Dry Battery Counterfeit White Paper

It is widely documented and now universally recognized by governmental and non-governmental organizations that the theft of intellectual property, including patented technology, trademarks, and copyright, is a significant trade problem. Laws have been written and are being improved upon globally, which criminalize the manufacture and sale of these products and provide civil enforcement remedies to remove them from the marketplace. There is also a growing awareness and documentation that products bearing counterfeit and infringing trademarks, while appearing identical or confusingly similar to a genuine product on the outside, are not the same as a genuine product on the inside and may present hazards to the health and safety of the users of these products. Documented instances of health and safety problems involving products bearing counterfeit and confusingly similar marks and trade dress include pharmaceuticals, electrical products, automotive parts, and aircraft parts. The Dry Battery Section of the National Electrical Manufacturers Association has prepared this white paper to inform the public about the health and safety problems that have been found with counterfeit (identical or nearly identical) and infringing (confusingly similar) batteries, where manufacturers and distributors of their products unlawfully seek to trade on the intellectual property rights and reputation of the genuine brand owners. Whether identical in appearance or confusingly similar, this paper refers to the fake branded product collectively as “counterfeit”.

Counterfeit batteries have a negative impact to both consumers and manufacturers of genuine battery products. Counterfeit batteries have exhibited characteristics presenting both safety and environmental concerns, which negatively impacts both consumers and the U.S. industry. This document discusses issues that face the U.S. industry due to the presence of counterfeit battery products in the marketplace.

Manufacturers of genuine branded batteries manufacture their products to specifications intended to meet consumer expectations for performance and quality. Counterfeit products, on the other hand, are products designed to mislead consumers into thinking they are purchasing a good quality branded product. When poorly constructed, these counterfeit products are prone to leakage of electrolyte. This leakage can occur while the battery is still in the package, during non-typical use, or even during typical use. Battery electrolytes are potentially harmful to body tissues and reputable battery makers take great care to design products where leakage is essentially prevented. Battery electrolyte is also potentially harmful to the circuitry in devices.

Quality batteries typically contain a vent designed into the seal of the battery. This single-use vent is designed to release internal pressure within the battery during a condition of abuse to preclude an explosion. Counterfeit batteries may not contain a vent or may contain a suspect quality vent. Either version can be problematic in the event of battery foreseeable misuse and abuse. If pressure is generated inside the battery due to misuse/abuse, and the vent is either not present or does not work properly, the internal pressure cannot escape by design and this could result in an explosion.

Another trend observed with counterfeit batteries is the use of less expensive carbon zinc technology in a counterfeit alkaline package. Battery makers warn of mixing different types of batteries on packaging because mixing chemistries can result in one or more batteries being deeply discharged as the higher capacity batteries discharge longer than the lower capacity batteries. An unsuspecting consumer that has purchased both legitimate and counterfeit alkaline batteries of the same type could unknowingly mix carbon zinc with alkaline batteries. The resultant deep discharge of the carbon zinc batteries can lead to pressure generation within the batteries. This pressure generation can lead to electrolyte leakage, venting, or even an explosion depending on the quality of the vent mechanism.

Counterfeit batteries have been found to contain mercury, which appears to be intentionally added, a violation of both federal and numerous state laws. The 1996 “Mercury-Containing and Rechargeable Battery Management Act” bans the sale of alkaline and carbon zinc batteries with “intentionally introduced” mercury. Seventeen (17) states have passed laws limiting the amount of mercury that can be in an alkaline or carbon zinc battery sold in their state. Twelve (12) of these states require “no added mercury,” one (1) sets the limit at 1 ppm of mercury and one (1) sets the limit at 4 ppm of mercury. The U.S. battery industry’s development of a quality performing battery without intentionally added mercury was an important action that encouraged public policy makers to avoid adopting costly battery collection requirements, which costs would ultimately be passed on to consumers.

Counterfeit battery products harm the brand reputation of the battery manufactures and the battery category in general. According to U.S. Customs seizure statistics for 2001, nearly four million dollars worth of counterfeit batteries exported from China were seized and the problem appears to be getting worse. Recent retail market sampling, conducted by the battery industry, suggested annual estimated sales losses of $12 million in U.S. sales, $4 million in South American sales and $7 million in European sales. U.S. companies, which have succeeded in attaining brand recognition and a loyal consumer base, are losing millions of dollars of business. Counterfeiters are profiting from the extensive marketing efforts of U.S. battery manufacturers who have invested millions of dollars in the design and performance of their products and who have developed a demand for reliable battery products that meet performance standards and government regulations. Consumers are being disappointed by poor performing counterfeits, or sometimes seriously injured due to unsafe products.

Sudden unexpected losses in market share and increases in the number of product-related complaints and misdirected lawsuits are problematic issues being dealt with due to counterfeit products. The increase and magnitude of the problem is costing U.S. manufacturing jobs. Counterfeit products take sales and profits from U.S. manufacturers. Product related complaints cause a burden on U.S. manufacturers and retailers who are forced to deal with those issues. When one considers that batteries are typically used in a variety of electronic products and games, the impact of a counterfeit battery product is far reaching. In a survey conducted by the IACC (International Anti-Counterfeiting Coalition), Fortune 500 companies reported spending on average between $2-4 million per year just to combat counterfeiting. At a time when manufacturers and retailers are struggling to stay competitive, these burdensome costs translate into reduced revenue and job losses.