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The 'sting' puts a stop to some
In 1982, Eugene Goodale, patent and trademark attorney for Caterpillar Tractor Co. was given a plastic package supposedly containing a Caterpillar fuel injector nozzle. It was almost an exact duplicate of Caterpillar's own packaging, with minute differences that only a trained eye could detect.
"I work with this every day," says Goodale, " and it was difficult for me to spot the differences immediately. The untrained eye of the customer would not spot those differences. "
The nozzle itself was also a close duplicate, including the Caterpillar trademark, the Caterpillar part number-and a telltale code number that Caterpillar had never used.
Goodale called the Caterpillar manufacturing plant to find out why it had made the changes. It had not.
After an investigation involving detectives and a "sting " operation (since a buy had to be made), Caterpillar personnel-accompanied by a U.S. marshall with a federal court order-raided a Los Angeles company.
They found and confiscated 1,500 counterfeit injector nozzles, 68,000 polyethelene parts packages imprinted with the Caterpillar trademark, 14,000 pressure-sensitive Caterpillar labels, plus numerous boxes and rubber stamps with Caterpillar trademarks and part numbers.
Further investigation disclosed that the counterfeiting operation's "manufacturing" sources included at least one company in Italy and two in California. Its marketing efforts (price bulletins) covered the globe.
Engineering tests conducted by Caterpillar revealed numerous manufacturing defects in the nozzles that could have resulted in misfiring, lower horsepower, fuel pump failure, crankcase oil dilution and immediate piston seizure.
Caterpillar issued press releases and bulletins to dealers and customers worldwide, alerting them to the problem. Through court action, Caterpillar also halted the company's counterfeiting activity, although the firm is still in business.
"They were a legitimate operation before and we have every reason to believe they're a legitimate operation now, " says Goodale. Caterpillar sought a permanent injunction and also asked for monetary damages which, at
After the sting: Packing and shipping department of a counterfeit operation in Los Angeles was equipped with rubber stamps bearing Caterpillar part numbers and stamping equipment set up for Caterpillar labels. Raid on the operation netted 1,500 counterfeit injector nozzles, 68,000 polyethelene packages bearing the Caterpillar trademark and 14,000 "Caterpillar" labels.
the time, was the only "punishment" possible for counterfeiting. (Under new anti-counterfeiting law, it would have been a criminal offense.)
Goodale explains that Caterpillar did not pursue the damage suit simply because "it would have been a very expensive proceeding. But at least we accomplished what we set out to do. "
An isolated incident? Goodale can prove otherwise. Working with another engine manufacturer, Caterpillar recently uncovered another counterfeit operation in Brooklyn. This time, the company was buying parts from a variety of sources and labeling them according to customer (mostly overseas jobbers and distributors) demand.
James Snow, manager of packaging and processing control for Caterpillar, worked with a private investigator in this "sting" operation and participated in the subsequent raid. He describes a somewhat untidy warehouse and a "couple of likable guys."
Caterpillar and its ally were only allowed to confiscate boxes or labels with their trademarks. Still, the "likable guys" yielded enough to fill one and one-half 16-foot vans with counterfeit materials. They left behind stacks of parts in unmarked boxes and a comprehensive library of several major manufacturers ' counterfeited literature and promotional materials.
Sources for the parts have not been, and may never be, disclosed since files have not been searched to date. Some bearings that were confiscated, however, bore the original labels of a well-known manufacturer-but the labels had been covered with Caterpillar identification.
Snow saw "all kinds of truck engine parts" in the warehouse, and says he has good reason to believe that the sources were not always as reputable as the bearing example.
"Made in USA" air cleaner on left was actually traced to Indonesia.
Customer files were not available either, but judging from mailers and packages ready for shipment, the customer base was, again, worldwide.
The Caterpillar stories are instances of true counterfeit items, which are legally defined as "identical or substantially undistinguishable from the original. " This could also apply to trademarks.
The counterfeit is an exact or very close replica of the legitimate part, right down to markings, patent numbers, etc. Packaging is identical, usually including logos, trade names, and in some cases, even warranty information with instructions to return the part to the victimized manufacturer if defects are found.
True counterfeit parts are difficult, if not impossible, to spot. Even shoddy copies are often accepted by unknowing fleet buyers. In one case, Caterpillar found counterfeit filters that were virtually identical to its own. The only discernible differences were that the counterfeit filter weighed about a pound less than Caterpillar's, and printing was upside-down. Even an experienced mechanic would not be likely to check the weight of a filter bearing the familiar Caterpillar color and markings.
Counterfeiting may also extend beyond fast-moving parts: Sheet metal replacement components, such as bumpers, are examples. Ford's Rhoades says his company takes pains to treat sheet metal against rust. Parts are stamped with the Ford oval and code numbers but, he says, "Counterfeiters can copy anything."
Ford recently discovered that some counterfeit sheet metal used for repairs "completely rusted out" when put through the company's routine 500-hour salt spray bath. The parts had been installed by independent shops, but Rhoades is hesitant to place the blame there.
"They come through a long pipeline of distributors and repair shops, " he says, "but in this case, it began in Taiwan."
Donaldson Co., a major manufacturer of air cleaners, has not been a target of counterfeiters but is well aware of the problem and its possible consequences.
Materials used in the counterfeit (left side of photo), including the media, sealing compounds and inner core, did not meet Caterpillar's specifications. There are noticeable differences in markings and weight of the two filters, but even an experienced mechanic would probably look no further than the familiar Caterpillar name, printing and color.
Citing the "phenomenon" of air cleaner fires, John O'Brion, OEM parts marketing manager, explains that, although they're rare, such incidents have occurred.
"Nobody has been able to determine the source," he says, "but all the major air cleaner manufacturers are now using a flame retardant media as an added precaution. " The resin-based material will not prevent air cleaner fires, but will at least lessen the effects. O'Brion doubts that counterfeiters would know of the problem, or care.
Another area of concern is cab noise. "We've worked with the engine manufacturers to address intake noise, " says O'Brion, adding that it is an area of technology that counterfeiters are not likely to explore or adapt to.
Air cleaner fires may or may not be an issue since, as O'Brion emphasizes and others confirm, they are too rare to be anything but a phenomenon. Noise, to some, may not be reason for caution. But the cost of bogus filters affects everyone.
"Air cleaners are engineered to very exact engine specifications, " says Stan Koehler, Donaldson's truck engineering supervisor. "Without knowing the intended application," he explains, "the maker could not obtain proper pressure resistance, for instance, which would result in premature failure. Failure of the air cleaner could lead to loss of power, increased wear on engine parts and ultimately, the need for a complete-and expensive-engine rebuild. "
Tony Caronia, marketing support engineering supervisor for Fram Div. of Allied Automotive, says the effects of substandard filters may not be catastrophic.
"In severe environments, where there's a great deal of dust, failure may occur very quickly, " he says. "But for most operations, it's a slow process. "
Caronia explains that the truck user may never know what has happened. "Some people might accept the fact that they need an engine overhaul every 300,000 miles, " he says. "But the proper protection system might extend that life to 700,000 miles. "
Another caution Caronia offers deals with "overservicing. "
"A cheap filter might work, but you might have to change it three times as often, " he notes, "and every time you change the filter, there's danger of contamination. "
Admitting that many truck operators view filters as little more than a necessary evil, Caronia prefers to describe them as "low cost insurance policies." "Those who don't see the potential harm in counterfeit filters, " he says, "are taking a heck of a chance with protection of a $30,000 or $40,000 piece of equipment."
Certainly, counterfeiting hurts the manufacturer who has invested considerable time and financial resources in establishing a brand or trade name. It is also a threat to the legitimate parts distributor who has built a reputation for quality parts and service with his fleet customers. And everyone agrees it is a threat to a fleet's safety and efficiency.
"Every counterfeit part MEMA has found is terribly substandard in terms of quality, " says Parker Hannifin's Robert Miller. And Caterpillar's Snow adds, "There is absolutely no reason for counterfeiters to worry about quality. " He says their sole objective is to make a quick profit from someone else's name.
Counterfeiters have succeeded because they can keep their overhead very low-no research and development costs, no technical support, no quality control. They buy the cheapest materials. They have no worries about warranty or product liability since customers who end up with counterfeit products turn-usually in anger-to the legitimate manufacturer when the part fails.
"The sale we lose is small compared to the potential damage to the consumer, " says Snow. "It's the customer who's cheated."
Genuine Caterpillar fuel filter (right) is designed so that logo, identification and instructions can be easily read when the filter is installed. On counterfeit version (left) printing is upside-down. This counterfeit even included a copy of Caterpillar's caution to replace with a Caterpillar filter matched to the operating requirements of the engine.
Reprinted with permission of HEAVY DUTY TRUCKING, January 1985.