New reports reveal biggest fake goods markets
Major US and EU reports detail damage to workers in creative industries and SMEs | WeChat named alongside newer platforms that host counterfeits.
Two new reports have highlighted where the biggest markets for fake goods are and how counterfeiting can spell failure for SMEs.
The Office of the United States Trade Representative (USTR) and the European Observatory on Infringements of Intellectual Property Rights (EUIPO) both published reports yesterday (January 31) detailing the scope and impact of illicit trade in fake goods.
Online infringement
The USTR’s 2022 “ Review of Notorious Markets for Counterfeiting and Piracy” report pinpoints the online or physical markets that are engaging in or enabling substantial trademark counterfeiting or copyright piracy.
WeChat is highlighted in the report as one of the largest platforms for fake goods in China. Rights owners have complained about the sale of counterfeit goods on its e-commerce ecosystem, in particular WeChat’s ‘Channels’ short video functionality which is being used to advertise fake goods directly to consumers.
The increase in piracy sites using ‘bulletproof’ internet service providers (ISPs) to facilitate infringement was also a concern. Bulletproof hosting is much more lenient on pirated content, making it harder for rights owners to tackle infringement.
The report lists one such provider as Amarutu, which it says “provides offshore hosting for criminal activity”.
Impact on workers
Included in this year’s Notorious Markets report is a section detailing the effect of online piracy on US workers in the creative industries. According to estimates from the Global Intellectual Property Center, digital video piracy costs the US economy at least $29.2 billion annually.
This pirating of digital media results in lower revenues and wages across the creative sector, which impairs workers’ benefits and job security. The report states that illegal downloads and streaming of film and TV programmes are estimated to cause up to 230,000 jobs losses and cost over $45 billion in lost GDP in the US. When content is stolen, returns on investment are hit, and less money is available to employ workers for future projects, says the report.
Commenting, ambassador and US trade representative Katherine Tai said: “The widespread trade in counterfeit and pirated goods harms the economic security of American workers and undermines our work to craft equitable and inclusive trade policy.
“The Notorious Markets List is an important tool that urges the private sector and our trading partners to take action against these harmful practices.”
Damage to SMEs
Also looking back at counterfeiting activity in 2022 is ‘Risks of Illicit Trade in Counterfeits to Small and Medium-Sized Firms’, a report published jointly by the EUIPO and Organisation for Economic Co-operation and Development (OECD).
The report highlights the potentially catastrophic effect of IP theft on SMEs, with victims being 34% less likely to survive after five years—particularly those that suffer patent infringement.
SMEs may lack the resources to monitor and counter the risk of fake goods effectively, leaving them vulnerable to infringement and the resulting loss of revenue and reputation.
The most common source of fake goods affecting SMEs came from China, according to the report, which represented 85% of seizures related to online sales and 51% of global seizures of offline sales.
The goods most often targeted by counterfeiters were electrical machinery and electronics (accounting for 30% of seizures), clothing (18%), perfumery and cosmetics (10%) and toys and games (also 10%).
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