In The Knockoff Economy Kal Raustiala and Chris Sprigman argue that brands actually benefit when counterfeiters sell cheap copies of their products. Highlights from an excerpt posted on Freakonomics include:

• When people buy a cheap knock-off of a famous product they’re implicitly sending the message that the original is so desirable that it’s worth it to buy a counterfeit.
• This kind of endorsement is excellent marketing for any brand.
• Since the counterfeits are often of low quality, it’s very easy to distinguish between the authentic product and the ones you can buy from a street seller.
• One study found that 40% of those who bought a counterfeit went on to buy the genuine product later on, meaning that the counterfeit is often used as a test run for the original.

Read more about what this means for companies with trademarks by reading the full excerpt over here. You can find the book here.

Source: Freakonomics