The Toy Industries of Europe(TIE) trade association estimates one of every 10 toys sold in Europe is a fake.

Next Page: More counterfeit products and IT applications that help fight the distribution.