The Economic Impact of Counterfeiting and Piracy

The Economic Impact of Counterfeiting and Piracy You do not have access to this content

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19 June 2008
9789264045521 (PDF) ;9789264045514(print)

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This study develops and applies a rigorous methodology to estimate the incidence of counterfeit and pirated items in world trade. This methodology can be used in the future to refine the assessment as the quality and quantity of data improve. The study also provides an analysis of the market for counterfeit and pirated goods and the effects on various affected parties, ranging from the owners of the intellectual property rights, to consumers and governments. The study also provides a number of in-depth snapshots of different industry sectors, highlighting how those sectors are affected by counterfeiting and piracy, and how they are responding.
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  • Introduction
    Protection of intellectual property rights (IPR) is an issue of high importance and increasing priority for governments. Its importance reflects the growing recognition of the key role that intellectual property (IP) plays in promoting innovation and growth on the one hand, and, on the other, increasing concern with the adverse effects that counterfeiting and piracy are having on economies and society as a whole.
  • The markets for counterfeit and pirated goods
    In this chapter, we: 1) describe how the markets for legitimate and infringing products operate and interact; 2) identify the key factors that drive demand and supply of counterfeit and pirated products; and 3) indicate how economy wide institutional factors influence the location of where counterfeit and pirated products are produced and consumed. In so doing, this chapter presents a framework for analysing and understanding the phenomenon.
  • Current conditions in counterfeiting and piracy
    This chapter presents information on what is currently known about counterfeiting and piracy in different economies and in different product areas. The information has been drawn together from a variety of sources, including analysis that was carried out by governments, industry and research organisations, and information developed through two government surveys and an industry survey that were conducted by the OECD.
  • Estimating the magnitude of counterfeiting and piracy
    One of the principal objectives of this report is to explore methodologies and techniques that could be employed to improve measurement of the magnitude of counterfeiting and piracy in economies, both overall and in specific sectors.
  • Examining the economic effects of counterfeiting and piracy
    This chapter examines the effects of counterfeiting and piracy on economies. First, the general socio-economic effects are outlined, followed by the effects on rights holders, consumers and governments. Then, the effects specific to developing economies are presented.
  • Improving information and analysis
    Available information on counterfeiting and piracy falls far short of what is needed for robust analysis and for policymaking. This chapter therefore focuses on what could be done to improve and expand information on counterfeiting and piracy. The chapter also suggests how measurement techniques could be advanced in order to produce more accurate global and sector-specific estimates about the magnitude, scope and effects of infringements on economies. Finally, the chapter concludes that these three areas should receive priority: 1) improving information that is available from enforcement activities (i.e. customs and related law enforcement agencies); 2) developing a framework for collecting information on the effects that counterfeit and pirated products are having on the health and safety of consumers; and 3) expanding the use of surveys to collect basic information from rights holders, consumers and governments.
  • An overview of government and industry initiatives
    Governments and industry have been active in combating counterfeiting and piracy on a number of fronts, both independently and, equally importantly, with each other. In addition to efforts undertaken in a national context, governments have been working through multilateral institutions and on a bilateral and regional basis to address issues. Industry has also been active, nationally and internationally, both on a sectoral and crosssectoral basis. This chapter provides an overview and assessment of the initiatives that have been taken, and Annex 7.A2 presents the situation in 15 different economies, in greater detail.
  • Audio and visual sectors
    In accordance with the OECD Council mandate for this study overall, the following sector analysis covers only piracy that culminates in the production of a physical product, such as a CD, a DVD or (increasingly less likely) a music or VHS cassette; that is, "hard media". Piracy of what the Council mandate considers "digital" (that is, non-physical) content, whether over the Internet or by other means, will be considered separately in Phase II of this project.
  • Automotive sector
    The main counterfeiting activities in this sector are focused on automotive components, such as parts and accessories used in the manufacture, repair and modification of all types of motor vehicles, from motorcycles to passenger vehicles (cars, buses etc.), as well as vehicles intended for the carriage of goods.
  • Electrical components sector
    For the purposes of this report, the electrical components industry is defined to include components used in the generation, transmission, distribution, or consumption of electric power.
  • Food and drink sectors
    The following analysis focuses on IPR (Intellectual Property Rights) infringements affecting alimentary products (food and drink). It should be noted that the broader interpretation of "counterfeiting" that appears to be commonly used within these sectors includes "fake" products that are misrepresented (e.g. a bottle containing some kind of alcohol, such as vodka, that is sold without infringing a trademark). However, while important from a public policy perspective, such products are beyond the scope of this project, which limits itself to instances of counterfeiting that infringe intellectual property (IP) rights.
  • Pharmaceuticals
    The purpose of this chapter is to provide an overview of counterfeiting activities in the pharmaceuticals sector, assess the magnitude and trends of these activities, examine the effects on patients/consumers, companies and governments, as well as analyse the measures for combating counterfeiting and piracy activities.
  • Tobacco sector
    This sector overview covers the international tobacco industry, focusing on cigarettes, as these constitute by far the greatest proportion of tobacco products, as well as yielding the greatest volume of information. The tobacco industry is almost unique, in that taxes constitute the major component of the final retail price, which makes tobacco, and especially cigarettes, lucrative for smugglers.
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