IPAN issue brief - no.
4
counterfeiting – society is the loser
Industry world-wide loses large amounts to counterfeiters and
piracy. These losses not only affect the producers of genuine items, but
they also involve social costs. Ultimately, it is the consumer who pays
the cost of unfair competition. Although many consumers believe they are
getting a bargain when they buy counterfeits, the actual value of the
product is normally much lower. Hence, they end up paying an excessive
price for an inferior product.
A survey by members of the Alliance Against Intellectual Property Theft
found that the UK market in counterfeit and pirated goods was worth over
£9 billion in 2004. This resulted in a loss of just under £2 billion to
The Exchequer. This money could have been spent by the Government on the
NHS or on schools.
These losses may result in a chilling effect on the creative industries
of the UK. A point will be reached where there be little incentive to
come up with new ideas, as they are copied, including by other
businesses.
There is also an increasing concern that counterfeiting is related to
other criminal activities, such as trade in narcotics, money laundering
and terrorism. The link between counterfeiting and organised crime has
been highlighted in the most recent Threat Assessment from the National
Criminal Intelligence Service. The report states that organised
criminals are increasingly involved in counterfeiting and other forms of
intellectual property theft.
It is estimated that trade in counterfeit goods is now worth more than 5
per cent of world trade. This high level can be attributed to a number
of factors, particularly advances in technology and increased
international trade.
The cost to countries which do not take action against counterfeiting
can also be high. If many products from such countries, including
genuine ones, gain a reputation of being of poor quality, this will
cause export losses which in turn implies both job losses and loss of
foreign exchange.
last reviewed: jul 08
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page last revised:22 Jun 2009 | 
