07 June 2019 at 15:21 BST

True cost of counterfeiting under the microscope

EUR 60 billion lost every year across the EU due to counterfeiting in 13 key economic sectors, though IP specialist firm questions the true costs.

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New research from the European Union Intellectual Property Office (EUIPO) shows that EUR 60 billion is lost each year due to counterfeiting in 13 economic sectors.

Five year tracking

EUIPO has been tracking the economic cost of counterfeiting over the past five years in sectors known to be vulnerable to intellectual property rights (IPR) infringements. These figures show that the direct annual losses of those sectors amount to EUR 60 billion, corresponding to 7.5 percent of their sales, as a result of the presence of fake products in the marketplace. The accumulated losses are equivalent to EUR 116 per EU citizen per year. Because legitimate manufacturers produce less than they would have in the absence of counterfeiting, thus employing fewer workers, 434 000 jobs are also directly lost in these sectors. The report estimates that due to the presence of counterfeiting, the 13 sectors lose 8.1 percent of direct sales annually in the UK. This is equivalent to approximately EUR 9.2 billion (GBP 6.7 billion), or EUR 141 (GBP 103) per UK inhabitant per year. The 13 sectors studied are: cosmetics and personal care; clothing, footwear and accessories; sports goods; toys and games; jewellery and watches; handbags and luggage, recorded music; spirits and wine; pharmaceuticals; pesticides; smartphones; batteries and tyres.

True of cost of counterfeits

The Executive Director of the EUIPO, António Campinos, said “Over the past 5 years, our reporting and research has given, for the first time, a comprehensive picture of the economic impact of counterfeiting and piracy on the EU economy and job creation, as well as intelligence on how intellectual property rights are infringed. Through our research, we have also shown the positive contribution that intellectual property has on employment and growth. Our work has been carried out so that policymakers and citizens can be in no doubt of the value of intellectual property and the damage that arises from its infringement.” Tosshan Ramgolam, brand advisor at IP protection company Incopro, with expertise in legal, technology & criminal intelligence, notes the true cost of counterfeit goods is hard to determine, saying “Not only do these goods have a financial impact on the marketplace, they can also damage a brand’s reputation, or worse, consumer health.” Mr Ramgolam cites research that 32 percent of consumers “who have bought one or more counterfeit goods suffering a health issue as a result.” He explains, “The majority of counterfeit goods are sold online, making it significantly harder for brands to tackle and prevent fraud. Amazon, the world’s leading online marketplace, is rife with “potentially dangerous counterfeits and other knockoff goods”.”

 
   
 
 
 

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