When someone has the option of choosing between a $1000 dark brown monogrammed Louis vuitton bag and a first copy for the $1000 bag which is probably a little more dark brown for $122, it’s not hard to wonder which deal will be cracked but what the buyer doesn’t understand is that though the counterfeit can fool the eye it can’t bask in the same glory as the real executive luxurious wonder he drops like a hot potato for a difference of $878.
Brands work day and night over their product detailing, advertising, and customer care which brings to you the feeling of luxury attached with each strand that goes into making it which eventually makes each piece an executive piece of art. Fashion as it is said is not a piece of utility but something crafted by someone’s sheer creativity, which is what supports the exorbitant pricing attached to branded items. It’s a shame how ruthlessly the credit of someone else’s hard work is treated in the form of counterfeit.
Counterfeit fashion products and merchandise are not new to anyone. The $600 billion annual industry (Dimet, 2006; Nanda, 2007) continues to grow every year and increases as the most serious threat facing the national economy. Philips (2005) reported that the counterfeit business as a whole would be the world’s largest business if it were recognized as a business. In 1985, about $60 billion was spent on counterfeit merchandise; in 1994, sales were about $200 billion and in 2002 about $376.2 billion (Ha & Lennon, 2006).
Meaning Of Counterfeit
Counterfeit, when used as a noun it can explained to be a ‘fraudulent imitation of something else’ and when as a verb it states to be ‘imitate fraudulently’ it clearly spells out that it is not the real thing but supposedly the reel. They can be even termed as knockoffs in everyday jargon terminology.
The counterfeit, identical in appearance, gives the impression of being the genuine product from the real manufacturer. Of course a knockoff is only meaningful if the genuine article is well-known and in demand. Therefore, most knockoffs are of luxury goods carrying a well known trademark. They are a deliberate attempt at deceiving consumers into thinking they are buying products made by a reputable manufacturer when they are, in fact, purchasing inferior copies. The counterfeiter sets out to make money by deception i.e. deliberately assuming the identity of an established, reputable manufacturer. Thus, he saves the normal capital investment required to produce a genuine, high quality product. The counterfeiter does not have to invest in expensive quality materials or quality control since he is producing an inferior product. He has no need to spend money on research and development, or advertising and marketing since he is riding the shirttails of a manufacturer who has already invested heavily in developing and promoting their brand. So, his overall costs are low in comparison with those of the genuine manufacturer, allowing him to sell his product copies more cheaply.
Are Buyers Equally Responsible?
YES! It’s not always that buyers are duped into buying theses knockoffs, earlier this could have been believed but now with so much exposure and brands like Gucci, Louis Vuitton, Prada giving every girl sleepless nights it comes to them as more of a necessity item despite the fact they bought the counterfeit from Thailand or some Chinatown and not from the high end store. This in fact is a more serious problem because the demand from these buyers is the engine that is making this counterfeit business so profitable for the dupers and a nightmare for the brand owners.
Fake products whether counterfeits, imitations, pirated or custom made pose an ongoing problem for luxury brands. Apart from legal implications that are important, fake goods cause enormous damage to brands, consumers, vendors and manufacturers. It harms a brands reputation, over exposes the high end brand, reduces brands equity and costs companies a lot to curtail. Fake goods also lower the self image of counterfeit customers and add to their mental stress but creating an increased desire for products that they will not be able to afford. For vendors and manufacturers there is a continuous fear of being caught by increasingly vigilant authorities.
In France, the maximum fine is 300,000 euro (£260,000) or three years in jail. In the USA a maximum penalty of $1,000 and/or one year in jail.
The UK government has decided against criminalizing consumers. Instead it has launched an information campaign aimed at people using markets and boot sales.
Seizures of counterfeit goods on the continent more than doubled in 2008, with customs authorities seizing 178 million fake items - mostly imported from China.
U.S. Laws And Agencies That Help
In question that arises who has the upper hand in a dispute regarding the counterfeit goods can be understood by application of this basic rule of who is entitled to use a trademark starts with determining who owns the trademark registration for the products in question. A federal registration gives nationwide effect to the owner of the registration. If a dispute is not settled based upon a simple registration review, the resolution is likely to come from federal and state courts' decisions. These rules usually favour the business that first used or registered the mark when the second use would be likely to cause customer confusion. A number of additional legal principles used to protect owners against improper use of their marks are derived from federal statutes known collectively as the Lanham Act (Title 15 U.S.C. §§ 1051-1127). In addition to laws that specifically protect trademark owners, all states have laws protecting a business against unfair competition. These include the use of a name in a context likely to confuse customers. Under federal and state laws known as "anti-dilution statutes," a trademark owner may go to court to prevent its mark from being used by someone else if the mark is famous and the later use would dilute the mark's strength—that is, weaken its reputation for quality (called tarnishment) or render it common through overuse. The Federal Trademark Dilution Act of 1995 expanded the scope of rights granted to famous and distinctive trademarks under the Lanham Act. President Clinton signed the Anti-counterfeiting Consumer Protection Act of 1996 (Public Law 104-153). This law, which had the International Anti-Counterfeiting Coalition (IACC) behind it, was drafted to make counterfeiting a more heavily penalized crime. Under this law, trafficking in counterfeit goods can result in the imposition of criminal penalties found in the RICO (Racketeer Influenced and Corrupt Organizations) Act. The RICO Act permits increased jail time, higher fines and asset forfeiture. The Act also allows greater involvement by all federal and local law enforcement in fighting counterfeiting; including enhanced authority to seize counterfeit goods. President Bush signed H.R. 32, the Stop Counterfeiting in Manufactured Goods Act, on March 16, 2006. It is the most significant anti-counterfeiting legislation in more than 20 years, setting a new world standard for anti-counterfeiting protection. The Act is a direct response to the increasingly pervasive and dangerous international counterfeiting problem that is threatening the U.S. economy, costing the U.S. jobs and harming U.S. citizens. According to the U.S. Customs and Border Protection, the U.S. has lost over 750,000 jobs due to the manufacture, sale and distribution of counterfeit goods.
The Organization for Security and Cooperation in Europe (OSCE) found that 7% to 10% of the total world trade ($450 billion) is from counterfeit goods (Dimet, 2006; Sforza, 2006; Thomas, 2006c). Both the International Anti-Counterfeiting Coalition (IACC) and OSCE agree that much of the counterfeit industry is made up of fashion items. About 18% of the $98 million worth of counterfeit products detained by the U.S. Customs in 2002 were apparel, sunglasses, watches, handbags, and headwear. Much of the counterfeit fashion industry comes from foreign countries. About 70% comes from Asian countries, including China, Korea, and Taiwan with top counterfeit production and sales, respectively (Nellis, 2003). Some research has been done to track the number of purchases of authentic products versus counterfeit products from particular designers. Led bury (2006) conducted a study on brands that consumers purchase most in the UK. The study compared the percent of genuine product purchases to the percent of counterfeit product purchases and found that Louis Vuitton, Gucci, Prada, and Tiffany have nearly the same amount of consumers purchasing the genuine product as consumers purchasing the counterfeit version. On the other hand, Yves Saint Laurent, Chanel, and Burberry have more consumers purchasing than the genuine products than the counterfeits.
Ill-Effects Of Counterfeiting
Charles Caleb Colton surely didn’t realise that one of his quotes, “imitation is the sincere form of flattery” Would be taken up so seriously by people that that the amounts of counterfeit goods outgrow the number of originals. Though counterfeiting comes out as far less publicized crime, but it still is ranking as first in economic encroachment across the globe.
If only it could be figured out how insanely wide repercussions counterfeit goods have from this quick preview from a 1998 movie “knock off” portrayed people in Hong Kong making knockoff jeans of some high end brand and not only that was enough they even were laden with Nano bombs which the mafia was sending across to the U.S. This gives you slight insight about the ill effects of knockoffs, sure it deteriorates a brands reputation but is in fact more like a shield which criminals hide behind to not only fund their illicit activities but also earn the fund through these.
Counterfeit purchases deprive the U.S. of more than $200 billion each year in tax revenue (Hathcote, Crosby, & Rees, 2005; Kelleher, 2006; Nellis, 2003). That money could be used, instead, for programming in such places as schools, hospitals, and communities. Less revenue equals less money, which in turn means fewer resources for Americans. Selling counterfeit products is cash, tax-free business. Ordinary citizens are required to pay taxes but dealers fill their pockets with the tax dollars instead of paying the government. According to Ha and Lennon (2006), counterfeiters contribute to the “economic black market” because governments lose money with no tax revenue. Serious threats and terrorist acts have been linked to the counterfeit industry. For example, handbags can be lined with illegal drugs and used for smuggling. Groups such as Al-Qaeda, the Mafia, the Irish Republican Army, and Chinese Triad profit from selling counterfeit goods. There is evidence to show links between terrorism and counterfeit goods (Ha & Lennon, 2006). Evidence from the Federal Bureau of Investigation (FBI), other federal officials, and anti-counterfeit investigators shows the bombing of the World Trade Centre in 1993 was funded by the sale of counterfeit fashion goods (Ha & Lennon, 2006; Henry, 2003; Kelleher, 2006; Nanda, 2007; Nellis, 2003). Counterfeiting businesses are threatening society; every time someone purchases a counterfeit product, he/she supports illegal activities of some kind, somewhere in the world (Kelleher, 2006). Not only has the counterfeit business reduced the amount of tax revenue and posed serious threats to security, but also the business has eliminated numerous jobs for people around the world. The Counterfeiting Intelligence Bureau studied the number of jobs lost in recent years due to counterfeiting and discovered between 1988 and 1997 over 200,000 jobs have been lost worldwide; over 100,000 jobs were lost in European countries alone, and 30,000 fashion and apparel related jobs have been lost worldwide (Fighting Counterfeit, 2007; Ha & Lennon, 2006; Sforza, 2006).
In Fiscal Year 2011, US Customs & Border Protection (CBP) and Immigration & Customs Enforcement (ICE) seized nearly $200 Million worth of counterfeit goods intended for sale in the United States. Unfortunately, we also know that those represent only a small percentage of the total market for counterfeit goods. Globally, the trafficking of counterfeit goods is much larger, and growing. That growth is driven in part by CONSUMER DEMAND.
The reason that terrorist organizations would fund themselves through counterfeiting is simple: fast, easy, plentiful cash. Counterfeiting and piracy are extremely easy industries to enter and would help terrorists maintain a certain level of anonymity. In addition, the profits from counterfeit sales significantly outweigh those of other illegal products. While the sales of cocaine might yield an entrepreneurial criminal a 100% profit margin, sales of pirated Windows software would earn a savvy counterfeiter profits of up to 900%.
There are various agencies, one of them which is trying to put across the message loud and clear is fake goods fund crimes, this has its headquarters in the UK. This agency functions and undertakes responsibility of 4 areas they being, Fake DVDs, Fake Fashion, Fake Money and Fake Cigarettes. They even encourage people to report such menaces and their anonymity is preserved.
Another one is IACC International Anti Counterfeiting Coalition formed in 1979 The International Anti-Counterfeiting Coalition is the world's largest non-profit organization devoted solely to protecting intellectual property and deterring counterfeiting. Our membership spans from automotive, apparel, luxury goods and pharmaceuticals, to food, software and entertainment. From the small privately-owned companies to large multinationals, we share one common goal–to combat counterfeiting and piracy. The IACC serves as an umbrella organization, offering anti-counterfeiting programs designed to increase protection for patents, trademarks, copyrights, service marks, trade dress and trade secrets.
It’s not like this counterfeiting issue is taken lightly recently many affected parties have been dragging these issues to the court in seek of justice, one such example is that of a case between Gucci America Inc v. Guess Inc. et al15, U.S. District Court, Southern District of New York, No. 09-04373 where reportedly Guess was booked for infringement of four designs: green-red-green stripes, a stylized "Square G," a group of four interlocking "G"s known as a "Quattro G," and a script logo. All but the last of these are covered by the injunction passed by the court. The verdict was announced in favour of Gucci which recovered $4.6 million.
This U.S. court ruling that requires EBay Inc. to pour more money into blocking the online sale of counterfeit luxury goods in a case between TIFFANY (NJ) INC. and TIFFANY AND COMPANY v/s EBAY, INC 08-3947-cv. Tiffany & Co. accused EBay in a nonjury trial in November of trademark infringement by allowing sales of bogus silver jewellery. Tiffany and other retailers say online sales of fake clothes, bags and jewellery cost them about $30 billion a year. This is a positive step as EBay is one of the biggest names in online shopping used by people across the world. EBay has taken it so well that it has almost published on its site how to spot a fake Louis Vuitton authentic guide.
Prevention Is Better Than Cure
With the growing awareness among people relating to the counterfeiting of goods it’s hard for all associated with this practice to maintain their business for long. But the best way to tackle this problem is from the root, which means that manufacturers must be cautious while handling their brand products. A manufacturer should have in place an effective anti-counterfeiting program to help protect itself from potential tort liability stemming from counterfeits. There is no single solution; a variety of techniques and actions should be taken to prevent counterfeiting. Furthermore, a manufacturer should take a zero tolerance approach against internal or external resources that take part in or facilitate counterfeiting. Once the level of concern is recognized, a manufacturer should create a comprehensive plan to identify weaknesses in its distribution and supply chain. Most manufactured products change hands a number of times before ever reaching retailers. Products often pass between the hands of so many middle men that accountability and tracking are lost. Therefore, a manufacturer should evaluate its entire manufacturing and distribution channel, from raw materials to the consumer. The following are a variety of methods a manufacturer can utilize to better police their manufacturing and distribution systems. This process is facilitated by purchasing raw materials from authorized suppliers only, and where possible, source from fully auditable suppliers who source exclusively from original manufacturers, franchised distributors or the first owners of the goods. Also, identify businesses having a higher probability of engaging in trade of counterfeit products. Businesses in certain regions of the world should be scrutinized more thoroughly than others: Eastern Europe and Southeast Asia, especially businesses in China. In the Department of Homeland Security’s mid-year report for 2007, 81% of all counterfeit product seizures were transported from China. .
A manufacturer should demand such authority from its suppliers, and a manufacturer must act on this authority. To make this feasible, a manufacturer may be required to reduce its source base. Institute must constitute shipping policies to protect the integrity of raw materials and component parts. Develop guidelines to ensure the physical security of overseas factories in the supply chain. Fully inspect carrier documents. Use seals on containers and note seal numbers on shipping manifests to protect containers from being opened and resealed. Further, develop relationships with customs authorities to exchange information and target shipments suspected of containing counterfeit products. Customs and Border Protection and U.S. Immigration and Customs Enforcement may prove helpful in seizing incoming shipments of counterfeit products before they can enter the stream of commerce. In some industries, such as pharmaceuticals, chemical markers may also prove useful to trace quantities being shipped. Such markers cannot be detected by human senses and are also difficult to detect through normal analytical techniques because the counterfeiter would need to know exactly which chemical marker has been used and be able to screen for it at the part-per-billion levels that can be achieved.
A. Verify the Legitimacy of Customers and Distributors
Counterfeiters prey on weaknesses in the legitimate supply chain. Often they pose as legitimate businesses and seek to purchase manufactured products in bulk in order to blend fake products. A manufacturer should be vigilant in ensuring it sells only to legitimate distributors and retailers. The following are some good practices:
1) Develop procedures for sales representatives to verify the legitimacy of purchasers. Instruct sales representatives to investigate the purchaser’s business background and scrutinize sales where the purchaser is willing to pay cash for very expensive orders or makes an unusually large order.
2) If feasible, employ investigators to track down purchaser history and provide leads on common spots for illicit trade. Manufacturers can employ investigators worldwide to assist in their effort to prevent counterfeiting. Ford, for example, has a full-time staff dedicated to finding counterfeits, and they, in turn, rely on additional informants outside the U.S. to provide leads, particularly at common spots for illicit sales, such as trade shows. Such undercover work can be especially helpful because distributors and suppliers involved in counterfeiting tend to be a tightly knit community that can be extremely difficult to penetrate..
A manufacturer does not have to make such an expensive commitment to utilize the advantages of market intelligence. “Mystery shopping,” where random samples are collected and tested can provide counterfeiting information for relatively low costs.
3) Monitor Internet sales of product and component parts.
The proliferation of the use of the Internet to purchase products, including electrical products, automotive components and pharmaceuticals, presents counterfeiters with direct access to the buying public. Manufacturers must actively and aggressively monitor Internet sales and secure products from the Internet to evaluate the authenticity and quality of the products marketed and sold using its brand. “Mystery shopping” from online sellers is a very useful tool in this setting.
4) Ensure subcontractors only produce authorized merchandise.
When performing audits, ensure subcontractors are not running “third shifts” to create undocumented products for distribution outside the proper supply chain. Unannounced audits may prove especially helpful, but this should be done only if this right has been negotiated into the contract with the particular subcontractor.
B. Manage Product Waste and Damaged Inventory
Because counterfeiters often prey on scrap yards, waste repositories or reclamation centres, a manufacturer should take appropriate steps to ensure waste and damaged products are disposed of properly.
C. Ensure the Legitimacy of Purchased Products at Retailers
In addition to the top-to-bottom approach recommended above, a manufacturer should still ensure the legitimacy of the product upon delivery to retailers. Retailers can be provided a variety of information and techniques to ensure products are genuine. Retailers should audit shipments, verifying packaging, case markings, pallet configurations, etc. Where feasible, products should be opened to confirm the units have proper batch numbers, expiration dates, or other identification codes. Any repackaged products or broken or altered seals should always be viewed with suspicion. Covert track and trace technologies, such as the FDA’s Radiofrequency Identification technologies (RFID), are an additional technique to be considered. This technology allows a manufacturer to trace its products through distribution channels with electronic tags that can be hidden on shipments. Using these technologies, a manufacturer can tell if a shipment has been diverted thereby allowing the retailer to more thoroughly scrutinized the shipment. In addition, this technology provides a manufacturer with a “head start” in tracking down the counterfeiter in question. As opposed to covert tracing systems like RFID, which provides information to track diversions from normal shipping patterns, a manufacturer should also use overt security devices to deter counterfeiters from even attempting to replicate a product. Such technology includes using holographic labels where the use of expensive or difficult-to-obtain material makes it difficult for counterfeiters to mimic the product. Such technologies can be very creative. Anheuser-Busch recently faced a problem with counterfeiters in China refilling discarded bottles for resale. To deter such activity, the company started using expensive foil labels on the bottles that were temperature sensitive, turning red when cold.
Outreach to Law Enforcement, Regulatory Officials, the Public and Competitors, manufacturer is not alone in the fight against counterfeiting. Law enforcement is in place domestically and abroad to assist in the attempt to stop counterfeiting. Indeed, the U.S. government is working to pressure other nations to crack down on the problem. In addition to governmental assistance, competitors and the public should be looked to for assistance.
As discussed above, developing relationships with customs authorities to exchange information and target shipments suspected of containing counterfeit products is an important factor in preventing counterfeits from entering the market. In addition to situations where a manufacturer tracks a known shipment of counterfeit products, it is important to assist custom authorities in identifying counterfeit products. Therefore, manufacturers should develop and maintain goodwill with law enforcement. Where feasible, a manufacturer should provide customs authorities’ information regarding specific counterfeiters so they increase scrutiny of associated shipments, and also provide samples of legitimate and counterfeit products so authorities will better recognize potential counterfeit products. Lobby government officials to pressure other nations to crack down on counterfeiting. To some degree, this is already being done, but the pressure must continue. Several commissions, such as the U.S.-China Economic and Security Review Commission and the U.S.-E.U. Action Strategy for the Enforcement of Intellectual Property Rights, have been formed to focus on this issue, but these meetings will only moved forward with the assistance of affected industries, which are in the best position to marshal the evidence of counterfeiting in today’s markets. To some degree, an anti-counterfeiting program’s goal is to make a manufacturer’s own product less attractive to a counterfeiter than competitors’ products, but industrial competitors’ conflicts of interests with regard to counterfeiting ends there. Competing manufacturers face the same challenges, so working together may result in creative solutions and reduce overall costs of implementing a comprehensive anti-counterfeiting program. The public consumers are often in the best position to discover counterfeits, so channels need to be available for consumers to contact a manufacturer regarding potential counterfeits. For example, in the 2003 Lipitor incident, complaints by twenty consumers regarding the strange taste of the pills triggered an investigation that traced the fake pills to a sophisticated counterfeiting enterprise in South America. Therefore, hotlines or other direct communication channels should be provided to consumers so they can directly contact a manufacturer when there is a concern. Given the tremendous increase in counterfeiting in today’s markets, a manufacturer facing a claim that one of its products injured a consumer should be hesitant to assume the product was in fact a genuine product. Testing procedures should be implemented by manufacturers to analyze questioned products to ensure product authenticity. Such measures could provide significant defences to a claim and reduce a manufacturer’s annual litigation costs. These examples should provide any product manufacturer with a framework for creating its own anti-counterfeiting program. No one program will work for every manufacturer, but all programs will require comprehensive and creative efforts. Furthermore, taking a zero tolerance approach when counterfeiters are found will ensure the program actually provides results.20
Even if we start today in thy love of Louis Vuitton it will take some time to mend the mishaps so happened by the befalling legacy of counterfeiting goods taking over the planet and hijacking the design, trademarks and other rights which solely belong to the creators but as a result a small step can help pave the way for ahead, spreading awareness as well as straitening the laws, encouraging the support of more and more agencies as well as non profit organisations and persuading people on giving up their counterfeit luxuries for the betterment of the society at large can be positive and assuring long lasting steps.
I leave you with these tips that will be handy, How to Spot a Fake,
The International Anti-Counterfeiting Coalition offers consumers five tips to help avoid purchasing counterfeit goods. Keep an eye out for:
Firstly, labels those are blurred or torn.
Secondly, product names those are misspelled or altered.
Thirdly, unannounced changes in product content, colour, smell or packaging.
Fourthly, missing codes, consumer numbers or trademarks.
Lastly, products lacking the usual guarantees and/or licensing agreements one should find.
So ladies when you see that Prada bag and your heart starts to melt like butter on a hot toast remember it’s not even close to what you picture in your for it to be.
# 20 Russell B. Morgan, Kyle D. Neal, How to Prevent and Defend Claims Resulting from Counterfeit Products, Bradley Arant Boult Cummings Publication, (2008)
# Amy Frerichs, Attitudes toward Counterfeit Fashion Products: A South Dakota State University Case Study, Journal of Undergraduate Research: Volume 6, 2008, at 19
# Catherine Soanes, Sara Hawker, Julia Elliott, Oxford English dictionary, Oxford University Press, USA, 22-Sep-2005
# Adele R. Meyer, The Facts on Fakes!, (2012), http://www.narts.org/i4a/pages/index.cfm?pageid=3313
# Uche okonkwo, Luxury fashion branding: trends, tactics, techniques, Palgrave Macmillan, 15-Jun-2007
# Traveller and Tourist, Avoiding Fakes and Fines on Your Summer Holiday, 13 July, 2011, http://www.travellerandtourist.co.uk/article/avoiding-fakes-and-fines-your-summer-holiday
# Tara MacIsaac, No More Knockoffs, Says Councilmember Chin, April 26, 2011, http://www.theepochtimes.com/n2/united-states/no-more-knockoffs-says-councilmember-chin-55418.html
# BBC News, Tourists warned over fake goods, 22 August 2009, http://news.bbc.co.uk/2/hi/uk_news/8215519.stm
# Adele R. Meyer, The Facts on Fakes!, (2012), http://www.narts.org/i4a/pages/index.cfm?pageid=3313
# Amy Frerichs, Attitudes toward Counterfeit Fashion Products: A South Dakota State University Case Study, Journal of Undergraduate Research: Volume 6, 2008, at 19.
# IACC, About Counterfeiting, iacc.org/truth-about-counterfeiting
# Zachary A. Pollinger, Counterfeit Goods and Their Potential Financing of International Terrorism, The Michigan Journal Of Business, Vol. 1, Issue 1, January (2008)
# Fakes Fund Crimes, http://www.fakesfundcrime.org.uk/home/fake-goods-fund-organised-crime
# IACC, https://iacc.org/about-the-iacc/mission-history.php
# Fashionpile, EBay Reviews and Guides, http://reviews.ebay.com/How-to-SPOT-fake-LV-LOUIS-VUITTON-authentic-Guide-1?ugid=10000000000021258
# U.S. Customs and Border Protection, Office of International Trade (2007), http://www.cbp.gov/linkhandler/cgov/import/commercial_enforcement/ipr/seizure/07_midyr_seizures.ctt/07midyr_seizures.pdf
# See Coalition Against Counterfeiting and Piracy, Supply Chain Best Practices Tool Kit, 8 (2006)
# See F. Balfour, Fakes!, BusinessWeek, Feb. 7, 2005, at 60.
# See FDA, Enforcement Manual Newsletter Drug Anti-Counterfeiting Techniques Move Beyond Product Packaging to the Tablet—and Patient (October 2005)
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