Harshit
The Economic Impact of Counterfeiting
Harshit Chugani 3 Oct 2018

The Economic Impact of Counterfeiting

The grey market consisting of fakes/counterfeits/lookalikes/ infringements, causes major loss in every sector of the industry, and the ripples are widespread to every strata of the economy. The most noticeable effects are centred on two parameters—lost sales of the manufacturer and effect on public taxes-as most of the manufacturers in the grey zone do not pay the requisite revenues. The figures that transpire in lieu of these are alarming.

An ICC-INTA study forecasts that the value of trade in counterfeit and pirated goods could reach $991 Billion by 2022, going by the OECD/EUIPO’s estimated projection of growth in import volumes and the ratio of customs seizures to real imports.

While certain segments such as sportswear, fashion and apparel goods are privileged to what is known as ‘ wilful counterfeiting’ in IP parlance, the other members of the pie chart such as FMCG  and pharmaceuticals stand vulnerable to sinister grievances.

The luxury goods brands, up to a certain extent, count on spurious products as a mildly sensational means of free marketing, and understandably so- as the set of customers buying counterfeits from local markets is unlikely to overlap with the set that can actually can afford premium products.

However, the consumables and pharmaceuticals industry cannot boast of such an advantage. While they are the most sensitive class of products, they are also the most intruded, because of high mobility in the market, sheer volume of sales, and a high turnover at relatively low cost.

 The high reward- to- risk ratio, extensive distribution networks and brand familiarity of the unsuspecting customer, serves as added incentive for the flourishing resemblances.

A recent study by ASSOCHAM (Associated Chambers of Commerce and Industry of India) suggests that fake/counterfeit/comparable drugs constitute US $ 4.25 billion of $ 14-17 billion market in the domestic drugs market in India. Other than the degrading effect on the health of the population, this could also be a point of contention for the rivals who resist India’s rise in pharmaceutical export.

In the Indian context, rural pockets are especially victims of the consequences, where the consumers more often than not, fail to distinguish the subtle change. The numbers being as high as 1/3 rd of each category being faked amounting to 10-30% of loss in sales, many manufacturers such as Hindustan Unilever have started their own faction of IP protection resources.

However rather than compartmentalised workforces, IP protection requires an open, integrated and pro-active mechanism.

 he solution to this problem could be CopyKitten. CopyKitten is the world’s first aggregator platform for potential IP infringements. Though CopyKitten is still at a nascent stage, currently hosts a growing database of 2000+ listed leads of IPR violations for over 50 Multinational Brands. The CopyKitten network, active globally, undertakes the tedious job of finding infringers and infringements (even those who do not hold presence on the Web) and then bringing them to the scope of the Internet.

The reports on the leads can be purchased for a nominal cost, thus helping the brands to channelize their IP economies . The conversions for every point in action and awareness could be huge, as the ICC- INTA study suggests that a percentage point reduction in the intensity of counterfeiting and piracy would reflect as $40-$50 Billion for the 35 OECD countries.

 

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