Can the world economy take it? New report is 'alarmed' by counterfeiting tsunami
The Paris-based International Chamber of Commerce (ICC) has raised a resounding wake-up call. In one February report, it calls the worldwide explosion of counterfeiting, including intellectual property crimes, “alarming,” and says that the trend upward is “leading many to question whether the global economy can continue to absorb the massive losses that result from IP theft, counterfeiting and piracy.” (Intellectual property, the economy, and what is at risk, by Jeff Hardy)
The clear implication: anti-counterfeiting measures by business and government are urgent and cannot wait.
A second ICC report flatly predicts that global counterfeiting losses will go to $1.7 trillion by 2015, the first update of a widely cited report in 2008, pegging global losses at $600 billion. That report, by the Organisation for Economic Co-operation and Development (OECD), also in Paris, was based on mid-2000s data, when the world, and especially the internet, was a different place.
This is a crisis, and not one increasing by stages…it is exploding right in our faces, and is increasingly compelling businesses and governments to take action to face the threat.
Counterfeiting trends: the perfect storm
The ICC looks past the sometimes dry-sounding numbers to the social cost of world-scale counterfeiting. In addition to losses for individual businesses, the ICC paints the picture of a global drain on governments, jobs, and economies. Its data shows that counterfeiting deprives governments of tax revenue, destroys millions of jobs, and exposes consumers, companies, and the military to dangerous and defective products. No wonder President Obama in his 2011 State of the Union message, tied anti-counterfeiting measures to economic recovery.
The ICC especially targets the growth of the internet as the force behind an oncoming counterfeiting tsunami, most visibly in piracy of software, music and movies. Our view is rather that we are living through the consequences of a perfect storm: the rise of the internet, the economic meltdown, technologies that empower near-perfect copies, globalization, and a shift in social mores. This is a moment in history where businesses, and government, urgently need to take action.
Anti-counterfeiting and the internet
This is not to downplay the powerful role of the internet. In fact, more than the channel for pirated software, music, and movies that it is, the world wide web has become a global black market in fake goods of all sorts. Last Thursday, Google announced that in the last six months of 2010 alone it had shut down 50,000 advertising accounts for sales of fakes. (see our blog post). This comes on the heels of the U.S. government citing Baidu, China’s largest search engine and thirty-two other web sites as "notorious markets" for fake goods.
Still unknown is the role of the internet in facilitating supply chain infiltration and large-scale movement of counterfeit product.
High time to mandate anti-counterfeiting measures
The ICC study adds statistical weight to what is already being placed front and center by governments and industry. Just last week Senator John McCain announced Senate hearings on counterfeiting, especially in electronics. Vice President Biden chaired a White House conference on the crisis last month. We believe these are the first steps to mandating anti-counterfeiting technologies, like those produced by Applied DNA Sciences. It’s high time.