Confiscation of the Proceeds of IP Crime 2013: A modern tool for deterring counterfeiting and piracy

The theft of Intellectual Property (IP) in the forms of trademark counterfeiting and copyright piracy is a socio-economic problem of enormous scale that has escalated significantly in the last decade.

In one country after another, the massive infiltration of counterfeit and pirated products has created an enormous drain on national economies around the world — crowding out billions in legitimate economic activity and facilitating an “underground economy” that deprives governments of revenues for vital public services, forces higher burdens on tax payers, dislocates hundreds of thousands of legitimate jobs and exposes consumers to dangerous and ineffective products. Moreover, the Internet is increasingly exploited as an illicit marketplace for counterfeiting and piracy. The latest estimate from ICC BASCAP indicates that the total global value of counterfeiting and piracy could reach a staggering peak of USD 1.7 trillion by 2015.

Objectives of the report

Sound legislation on confiscation and recovery of assets has already proven to be a very effective way to fight against organized crime and its profit-driven criminal enterprises. However, despite the effective application of Proceeds of Crime (POC) legislation to traditional organized criminal activity, there has been limited application to criminals producing and trading counterfeit and pirated products.

This report aims to encourage more governments to develop and apply of “Proceeds of Crime” legislation to IP crimes. Recognizing that POC legislation is complicated and the process from drafting legislation to implementing regulations can be lengthy and difficult, the report is intended to provide a guide to facilitate the process and, consequently, achieve more rapid implementation.

To do so, the report:

1. Explains the primary provisions of POC laws relating to the process of identifying, tracing, freezing or seizing, confiscating and returning proceeds of crime to its victims, enforcement agencies or the state.
2. Examines POC legislation in four different counties (United Kingdom, Australia, Italy and Switzerland), highlighting the best practices from these countries and the most effective features of POC legislation.
3. Provides an inventory of key legislative provisions and best practices which could serve as model provisions for governments to design modern and effective POC regimes, with an emphasis on applicability to IP crime.

Looking forward

This report highlights the growing role that organized criminal networks play in intellectual property crimes. A sampling of POC laws in place in the United Kingdom, Australia, Italy and Switzerland are put forward as examples of how the confiscation of assets under these laws can serve as an effective additional punishment and deterrent to IP criminals — leveraging existing laws to enforce the protection of IP rights and providing a valuable source of “self-funding” for further IP law enforcement activity.

It is hoped that the report generates greater awareness among policy makers in more countries of the value of this type of legislation, and that the inventory of key legislative provisions and best practices will encourage and support national government efforts to establish or enhance a proceeds of crime legal framework.

Notably, there are indications that national governments are increasingly adapting POC legislation to tackle a wider range of criminal activity. For example, a study of the 117 countries that are parties to the World Health Organisation Framework Convention on Tobacco Control (FCTC) found that 56% reported enabling the confiscation of proceeds derived from the illicit trade in tobacco products.

BASCAP and UNICRI share a common commitment to stop the infiltration of organized criminal networks into counterfeiting and piracy. That commitment led to the development of this report, and collaborative work in this area will continue.