Trevor Little

A major new study released today has revealed that counterfeit and pirated goods represented up to 2.5% of world trade in 2013 – a figure that Antonio Campinos, president of the EU Intellectual Property Office (EUIPO), noted “is equivalent to combined GDP of the Czech Republic and Ireland”. Reflecting on this, BASCAP director Jeff Hardy has called on policymakers to do more to fight the scourge of counterfeiting.

The research, Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, was conducted jointly by the OECD and the EU Intellectual Property Office (EUIPO), and aimed to measure and analyse the scale of counterfeit and pirated trade. To do this it utilised a global dataset covering almost half million customs data on seizures, supplemented by interviews with trade and customs experts. The headline findings are as follows:

  • In 2013, international trade in counterfeit and pirated goods products represented up to 2.5% of world trade (or as much as $461 billion).
  • Counterfeit and pirated products amounted to up to 5% of imports in 2013 in the European Union, (or as much as €85 billion).
  • The highest number of counterfeit shipments being seized originates from East Asia, with China the top source.
  • Rights holders in China are themselves frequently targeted by infringers: about 1.3% of seizures of counterfeit and pirated goods concerns violations of the IP rights of Chinese companies.
  • Almost 20% of the total value of seized products refers to IP rights of holders registered in the United States (followed by Italy (14.6%), France (12.1%), Switzerland (11.7%), Japan (8.2%) and Germany (7.5%)).
  • Between 2011 and 2013, an average of almost 62% of seizures worldwide concerned postal shipments.
  • The sizes of seized shipments tend to be small: shipments with fewer than ten items accounted for 43% of the total number of shipments (on average).

The research is not specifically designed for IP professionals, but rather as a tool to motivate policy-makers to ramp up efforts to fight illicit trade. To that end, the figures (which exclude products that are created and consumed in the same country, as well as online pirated digital products) provide a compelling reason to act. As Campinos stressed at the press conference to launch the report this morning, the figures “are almost too large to comprehend” and it is important that all governments are alerted to the real impact illicit trade has on their own economies: “IP rights are the fundamental building blocks of modern economies - they are also the future hope for developing countries.”

Another hope is that the message is heeded. At present, as BASCAP director Jeff Hardy noted at today’s launch, when it comes to fighting counterfeit trade “we are failing”, and there is a real need to ensure that policymakers take the threat seriously. Without a joined up, thoughtful international approach, anti-counterfeiting efforts will continue to fail. As the report notes, “traffickers exploit new governance gaps… [and are able to] quickly identify weak points and gaps, and consequently leverage opportunities for arbitrage”. Policymakers have to be equally nimble and provide enforcement authorities with the ability to stem the flow of fake goods wherever it emanates from and however it is delivered to market. 

Of course, this relates to the ‘supply’ side and Campinos was at pains to stress the need to tackle demand at the same time. He lamented: “if there is no demand there would be no supply. However, the issue is that the demand side is increasingly driven by youngsters, and young people feel totally disconnected from the things we are talking about.” To overcome this, he argued that the message needs to be personalised: “The only way we can convince them is to explain that each time they illegally download content or buy counterfeits, that they are costing jobs. That it impacts the amount of tax people pay. So it’s about their parents’ salary and jobs”.

What is clear is that the challenge is getting bigger. The positive is that IP counsel are not the only actor in efforts to combat illicit trade. But there is a negative too – that while they can’t solve the problem alone, not all other stakeholders feel the same urgency to act. Hopefully, studies such as this will go some way to encouraging increased meaningful action. 

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