Tech

Perfume makers are fighting back against an illegal fake scent boom

The luxury perfume market has blossomed into a $12 billion industry, but it’s facing a fresh challenge in the form of counterfeit fragrances. While companies have long had to deal with plagiarists ripping off their recognisable packaging and iconic bottle shapes to peddle their sub-par offerings, technology advancements have meant that counterfeiters have taken to copying their famous scents in the form of “smell-alike” perfumes.

Smell-alikes, much like the luxury perfume market itself, are booming. Between 2017 and 2018, more than 2.2 million fake body care items, including cosmetics and perfumes, were seized in the UK alone, while the OECD estimates that fake goods imported to the UK were worth £13.6bn in 2016, equivalent to three per cent of genuine imports, up from £9.3bn in 2013.

“Business, consumers and economies across the world are all under attack from counterfeiting,” says Phil Lewis, director general of the Anti-Counterfeiting Group. “The UK is one of Europe’s most targeted countries for these insidious fakes, many of which contain dangerous toxins and stabilisers. Moreover, we lose over £400 million in revenue, which instead falls into the hands of international crime gangs who use the profits to foster other forms of illicit trade including people, drugs and weapons.”

This hasn’t been an easy battle for luxury perfume makers to fight, not only because fake scents are by their very nature much harder to identify than, say, a knock-off high-end handbag, but also largely due to the fact there is a lack of copyright protection concerning fragrances in most countries. This is despite the fact that Play-Doh maker Hasbro was awarded a trademark registration by the US Patent and Trademark Office for the “distinctive smell” of its famous modelling compound.

This lack of protection is due to the complex nature of perfumes, as each fragrance is composed of sub-element fragrances called “notes”. There are top, middle and base notes, each of which lasts for varying periods of time: the top note is the first impression that a consumer gets; the middle is what other people will smell from the fragrance; and the base note is the underlying scent of the entire perfume. Complicating matters is the fact that the skin of the wearer can alter the smell of a particular fragrance.

To combat this problem, European perfume manufacturers have been battling in court for protection of their scents for the past two decades. In 2006, L’Oréal was involved in a landmark case which saw it bring an infringement suit against Bellure, a Belgian company, for producing smell-alikes of its popular Trésor, Miracle, Anaïs-Anaïs and Noa fragrances. The court held that this constituted infringement of the smells of L’Oréal’s perfumes, and ordered Bellure to pay damages. However, the idea that fragrances could be infringed upon was overruled when this case was appealed to a higher court.

The court reasoned that perfumes are manufactured through the application of merely technical knowledge and are not subject to copyright protection because they are not expressions of the mind of the person who compiles perfume ingredients.

However, there have been some strides made in the protection of fragrances since. Two years later in 2008, L’Oreal’s Lancome subsidiary successfully provided that Dutch-based Kecofa had infringed on one of its fragrances by using gas-chromatic analysis – a chemical method for separating substances – to prove that the company’s “smell-alike” product used 24 of its perfume’s 26 ingredients. What is more, the court held that the Lancome’s perfume could be subject to copyright protection because it is a fixed substance that gives off a fragrance that can be recognised by the senses, which makes it tangible enough to be regarded as a copyrightable work under Dutch law.

This ruling lends credence to the chemical analysis technique used in the overruled holding in L’Oréal by showing if perfumes’ similar chemical compositions produce similar fragrances, then there could be copyright infringement.

Just last year, Gucci – along with a number of other well-known luxury perfume makers – scored a similar victory after using the same technique against Spanish company Equivalenza. The ironically named outfit, which was peddling rip-off scents, was found guilty on all three counts; illegal copying of original perfume, unfair competition and business reputation abuse.

Even with such strides being made, taking down these counterfeiters remains a hard task. Annabelle Gauberti, the founding partner of London law firm for creative industries Crefovi, says that brands can fight fakers through distribution but given the scale of the problem and the transient nature of those operating counterfeit fragrance schemes, it’s no easy task.

“Brand owners can ensure that they set up a distribution system whereby the bottles of perfume are only going to be sold in places that have a luxury aura and comply with certain criteria, such as prices and levels of service,” she said. “Therefore, when you have some bottles of Tom Ford, Chanel and Prada perfumes being sold on street markets, or even online on places like eBay or Alibaba, [be they real or fake] they can take action.

“LVMH went after these counterfeit products in Paris by obtaining a court order to seize all of the goods and get all of the stall owners sentenced by the Paris court,” Gauberti says. “The problem is that these people are transient and often don’t have bank accounts, so there’s not much you can do against them; it’s very difficult to pin them down.”

Given these difficulties, LVMH – the company that owns numerous luxury brands from Louis Vuitton and Christian Dior to Fendi and Givenchy – has since turned to technology to help it fight counterfeit products. So now, not only does the company hire 60 lawyers and spend $17 million annually on anti-counterfeiting legal action, but it has also developed its own blockchain tool called Aura, that uses Ethereum blockchain technology along with Microsoft’s Azure services. Any person that buys an Aura-certified product will be able to see the full history of the item, ranging from its raw materials and manufacturing locations to where it was initially sold, and any second-hand purchases will also be noted.

“The platform is open to all luxury brands, with no intermediary, who will therefore be able to benefit from the huge potential of this technology,” a spokesperson for LVMH said.

This is one of many technological advancements being used in the fight against counterfeiting; luxury firms are also adopting new measures such as radiofrequency identifications tags and holograms to enhance product security, while others are turning to so-called terahertz spectroscopy that detects and controls properties of matter with electromagnetic fields.

On the other side of the spectrum, however, technology is also advancing the techniques of plagiarists, with the internet contributing to the rise of a networked, sophisticated generation of counterfeiters that can adapt quickly and distribute products in ways that are harder to detect and prevent than sales through more traditional channels.

Ultimately, it remains to be seen who will come out on top. Counterfeiting is a battle the industry is geared up to fight. Chanel says it dedicates “considerable financial and human resources to this effort”. But there remains quite the battle ahead – total trade in fakes is estimated at around $4.5 trillion, and counterfeit luxury merchandise accounts for 60 to 70 per cent of that amount.

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