Counterfeiting is out of control

  • 13 May 2005

By Maria Livanos Cattaui

The theft of intellectual property has become as serious for society as the theft of physical property. Not only has the problem grown in size – now accounting for $600 billion per year in counterfeit goods worldwide – but also in the range of products and the geographic scope.

Almost every successful product – pharmaceuticals, toys, spare parts for cars and aircraft, software, entertainment products, clothes, cosmetics and fashion accessories – is being copied. All regions are now both production and consumption areas, and almost no country is unaffected by the problem.

Intellectual property theft has become a sophisticated industry using high technology, the Internet, and the networks and know-how of organized crime. Counterfeiting and piracy are more profitable than narcotics but without the risks; they are becoming the number one crime of the 21st century. Combating them has become a priority for society, and not just for intellectual property right holders.

Knowledge-based industries are the keystone of the economic strategies of many countries at different stages of economic development. Developed countries need them to create jobs; developing economies need them to move up the value chain.

Intellectual property theft stifles innovation and deters honest local entrepreneurs from investing in product and market development, especially in knowledge-based industries. The most affected victims of intellectual property theft are often small local entrepreneurs who are successful enough to be copied, but who do not have the resources or know-how to defend themselves.

Producers of reputable products are reluctant to manufacture in countries where intellectual property theft is rife. Such countries lose out on outsourcing and employment opportunities, as well as on foreign direct investment and transfer of know-how and technology.

The impact is not only economic. Intellectual property theft is an illegal activity whose perpetrators do not pay tax, do not respect labor laws and do not care about product quality or safety.

Governments therefore have less money for the country’s infrastructure; workers in this underground sector have no legal protection, and consumers are subject to risks to health and safety when products such as toys, medicines, foodstuffs, beverages, airplane parts or car parts are reproduced without the safety features of the originals.

Consumers end up with inferior products with no after-sales service, and less choice as legitimate manufacturers pull out of markets where intellectual property theft is prevalent.

Individual companies and business sectors have attempted to fight the counterfeiting of their products on their own at great expense and with limited results.

It is time for all sectors to unite, to pool resources and knowledge, and to work under one umbrella with governments and enforcement agencies. In recent months, companies and organizations from all parts of the world, including Interpol, the World Customs Organization and the World Intellectual Property Organization, have met together through Business Action to Stop Counterfeiting and Piracy, a new initiative of the International Chamber of Commerce.

This initiative is coordinating and organizing industry efforts, identifying common messages, creating a central location for knowledge, data and other intelligence, developing information materials and ensuring that lessons learned, good practices and various achievements are shared throughout the business community.

The last two Group of 8 summit meetings have recognized the growing need for strong measures to fight piracy and counterfeiting. However, we in the business community have seen little evidence of concrete action. We urge the leaders meeting at the Gleneagles summit in July not only to reiterate the importance of respect for international obligations in the intellectual property field, but also to commit their governments to enforce existing laws against such activity with a new and strong determination.

Business stands ready to assist and support governments to the maximum in the design and execution of vigorous programs to that end.