Intellectual property can be a business’s most valuable asset. So when outside parties threaten to steal your ideas, copy your products or disrupt your marketing channels, corrective action on your part can become tedious, time-consuming and expensive. Also, because of the high value associated with Intellectual Property Right (IPR), infringement of those rights is a lucrative criminal activity, which generates significant costs to the rights owners and to the economy in general. In fact around 12,000 IP infringement cases are filed each year.

Now, a study conducted by the European Union Intellectual Property Office (EUIPO) in partnership with the European Patent Office (EPO) found that the total contribution of IPR-intensive industries to the EU economy accounts for approximately 42% of GDP (€5.7 trillion) and 28% of employment plus another 10% in indirect employment effects in non-IPR intensive sectors. Those sectors also generate a trade surplus of approximately €96 billion with the rest of the world and pay their workers 46% higher salaries than other sectors.

The economic Value of IPRs

This IP infringement report brings together the findings of the research carried out in recent years by the EUIPO, through the European Observatory on the Infringement of Intellectual Property Rights, on the extent, scope and economic consequences of IPR infringement in the EU. Evidence on the economic value of IPRs in the EU economy, the extent to which this value is exploited, the infringement mechanisms used to capture that value and the actions being taken in response to these challenges are outlined and discussed in the report as well.

According to a study carried out by EUIPO and the Organization for Economic Co-operation and Development (OECD) in 2019, estimates of IPR infringement in international trade in 2016 could reach as much as 3.3% of world trade. Up to 6.8% of EU imports, or €121 billion per year, consist of fake goods. Both sets of figures are significantly higher than those found in study by the two organisations published in 2016, indicating that the problem has grown even more serious in recent years.

Annual Losses of €92 Billion During 2012-16 Due to Counterfeiting

In a series of sectorial studies, the EUIPO fears it has lost sales in 11 sectors in the EU, as a result of counterfeiting. These losses have occurred directly in the industries being analysed and across their associated supply chains and totalled more than €92 billion per year during 2012-16.

Abundant value, lenient sentences and high returns on investment together make it attractive for criminal gangs to engage in counterfeiting activities. The modus operandi of such gangs is becoming increasingly complex as technology and distribution channels evolve, hand in hand with the breadth of products being counterfeited.

How Legitimate Brands Can Suffer Due to Advertising!

The business models adopted by counterfeiters make significant use of the internet to distribute their products and to promote the distribution and consumption of illegal digital content. Internet sites selling counterfeit goods benefit from additional advertising revenues from both “high risk” ads (adult, gaming, and malware) and, paradoxically, also from legitimate brands, which then suffer in two ways from advertising on such sites: damage to their own brand and provision of credibility to the hosting website.

In addition to analysing the supply of counterfeit goods and pirated content, the EUIPO has also studied the demand side, that is, the attitudes of EU citizens towards IPR and their willingness to consume IPR-infringing goods and services. The incentives for consumers to purchase counterfeit goods and to access copyright-protected content illegally include lower prices, easy accessibility and a low degree of social stigma associated with such activities.
In response to these developments the EUIPO, together with public and private partners, is undertaking and supporting a number of actions to meet these challenges.

The Economic and Social Impact of IPR Infringements

The actions by the EUIPO range from providing rights owners with information on the changing infringement landscape and working with Europol on wider responses to IP crime. It also included participating in the funding of a specialised IP crime unit within Europol, supporting the European Commission’s efforts to address the supply of counterfeit goods in third countries and to help Small and Medium-Sized Enterprises (SMEs) protect their IPRs. This was done by providing citizens with information on the availability of legally accessible digital content and on the economic and social impact of purchasing counterfeit goods or accessing digital content illegally.


How the CRI Group™ Can Help You Tackle IPR Infringement

CRI Group’s Intellectual Property Investigations team helps companies identify threats to IP and confidential information internally and throughout their supply chain, develop the appropriate mitigation strategies and investigate suspected infringements.


For further information on IPR infringement or to book a meeting with our experts, click here.