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Trade in counterfeit & pirated goods is $.5 trillion – 2.5% of all imports

“Fakes,” or counterfeit products, are a growing menace that deplete resources, threaten jobs and endanger lives. 

A report compiled by the Organization for Economic Cooperation and Development (OECD) says that imports of counterfeit and pirated goods are worth nearly half a trillion dollars a year, or around 2.5% of global imports. That is about the entire GDP of Austria, or of Ireland and the Czech Republic combined.

The U.S., Italian and French brands have been the hardest hit, and “many of the proceeds going to organised crime.” The 2016 report was co-authored by the EU’s Intellectual Property Office. China also is in the top 12 (see graph below).

Five-percent are Fakes

Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact puts the value of imported fake goods worldwide at $461 billion in 2013, compared with total imports in world trade of $17.9 trillion.

Up to 5% of goods imported into the European Union are fakes, the report stated. Most originate in middle-income or emerging countries, with China the top producer.

“Transit points include economies with very weak governance and having a strong presence of organized crime or even terrorist networks (e.g. Afghanistan or Syria).”

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“Given the fundamental economic importance of IP, counterfeiting and piracy must be directly targeted as a threat to sustainable IP-based business models,” concludes the OECD report.

China may be making great strides in domestic patent protection (see China is Poised to Overtake the U.S. as the Leading Patent System) with low injunction hurdles and high respect for foreign-held rights, but as of 2013, it was responsible for almost two-thirds of global counterfeits, based on the percent of seizures documented.

Missing: Content and Invention Theft

Ironically, the Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, does not mention content sharing or copying, copyright violations, as a global threat.

It also does not address the economic impact of products being falsely sold as original that are infringing other businesses’ patents.

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For those interested, the 2017 OECD Global Anti-Corruption and Integrity Forum will be held this year in Paris, March 30-31. For more information go here.

 

Image source: OECD report

Gov’t study of economic impact of patent infringement is needed ASAP, experts say

There are abundant statistics on the cost of counterfeit goods, copyright infringement and even the negative impact of patent “trolls,” but nothing on the estimated extent of U.S. patent infringement and the cost in lost jobs, failed businesses and unpaid taxes. 

Global trade in counterfeits or fake goods, such as fashion, automobile parts and pharmaceuticals, has reached $600 billion annually, or about 5%-7% of GDP.  

The U.S. economy alone loses $58 billion each year to copyright infringement (2011 estimate) — crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue.

The Recording Industry Association of America (RIAA) reports that the U.S. economy loses $12.5 billion in total output annually as a consequence of music theft and that sound recording piracy leads to the loss of 71,060 U.S. jobs, as well as losses in tax income.

Statistics on the cost of counterfeits and copyright infringement are conducted fairly regularly. There is even biased research on the cost of non-practicing entities. (Claims of $29 billion in damage from “trolls” are wildly inflammatory, says a former USPTO commissioner, which despite having been debunked are still cited by academics and reporters.)

Surprisingly, there are no estimates of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses, unpaid taxes and other economic impact.

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“There have been no studies that I am aware of devoted to quantifying the amount of patent infringement in the United States,” said Gene Quinn, patent attorney and publisher of IP Watchdog told IP CloseUp.

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“”It would be extremely helpful to get some kind of quantification of the amount of harm that befalls innovators through the concerted and calculated ‘efficient’ infrdataingement business practices of those who use technology and simply refuse to pay for their ongoing, and frequently willful, patent infringement.”

Tip of the Iceberg?

Patent damages paid may be the tip of the infringement iceberg. The real damage may be below the waterline.

To provide some context, 15 leading technology companies paid patent litigation damages of more than $4 billion over as 12-year period from 1996-2008.

That’s just a little over a dozen companies who had to pay damages. The figure presumably does not include settlements, licenses, and all of the times they and thousands of other businesses paid nothing for the inventions that they used.

The Impact of Undetected Infringement 

  • Today, with more issued U.S. patents, and much greater difficulty securing a license or winning a patent law suit, the amount of patent infringement that actually takes place but remains unidentified could exceed a trillion dollars.
  • There is no known government, academic or privately commissioned study of the extent of patent infringement in the U.S., and the cost in lost jobs, failed businesses and economic loss.

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“It is not enough just to be aware that there is harm caused by undetected patent infringement,” said Paul R. Michel, Chief Judge of the Court of Appeals for the Federal Circuit (ret.). “The government needs to conduct a proper empirical study ASAP to determine its scope and impact.”

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Image source: ltrdigitalgroup.com

 

 


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