Putting the Brakes on Gray Market and Counterfeit Goods

Completely stopping the flow of fake or illegally obtained high-tech products may not be possible. But Cisco’s Ram Manchi, through his work at AGMA, is doing what he can to slow it down.

meetings and through our website. AGMA also ensures that member companies do not violate any legal stipulations on sharing specific company/channel/individuals names.

As companies are being impacted by gray market and counterfeit goods, some companies have successfully detected and litigated the suspects. Some of these cases are discussed as case studies at AGMA meetings and conferences, providing the rest of the members’ insights into the process of detection, investigation, evidence, engagement of law enforcement and litigation.

AGMA conferences are also actively attended by law enforcement agencies such as the FBI, U.S. Secret Service and U.S. Postal Inspector General’s office. Such engagement further helps member companies to learn more on processes, available government agencies and how the legal system can help.

CSO: Can you give an example of what’s happened when members have shared best practices? How have they benefited?

Manchi: In one AGMA member company’s case, the company monitored abnormalities in volumes of product shipments, which helped identify a huge gray market fraud. The volumes of product being purchased were unusually high compared to the potential demand for the product to a specific country that has special discounts. Upon monitoring over a period of time and investigating the buyer and ship-to address of the buyer, it was found that both were fictitious, and the shipments were being forwarded to a more profitable market. The magnitude of margins lost in this case was in the multi-millions for the manufacturer. Upon sharing this case study with AGMA members, some of the member companies implemented additional tracking of shipment volumes by the market segment and by geography, and in fact, found interesting scenarios to pursue.

In another case, significant quantities of product was purchased for a market segment that had special discounts. Upon investigation, it was found that the named end-user’s budget was a fraction of the purchases made, and also interestingly, they had no product installed at their site. Unfortunately, these transactions not only impact the financial health of the manufacturers but also destabilize the channels, since the deeply discounted product competes in the same market with a good price point. This case alerted AGMA member companies to also review the authenticity of the purchasing entities when large volumes and special discounts are involved.

CSO: Why is AGMA geared toward the high-tech industry?

Manchi: Those companies have commonalities in terms of outsourcing, product development, their business models and the management of their IP. Having those common factors makes it