Transcript The OECD Study on Counterfeiting & Piracy UNECE International Seminar on Product Safety and Counterfeiting Geneva 5 November 2007 Danny Scorpecci Structural Policy Division OECDThe views expressed are those.

The OECD
Study on Counterfeiting &
Piracy
UNECE International Seminar on Product Safety
and Counterfeiting
Geneva
5 November 2007
Danny Scorpecci
Structural Policy Division
OECD
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The views expressed are those of the author in his private capacity and do not
necessarily represent those of the OECD or its Member governments.
Objectives
1.
Bring participants up to date on the OECD’s
Study on counterfeiting and piracy
2.
Discuss some of the major findings and
issues that have arisen in the study
3.
Touch briefly on possible future action
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Rationale for the project
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The problem of counterfeiting & piracy has been
growing
– both scope and magnitude;
– affects firms, consumers, governments and workers
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There is a broad range of effects
– economic, health, safety
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Concern is increasing
– over role of organised crime
– about economic implications for economies where there is
significant production of counterfeit goods
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Structure of the project
>>> Three phases

Phase 1: Counterfeit and pirated products
– Scope: Tangible products that infringe trademarks, copyrights,
patents or design rights
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Phase 2: Digital piracy
– This has been scoped, waiting for agreement of member
governments and industry and funding before moving forward
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Phase 3: Other IPR infringements
– Yet to be scoped and funded and must take account of
progress in Doha Development negotiations
– If it goes ahead will mostly cover Geographic Indicators
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What is counterfeiting and piracy?

Definition for this study (Phase 1)
“A counterfeit or pirated product is a product that
infringes on an intellectual property right (IPR) “
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Trademark
Copyright
Patent
Registered design
Example: a replacement motor vehicle part, a “generic”
medicine or an unbranded spirit called vodka would not be
counterfeits unless this requirement is met.
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Sectoral case studies
Sectors studied in depth
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automotive products
food/drink products
pharmaceuticals
tobacco products
music recordings
motion pictures and other video
content
electrical components (including
batteries)
Other possibilities explored
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luxury goods, perfumes and
fashion clothes
chemicals and pesticides
sportswear and other branded
clothing
personal care, toiletry and
household products
books
industrial and consumer motor
lubricants
aircraft components
toys
computer software
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► Magnitude of the problem

Measurement needs rigorous methodology, but data is hard to
find
• activities are illicit and clandestine
• enforcement and customs data are sparse, incomplete and inconsistent
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Analysis suggests that up to US$ 200 billion of international trade
could have been in counterfeit or pirated products in 2005
The figure does not include
– domestically produced and consumed products
– non-tangible pirated digital products
If added, the figure could be several hundred billion dollars higher

Earlier figure of 5-7% of world trade lacks rigorous foundation
and could not be confirmed or disproved
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► Extent of the problem
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Virtually everything can (and probably has) been counterfeited,
and is taking place in virtually every economy
Analysis confirms counterfeiting of
• increasingly complex products
• sophisticated packaging
• security items (i.e. holograms)
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Growing trend towards everyday products intended to deceive
consumers, many of which may affect public health and safety, eg
• car parts
• Pharmaceuticals
• food/drink
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Evidence of growing infiltration of legitimate supply chains – an
area of interest to organised crime
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Customs seizures
Seizures of imported counterfeit and pirated
products from the top 20 source economies
Region of top 20
source economies
Number of source
economies in region
Seizures
(% of total)
Asia (excl. Middle East)
Middle East
Africa
Europe
North America
South America
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2
2
2
1
1
69.7
4.1
1.8
1.7
1.1
0.8
Top sources
20
79.2
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Why do people produce/consume C&P?
Counterfeit or pirate supply
Knowing demand for
counterfeit or pirated products
Driving factors
Driving factors
Market characteristics
High unit profitability
Large potential market size
Genuine brand power
Product characteristics
Low prices
Acceptable perceived quality
Ability to conceal status
Production, distribution and technology
Moderate need for investments
Moderate technology requirements
Unproblematic distribution and sales
High ability to conceal operation
Easy to decieve consumers
Consumer characteristics
No health concerns
No safety concerns
Personal budget constraint
Low regard for IPR
Institutional characteristics
Low risk of discovery
Legal and regulatory framework
Weak enforcement
Penalties
Institutional characteristics
Low risk of discovery and prosecution
Weak or no penalties
Availability and ease of acquisition
Socio-economic factors
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► Distribution channels

Most counterfeited goods are transported through commercial
transport services
often with appropriate documentation (such as Bills of Lading)
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Growing use of free trade zones
these are used as gateways and way-points where goods can be
• broken down into smaller consignments
• sanitise documents to disguise point of manufacture
• elaborated and repackaged (often only become counterfeits at
this point)
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The internet has emerged as a new and powerful means to sell via
auction sites, stand alone e-commerce and e-mail solicitation
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► Main Effects
Counterfeiting and piracy…
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can impact negatively on innovation and growth
may reduce employment
can reduce foreign direct investment (FDI)
damages sales volume, profits, brand value and capitalisation of rights’
owners, and can lead to potential legal liability
can seriously affect health and safety of users
can negatively affect consumer confidence
reduce tax revenues to governments
induce high costs on governments and industry to combat C&P
encourages participation by organised crime and can be the cause of
corruption
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Importance vs. Priority
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Most governments have labelled counterfeiting and piracy
as important problems.
However, not always matched by priority
other illicit activities are being given first call on resources
(for example, drugs, people smuggling, gun running)
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Governments may better respond to these problems if
they appreciate the corrosive effects of C&P
especially organised crime and effects on health and safety
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Laws & regulations often ineffective
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Not properly enforced
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Insufficient public enforcement resources
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Low priority in courts
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Protection of locals
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Courts often lenient as counterfeiting and
piracy are not considered as serious crimes
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Penalties do not always deter, so high rate
of repeat offenders
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For the attention of policymakers
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Improve co-ordination amongst domestic agencies
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Consider having a clear C&P policy
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Have a clear and enforceable legal and regulatory framework
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Ensure effective enforcement and measure progress
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International co-operation, bilateral, plurilateral and multilateral
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Increase awareness amongst government officials and
consumers
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Enhance co-operation with industry
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Where to from here?
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That counterfeiting and piracy is a significant and growing
problem that has economic, social, health and safety
consequences has been recognised at highest levels:
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G8 meeting at Heiligendamm in June 2007 included Intellectual Property
generally, and Counterfeiting and Piracy specifically, in its Summit
Declaration
A Unit has been established within the OECD to steer the
implementation of the Heilingendamm Dialogue Process,
including the promotion and protection of IP
Dialogue will include the “O5” emerging economies: Brazil,
China, India, Mexico and South Africa
OECD may also do further counterfeiting work on Phase II
(digital piracy) and Phase III (other IPR infringements)
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Snapshot of Conclusions
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Counterfeiting and piracy is a significant and growing problem
that can affect health and safety
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Counterfeiters are well organised and adept at establishing
distribution channels, and this encourages the participation of
organised crime
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The infiltration of legitimate supply lines, and the potentially
harmful effects of many products is of growing concern
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The very damaging effects on consumers, rights holders and
governments are now beyond dispute
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More priority, co-operation and information collection is
necessary to better understand and deal with these problems
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Further information available
>>> Contact us
Danny Scorpecci
Structural Policy Division
OECD
2, rue André-Pascal
75775 Paris CEDEX 16
France
Email: [email protected]
Phone: (331) 4524 9433
Fax: (331) 4430 6257
Website: www.oecd.org/sti/counterfeiting
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