Report of OECD and EUIPO on Trade in Counterfeit Goods

Tuesday, 16 of April of 2019

The European Union Intellectual Property Office (EUIPO) in collaboration with The Organisation for Economic Co-operation and Development (OECD) have recently published a Report that analyzes the trends in trade of counterfeit and pirated products between the years 2013-2016. This study has revealed that the world trade in counterfeit and pirated products amounts to nothing less than 460,000 million euros (representing up to 3.3% of world trade in 2016, compared to 2.5% in 2013).

This situation significantly affects the European Union, where in 2016, 6.8% of all imports from outside the EU consisted of counterfeit and pirated products, with a value of up to 121,000 million euros. This, despite the involvement of different governments in strengthening the protection of intellectual property rights and customs controls. For the owners of such rights, the counterfeit market involves serious monetary losses, as well as a progressive and constant erosion of their intangible assets.

Indeed, one of the factors that has facilitated the increase in the distribution of counterfeit products is the online sales boom. Although it has contributed globally and positively to speed up the connection between supply and demand, a large number of small shipments (no more than 10 items) that are delivered through the mail and express courier services include counterfeit and pirated products. This fact increases the cost of checks and retentions at customs and decreases the likelihood that offenders will be detected.

Some of the most affected sectors include: luxury products, footwear, clothing, leather goods, perfumery and cosmetics. But increasingly, products directly related to the environment and people's health are included; such as toys for children, food products, pharmaceuticals and medical equipment, vehicles and their parts, pesticides or fungicides, and even components of electrical appliances, which are present in the day to day of all of us. Imagine for a moment that the material used to make dental fillings, a few simple lenses or self-tanning products, did not meet European quality and safety standards, or that they included components with harmful effects for our health. Or without going any further, a mobile counterfeiting a brand of acknowledged reputation that hides a preinstalled malware... What consequences could it have in the market?

Customs seizures reveal the main countries and regions of origin of counterfeit products: The People's Republic of China at the top, followed by Hong Kong, Turkey, Singapore, Thailand and Malaysia. Nevertheless, it should be noted that China is gradually reducing its figures, unlike Hong Kong, which has positioned itself as an important transit point for counterfeit goods. However, in many cases it is difficult to determine the true origin of counterfeits, since the same product can be made or manufactured within an economy. The merchandise arrives in large containers to a local market, which is responsible for reproducing the packaging and labeling of the original products. Small shipments are then used to penetrate other markets.

As for the companies that are most affected by counterfeiting and piracy, in the global calculation of 2016, it was estimated that around 24% of the seized products damaged the IP rights of owners established in the United States, 16% in France, 15.1% in Italy, 11.2% in Switzerland and 9.3% in Germany. Moreover, China, Switzerland and the United States were the countries that registered the highest number of trademark applications in the European Union between 2010 and 2017. At the same time, it is important to consider how a growing number of rights holders threatened by counterfeiting are established in Brazil, China and other emerging economies.

We can conclude that no economy escapes the harmful effects of trade in counterfeit and pirated products, and in this context cooperation policies become a vital necessity, as well as consumer awareness, to try to address this threat to the innovation and global economic growth.

Alicia Marijuán Muñoz