Intellectual property (IP) theft is a huge and growing global challenge that costs legitimate businesses worldwide €700 billion in lost sales annually, according to new research by the ICC. It urged immediate and sustained government measures to bring counterfeiting and piracy under control.
Another recent report by UK-based Frontier Economics found that the economic cost of IP theft extends well beyond lost business sales. According to Frontier’s study, counterfeiting and piracy cost G20 governments more than €100 billion a year in lost tax revenues and place 2.5 million legitimate jobs at risk.
“IP theft has become a serious economic and criminal problem, and it is getting worse every year,” said Jean Rozwadowski, Secretary General, International Chamber of Commerce. “It is urgent that the G8 and G20 leaders not only commit to action on counterfeiting and piracy at this year’s summit, but also ensure the issue is on future summit agendas.”
According to ICC research, counterfeiting and piracy also impede innovation, international trade and business investment while concern over weak IP rights enforcement causes G20 economies to lose foreign direct investment. Furthermore, consumers waste money on poor-quality counterfeits that are unregulated and sometimes hazardous. This causes increased government spending on both health care and – because of widespread criminal involvement in the counterfeit trade – crime prevention.
On the flip side, the research found that stronger IP protection helps drive innovation and economic development and would recover billions in taxes lost to IP theft.
Another recent study, by Paris-based Tera Consultants, found that the growth of unauthorised file sharing, downloading and streaming of copyrighted works and recorded performances is a major threat to both revenues and employment in Europe’s creative industries. The study, “Building a Digital Economy: The Importance of Saving Jobs in the EU’s Creative Industries,” predicts digital piracy will cost Europe up to 1.2 million jobs and €240 billion in retail sales by 2015.
“Better IP protection must be a key part of any G8/G20 response to weak economies, high unemployment and ballooning deficits,” Rozwadowski said. “Now is the time to increase, not decrease, the resources targeting piracy and the illegal trade in counterfeits.”
Measures urged by the ICC and many national Chambers of Commerce include: confiscating the proceeds of counterfeiting-related crime; cracking down on counterfeiting in free trade zones; stopping the cross-border trade in fakes; investing resources in more effective enforcement; building the judicial system’s capacity to handle piracy issues; curbing illegal sales of fakes over the Internet; and introducing more effective measures against digital piracy. The ICC stressed that government efforts to strengthen IP enforcement regimes should not be considered costs, but rather investments that pay tangible economic and social dividends.
Communiques at recent G8 summits have acknowledged the growing need for stronger IP protection. Recently, some countries have made progress, including the summit host, Canada, which this month introduced copyright reform legislation.
“Past G8 commitments have failed to produce concerted action on this issue,” said Jeffrey Hardy, Coordinator, Business Action to Stop Counterfeiting and Piracy, an arm of the International Chamber of Commerce. “This year, we are looking for the G8 and G20 to signal that measures against IP theft are a priority, not only in their countries, but for the many other nations that look to them for leadership.”