There's little question that the migration of electronics manufacturing to Asia has heightened the industry's concerns over counterfeiting. China, in particular, is known for its lax enforcement of intellectual property, patent and trademark laws. Although legal action has been the main recourse for victims of counterfeiting (see "An Offshore Test of IP Rights"), electronics companies may find an unexpected ally in the fight against bogus products: the Underwriters Laboratories.

Although best known for setting performance and safety standards for electrical products and other goods, the UL also has a well-established anticounterfeiting program. In the mid-1990s, the UL became one of the first Nationally Recognized Testing Laboratories (certified by the U.S. Department of Labor) to activate an anticounterfeiting operation. The UL's efforts focus largely on the identification and seizure of counterfeit goods—keeping them out of the U.S. supply chain.

Electronics products—many of which contain UL-certified devices—increasingly are showing up on the UL's radar screen, says Brian Monks, director of anticounterfeiting activities for the UL. Part of the reason is that more electronics products are being manufactured in areas that are lax in IP and patent protection. Also, PCs, cell phones and other electronic devices are popular consumer items. Counterfeiters most often knock off commodity items, according to the UL. In 2003 U.S. Customs seized millions of dollars' worth of cigarettes, clothing and handbags, in order of total value. But media, such as blank tapes and CDs, and consumer electronics followed closely-ranked fourth and fifth, respectively.

"The information technology industry is starting to see counterfeiting eating its lunch," Monks says. IT trade organization as well as several major IT corporations—among them makers of notebooks, laptops, PCs, motherboards, power supplies, wire harnesses, connectors and fans—have called on the UL for help in developing anticounterfeiting tactics and procedures. "More companies in this arena are coming to us and asking us for assistance," Monks says. "They are acknowledging they can't fight counterfeiting themselves."

The UL—which trains U.S. Customs agents to detect counterfeit equipment—also provides similar services to companies, retailers and foreign customs agencies. Although the criteria for spotting counterfeits are different for just about every product, the UL advises companies what to look for, such as spelling errors on labels or the country of origin missing on a manifest. It also provides reference materials on security measures, such as the use of holographic labels. Since the UL's anticounterfeiting program was launched, in 1995, the UL has assisted U.S. Customs with more than 950 seizures of counterfeit products, with a U.S. value in excess of $120 million.

The nonprofit UL is seeking to partner with more organizations in its anticounterfeiting efforts. It currently works with the International Anti-Counterfeiting Coalition, the National Electrical Manufacturers Association and the Electro-Federation of Canada. However, four electronics associations contacted by EB say their efforts are more focused on IP policy and law enforcement and less on identification and search and seizure tactics. "IP protection is a key issue at the SIA and is always an issue with our trading partners," says John Greenagle, spokesman for the Semiconductor Industry Association. "We have met with Customs in the past," says Rob Haralson of the AEA, "and have been briefed on what it does. From the policy perspective, however, we focus our efforts on enforcement of existing laws." The Consumer Electronics Association echoes the same sentiment. And the National Electronic Distributors Association actively promotes the use of franchised distributors—which buy products directly from manufacturers. Members of these organizations, spokespeople say, simply haven't demanded anticounterfeiting assistance.

Still, the UL will continue its outreach program, says Monks. "It's UL's opinion that 'United we stand, divided we fall' is critical in the war on counterfeiting. If companies band together and bring our resources to bear on counterfeiters, we have a chance to stop counterfeiting."

Like electronics organizations, the UL actively supports the protection of IP. Any gap between it and electronics organizations seems to be largely a matter of focus. U.S. Customs seizes and destroys counterfeit goods to keep them out of the U.S. market and can levy fines. To date, the UL has deliberately focused on high-volume, low-priced items associated with consumer safety. Many of these items—such as power strips and extension cords—are not as sophisticated as electronics products and are easier to identify as counterfeits. Short of ripping apart a semiconductor, however, says the SIA's Greenagle, it's tough to spot a counterfeit chip. But the electronics industry's attitude may shift as counterfeiters become more sophisticated and the cost of defending IP in the courts rises. "There's no organized effort, but a lot of conversations about counterfeiting are going on," says Ken Stanvick, a principal at consultancy Design Chain Associates. It's going to become more of an issue, he says, as counterfeiting moves from "jelly bean" (commodity) knockoffs to more-sophisticated products.

In the meantime, says Monks, companies that outsource their manufacturing can make an effort to thwart counterfeiters. He recommends the following steps:

Have a tight partnership with your overseas manufacturer. "Don't just sit back and say, 'Company xyz is making my components,'" says Monks. "Make sure it is reputable—do your diligence." Companies should verify the validity of the manufacturer or vendor before procuring products, possibly by doing a source inspection at the port; audit the factory; and try to develop a relationship with the manufacturer.

Have a representative on-site at the factory. "You may want to make a source inspection or do a vendor audit," says Monks. Look at your manufacturer's supply chain, he adds, to make sure the components it buys are legitimate.

Keep an eye on orders. If your manufacturer usually buys 10,000 semiconductors a month and suddenly that figure drops to 2,000, find out where the other 8,000 are coming from. "The back of a truck," says Monks, "is not a good place to buy components."

Make sure you can get your money back. Generally speaking, counterfeiters don't provide that service.

Practice zero tolerance. If you find that your products contain counterfeit goods or that your goods are being counterfeited, take any legal action available. "The first thing a company should do," says Monks, is get its trademark recorded with U.S. Customs and Border Protection (CBP). It is inexpensive and will give the CBP the legal ability to seize products that are deemed to bear counterfeit trademarks. Companies can also work with local law enforcement to remedy the situation. Says Monks, "If you let counterfeiters get away with it, they will keep on doing it."