Piracy and Counterfeiting: Not Victimless Crimes

MAY-JUNE 2016|BY STEFANOS TSIMIKALIS, ATTORNEY AT LAW, PARTNER, TSIMIKALIS KALONAROU LAW FIRM
Intellectual property (IP) is all around us. No matter what product your enterprise makes or what service it provides, chances are that it is frequently using and creating intellectual property.

But IP is worth nothing if your business is not prepared to enforce it. It is only then that the optimum commercial results from its ownership will be reached. The State has a strong interest in protecting it as well since IP rights (IPRs) generate State revenues, in the form of taxes and increase recorded employment.

In a study1 carried out in 2013, it was found that approximately 39% of the total economic activity in the EU is generated by IPR-intensive industries, and around 26% of all employment in the EU is provided directly by these industries, with a further 9% of jobs in the EU arising from purchases of goods and services from other industries by IPR intensive industries. It is estimated that for Greece IPR intensive industries contribute 33% to the country’s GDP and 20% to employment2.

However, despite their importance, IPRs are still not given the treatment they deserve, especially by consumers. Another study3 reached the very interesting conclusion that, although Europeans agree that IP is both a legitimate way to reward artistic creation (96% acceptance rate of this statement) and a way to help improve and guarantee the quality of products and services (86% acceptance rate), which in turn leads a very large majority of Europeans to condemn IP infringement behaviors and more specifically the purchase of counterfeit goods (more than 70% acceptance rate), more than a third of them tolerate these same behaviors. In particular, 42% of Europeans (for Greeks it’s 51%) consider it acceptable to download or access copyright-protected content illegally when it is for personal use and 34% (50% for Greeks) agree with the statement “buying counterfeit products allows making a smart purchase that enables you to have the items that you wanted while preserving your purchasing power.”

These percentages clearly show that the public perception around IPRs is still quite blurry. A significant portion of Europeans (around 30%) and even more Greeks have a favorable disposition towards counterfeiting, seeing it either as a way to save money or as an act of protest against the establishment.

Shedding light on the direct and tangible impacts piracy and counterfeiting have on the industry and, as a consequence, on national economies, is crucial in combating them. The main effects these two phenomena have on the economy are categorized in:

a)    Direct costs to industry such as lost sales

b)   Cross-sector loss of sales, since reduced sales in one sector will negatively affect sales of suppliers, causing sales declines, and will have a negative employment effect

c)    Loss of tax revenue and income, since these goods are usually traded through unofficial distribution channels

The European Observatory on Infringements of Intellectual Property Rights4 has carried out six sector studies5 in an attempt to quantify the economic impact of counterfeiting and piracy. The table illustrates the exact impact these behaviors have had on a pan-European scale. The figures are staggering.

No doubt remains any longer that piracy and counterfeiting victimize society in its entirety, as they are directly associated with the increase of unemployment and lead to the loss of significant revenues for both businesses and the State alike. The conclusion that the good fight against counterfeiting and piracy should continue with perseverance can easily be drawn. In Greece, tackling counterfeiting and piracy should be made a priority and IPR holders should remain vigilant in facing the challenges posed, not only to protect their business but, also, to continue driving the economy. Raising awareness is imperative, and critical to help consumers understand the value of IP in today’s society. This is even more pressing in the case of Greece in light of the ongoing recession, the high unemployment rate and repeated attempts to re-boost the economy.

  1. Intellectual property rights intensive industries: contribution to economic performance and  employment in the European Union, Industry-Level Analysis Report, September 2013, A joint project between the European Patent Office and the Office for Harmonization in the Internal Market published and made available on the Observatory’s website at the address www.euipo.europa.eu/ohimportal/en/web/observatory/ip-contribution#1study
  2. Idem page 83
  3. European Citizens and Intellectual Property: perception, awareness and behavior, November 2013, European Observatory on Infringements of Intellectual Property Rights published and made available on the Observatory’s website at the address www.euipo.europa.eu/ohimportal/en/web/observatory/ip_perception
  4. www.euipo.europa.eu/ohimportal/en/web/observatory/home
  5. These studies cover a) the Cosmetics and personal care sector, b) the Clothing, footwear and accessories sector, c) the Sports goods sector, d)  the Toys and games sector, e) the Jewelry and watches sector and f) the Handbags and luggage sector. The full studies may be found on the Observatory’s website at the address www.euipo.europa.eu/ohimportal/en/web/observatory/home

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