components and pharmaceuticals

This page looks at questions about forgery and fraud regarding components (such as auto parts, computer parts and replacement equipment in aircraft), pharmaceuticals and publications.

It covers -

• introduction
• components
• publications
• pharmaceuticals
• offers
• responses

Questions about piracy of intellectual property are explored in the IP Guide on this site and the supplementary profile on trademarks.

     introduction

The International Chamber of Commerce argues that counterfeiting accounts for around 5% to 7% of world trade, with a higher figure in sectors such as the music and computer software industries -

Industries that find themselves competing with counterfeiters suffer a direct loss in sales. Some markets are even dominated by counterfeiters, creating barriers of entry for the producers of the genuine product. Consumers, who are deceived into believing that they bought a genuine article when it was in fact a fake, blame the manufacturer of the genuine product when it fails, creating a loss of goodwill.

Countries also suffer from the consequences of counterfeiting and some of the harmful effects include loss of tax revenues, loss of job opportunities and the use of proceeds of counterfeiting to fund other crimes. In countries where counterfeiting is rife there may be a lack of much-needed foreign investment and subsequent foreign know-how because IP rights are not being adequately protected.

The World Customs Organization estimates trade in 'fakes' as US$512 billion; other organizations put the proportion of global trade in fakes as over 10%.

Academic comments are provided in The Economics & Management of Global Counterfeiting (PDF) by Derek Bosworth & Deli Yang. There is a more popular treatment in Knockoff: The Deadly Trade in Counterfeit Goods (London: Kogan Page 2005) by Tim Phillips

Some consumption of forgeries is innocent: we assume that few people would knowingly buy vodka that includes methylated spirits, fake pharmaceuticals or ersatz aircraft parts.

Other consumption involves user complicity. Surveys by UK pollster MORI revealed that 40% of British consumers admit that they would knowingly buy counterfeit products "if the price and quality were acceptable". 76% of that group would buy fake clothing or footwear (it is claimed that up to 11% of 'famous brand' clothing and footwear in circulation is illicit), 43% watches, 38% perfume and 22% electrical goods.

A 1998 New Zealand government report suggested that piracy and faking of goods will increase worldwide because of the -

• growing cost of development of more sophisticated software and other products
• reducing cost of replicating sophisticated products
• globalisation of brands and the desire of consumers to have (in particular to be seen to have) goods bearing such brands
• globalisation of entertainment and the desire of consumers to experience such entertainment
• reducing cost of international trade, and the reduction in restrictions in international trade
• globalisation of the underworld because of the ease of travel and communication
• continual periodic breakdown of law and order in various regions through political unrest and economic recession
• ability to sell via the net means greater opportunity to purchase without prior inspection, and from sources less easily traced.

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