Disturbing Trends in Counterfeit Imports
The recent release of two influential reports by The Organisation for Economic Co-operation and Development (OECD, Trade in Counterfeit and Pirated Goods) and European Union Intellectual Property Office (EUIPO, Status Report on IPR Infringement), revealed an extremely worrying trend: imports of fake goods into Europe still grew even in flat and recessionary economic climates. This startling conclusion must be factored in any future anti-counterfeiting initiatives to ensure consistent pressure is applied to the illegal sector.
The growth of the fake goods trade
OECD’s report noted that illicit imports grew from €85 billion in 2011 to over €121 billion in 2016 – this is larger than the GDP of Slovakia! Beyond the 50% increase, the sector’s share of the overall trade market also grew from 5% to 6.8% during the period.
A secondary, and perhaps more important, observation included in the two reports is the seeming insufficient level of enforcement in regions. The criminal organisations behind the illicit trade are emboldened by this and adapt their operations to take advantage of such gaps in enforcement. Further, they enhance the complexity of their distribution by using multiple channels and entry points, such as small packages using postal services and free trade zones. They further conceal their activities by communicating through social media and communication apps.
In light of such developments, there are fears that rights holders and business owners may feel discouraged from protecting their intellectual property (IP) rights in the open market. Aside from the high cost involved, stakeholders are disappointed at the lack of legislative bite in some EU member countries to tackle the issue. Even the financial penalties are deemed to be too low to act as a suitable deterrent.
Continuous action is critical
However, brand owners must continue to enforce their rights. Otherwise, counterfeiters will benefit from this. Being reactive will also allow illicit traders to establish more sophisticated distribution networks and solidify existing ones that would be much harder to take down.
Brand owners must also continue to lobby the public and national legislatures to impress upon them the economic losses and missed opportunities caused by fake imports. In the four years between 2012 and 2016 alone, EUIPO estimates that fake goods cost EU citizens approximately 468,000 jobs and €92 billion in lost revenues! This is before we factor in the cost of reputation for brands, as well as lost tax revenues for governments. There’s clearly a lot of work that still needs to be done.