Report proposes new method to estimate impact of IP rights infringements on sales

European Union

On September 27 2012 the report "Measuring IPR infringements in the internal market", prepared by research organisation RAND Europe for the Internal Market and Services Directorate General of the European Commission, was presented to the inaugural plenary meeting of the European Observatory on Infringements of Intellectual Property Rights at the headquarters of the Office for Harmonisation in the Internal Market in Alicante, Spain. 

The report does not offer any information on the number of IP rights infringements in the European Union, their scale or their effect - however, it proposes a new method for estimating the impact of IP rights infringements on rights holders’ sales.

In order to arrive at this method, the researchers performed a comprehensive review of existing estimates and methodologies used to quantify IP rights infringements and their effects, and came to the conclusion that none of them were sufficiently objective, transparent or capable of being reproduced. They were thus inadequate for the purpose of providing reliable annual measurements for all of the affected products or markets and in all countries of the European Union.

In view of this situation, the report proposes a new method which basically consists in comparing the rights holders’ sales forecasts with their actual sales data in order to estimate “unfulfilled demand” for a product, presuming that the difference is, at least in part, caused by counterfeit products.

The researchers have tested the method using data provided by a multinational technology firm which produces consumer goods targeted by counterfeiters, and the results have been acceptable. Nevertheless, the report itself acknowledges that the limited scope of this test does not enable reasonably reliable conclusions to be drawn concerning the applicability of the method to broader market sectors or within the context of illegal downloads of protected works.

The report also acknowledges that there are a number of obstacles that stand in the way of using this procedure, not least important of which is the reluctance of companies to share forecast and actual sales data.  

The method proposed by the report appears to be an interesting alternative to estimations based on seizure and enforcement data. However, it is clearly at an initial development stage, and further research will be necessary before it can be considered useful in the difficult task of quantifying IP rights infringements and their impact.

Carlos Morán, Elzaburu, Madrid

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