From knock-off Louis Vuitton purses to imitation iPhones, the International Chamber of Commerce estimates that ten percent of world trade is in counterfeit goods and that the counterfeit market is worth $500 billion. With this number hitting just “the tip of the iceberg”, the World Customs Organization (WCO) has claimed counterfeit items reported worldwide hit 3 billion for the first time last year. Despite appealing to some consumers wanting to take advantage of a trademark or trademark’s social capital and reputation, counterfeited goods should be recognized as inherently criminal. Not only do these products come into existence on the global market through organized crime, thereby impacting negatively on businesses, more importantly, the social and ethical effects of these products are all too often overlooked.
Published within the WCO’s Illicit Trade Report, the “tremendous increase” of fake goods underlines this growing problem, which is evidenced in the fact that more countries are reporting IP-related infringements, a rise numerically represented from 58 to 69. The seizures of pharmaceutical products, clothing and accessories, electronic appliances and food items are most common with China remaining the biggest hotbed for the production of counterfeits and the US being the country they are most destined to hit.
The ten-day clamp in Africa called “Operation Biyela”, where 23 countries sought to perform one of the biggest hauls of counterfeit pharmaceuticals, resulted in the interception of more than one billion illicit products; nearly 50 percent of them being pharmaceuticals. The World Health Organization (WHO) developed this definition of counterfeit medicines:
А counterfeit medicine is one which is deliberately and fraudulently mislabeled with respect to identity and/or source. Counterfeiting can apply to both branded and generic products and counterfeit products may include products with the correct ingredients or with the wrong ingredients, without active ingredients, with insufficient active ingredients or with fake packaging.
Clearly, counterfeit medicines can post a serious health risk to consumers. What is even more frightening is that information derived from Operation Biyela reports findings of a variety of different types of counterfeit medicines including diet pills, anti-malaria tablets and antibiotics. The extensive range of these products, from lifestyle medicines to those which are used to treat cancer and heart disease should be concerning to consumers, yet the demand proves otherwise.
Ethical issues brought on by counterfeit products should also be brought be exposed, especially as they apply to labor exploitation and low paid workers facing safety and security concerns. On the other end of the spectrum, Rachel K. Ward, PhD, a media specialist in fashion art and luxury sectors appeals to Utilitarian terms to justify the abolishment of counterfeit goods. According to Ward, “the utilitarian argument is the most used in the fashion industry because it points to the fact that “intellectual property needs to be protected in order to provide sufficient incentive to develop new technology and creative products.” Similarly, Ward goes on to point out the low-quality of counterfeit goods and how easy counterfeit products can be to discern, counteracting the consumer original faith in the product.
Among trademarks, Nike, Apple, Samsung, Rolex and Louis Vuitton make up the top five to be common targets of counterfeiting. In fact, Louis Vuitton was engaged in extensive legal battles with Google over the promotion of counterfeit goods on the search engine.
In order to better understand and solve this global phenomenon, consumers must begin to educate themselves on the effects of their decisions to participate and fund a sphere of illicit trade. If you, or your business requires assistance and or advice when it comes to counterfeit goods, Dreyfus is available for consultation.