Industry Report: Massive $3 Trillion Counterfeits, IP Theft up 22%
Posted on Thursday, May 26, 2005 by Anonymous
Counterfeit and piracy losses in April surged over the Trillion Dollar (USD) mark for the second time in 4 months exposing links to fraud, assault, drugs, immigration violations, identity theft, murder, prostitution, illegal weapons, and terrorism, as reported by Gieschen Consultancy. Intellectual property theft incidents (trademark infringement and copyright violations) also peaked at its highest level in the past months, up 22% from January.
Based on worldwide counterfeit enforcement activity (investigations, raids, seizures, arrests, charges, convictions, sentences, civil litigation, public announcements) for month of April 2005, as reported through the DOPIP Security Counterfeit Intelligence Report, more than 250 incidents worth $3,000,045,753,460 (US Dollars) were analyzed from 42 countries.
The top 20 countries pursuing counterfeiters and pirates:
1. Philippines, $3.0 Trillion (USD) seizures and losses, 5 incidents.
2. USA, $30 Million, 97 incidents.
3. UAE, $10 Million, 2 incidents.
4. UK, $4.0 Million, 22 incidents.
5. South Korea, $3.6 Million, 1 incident.
6. Saudi Arabia, $2.8 Million, 1 incident.
7. China, $1.9 Million, 3 incidents.
8. Australia, $1.6 Million, 3 incidents.
9. Russia, $1.4 Million, 2 incidents.
10. Bangladesh, $1.3 Million, 3 incidents.
11. South Africa, $1.1 Million, 5 incidents.
12. Thailand, $1.0 Million, 2 incidents.
13. India, $0.9 Million, 51 incidents.
14. Singapore, $0.9 Million, 2 incidents.
15. Malaysia, $0.9 Million, 12 incidents.
16. Germany, 2 incidents.
17. Italy, 1 incident.
18. Bulgaria, 1 incident.
19. Malta, 2 incidents.
20. Canada, 6 incidents.
Other countries include Bahrain, Congo, Croatia, Cyprus, Czech Republic, Fiji, France, Georgia, Ghana, Ireland, Israel, Ivory Coast, Japan, Namibia, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Taiwan, Vietnam, and Zimbabwe.
The most popular items to counterfeit:
1. Financial Instruments, 85 incidents worth $3.0 Trillion.
2. Entertainment & Software, 54 incidents worth $22.5 Million.
3. Identification, 39 incidents worth $3.0 Million.
4. Other Documents, 30 incidents worth $2.4 Million.
5. Clothing & Accessories, 9 incidents worth $5.6 Million.
6. Food & Alcohol, 9 incidents worth less than $1.0 Million.
7. Computer Equipment & Supplies, 5 incidents worth $2.8 Million.
8. Industrial Goods & Supplies, 5 incidents worth $10.0 Million.
9. Cigarettes, 4 incidents worth $8.9 Million.
10. Other Goods, 4 incidents worth less than $1.0 Million.
11. Drugs & Medical, 2 incidents worth less than $1.0 Million.
12. Jewelry & Watches, 2 incidents worth $2.8 Million.
13. Perfume & Cosmetics, 1 incident worth less than 1.0 Million.
14. Toys, 1 incidents worth less than $1.0 Million.
The top 10 (of 90) brands counterfeited:
1. Microsoft.
2. Louis Vuitton.
3. Sony.
4. Canon.
5. Kate Spade.
6. Nike.
7. Prada.
8. Titleist.
9. Viagra
10. Adidas.
The top 10 (of 231) items counterfeited:
1. DVDs (Movies).
2. CDs (Music).
3. Drugs.
4. Software (Business).
5. Checks.
6. Currency.
7. Cigarettes.
8. Drivers Licenses.
9. Software (Games)
10. Passports.
In summarizing the activity for the month of April, Glen Gieschen, Managing Director of Gieschen Consultancy stated "More than 90% of counterfeit and piracy activity was the result of seizures by law enforcement, customs, immigration, military and other government agencies which removed the items from the distribution chain. This action prevented trillions of dollars worth of poor quality and hazardous items from finding their way into the hands of consumers and businesses. Unfortunately, April was the second month since December where the value of fake items has neared the trillion dollar mark. Based on the types of bogus items seized, it is clear the manufacturing operations have not been affected by past raids and are increasing their capacity to meet a growing demand. Specifically, phony copyright and trademarked products are expanding through innovative marketing and distribution channels such as Internet retain and auctions, mail order, and spam operations. Detecting the manufacturing locations further challenges intellectual property enforcement personnel as items are outsourced and assembled in multiple locations.
The profession of counterfeiting, once dominated by experienced and skilled tradesmen using sophisticated techniques and expensive equipment has changed rapidly in the past 20 years. It is now a hobby and novelty to some, a method to supplement income, and increasingly a career to a growing number of young people. The simplicity and status of producing, selling and purchasing counterfeits without significant consequences or stigmas makes it attractive. The youngest age group appears to effect the most financial damage to society through the duplication of financial instruments (average age 29), entertainment and software (31), other documents (32), identification (37), clothing and accessories (40). In addition, the very young (12 and 14 years of age) were attracted to counterfeit currency and pirating music, movies, and games software. Older individuals, showing that experience, larger capital investments, and sophistication are required dominate drugs and medical equipment (44), cigarettes (46), food and alcohol (46), industrial goods and supplies (49), jewellery and watches (60).
The frustration of pursing the individuals and entities responsible for producing, distributing and selling counterfeit items has led to more effective forms of punishment. In particular, brand and copyright owners who are increasingly finding the legal systems too slow and costly to prevent the sale of counterfeit items are using the power of the Internet and media to inform the public of suspected counterfeiters. The decision not to pursing further legal or criminal remedies is taken after appropriate evidence is gathered and in some cases warnings have been issued. Once published, these names are collected and distributed through search engines and investigative agencies. In the month of April more than 84 businesses and 174 individuals were published. Trade and commerce organizations find this information useful to their members who routinely perform background and due diligence checks on potential partners, suppliers and business associates. Brand enforcement personnel use the intelligence to network with the IP owners who may help them share the costs of pursing legal or criminal actions against these individuals and entities. Governments such as the US and Nigeria have also caught on to this technique. Recently published lists of CD and DVD counterfeiters in Pakistan by the US government led to raids and seizures and a list of fake drug manufacturers has prompted action by India."
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