EU Underlines Intellectual Property Infringement Costs

The Intellectual Property arm of the European Union has just issued its most comprehensive report yet on the scale, costs, and risks of IPR infringement throughout the EU.

Looking back on developments since 2013, the EUIPO has not only reported on infringement but has estimated that the total contribution of IPR intensive industries to the EU economy is a staggering €5.7trn or 42% of EU GDP. One way or another it accounts for 28% of employment and fuels an external trade surplus of €96bn with the rest of the world. So the stakes couldn’t really be higher.

It naturally follows that such a valuable sector stands to be attractive to criminal activity, which mainly, but not entirely, consists of product counterfeiting. This is now particularly widespread not only through physical outlets but increasingly through internet distribution channels. Some of the products being copied also make for unusual, if potentially dangerous, targets.

Gone are the days when copies meant bags and watches. Now nothing is off limits, with the EUIPO report highlighting the illicit trade in vehicle parts, pharmaceuticals, and even washing powder being copied. Tyres, batteries, phones, shampoo, and alcohol also feature heavily with the trade in repacking cheap wine in expensive bottles a key concern to the EU wine trade.

Demand-side studies have shown that attitudes are reinforcing the trade with EU citizens encouraged to purchase counterfeit goods by lower prices, easy availability, and lower levels of social stigma than may have previously been the case.

The global counterfeiting trade is so serious that US President Trump has used it to justify a hike in import tariffs with China. Although the EU has not followed suit with direct action, it considers Asia to be a problem with China, Hong Kong, and Afghanistan all significant originators, closely followed by Turkey and the UAE.

Exact figures are difficult to assess, but a 2016 study by the EUIPO and OECD estimated the cost of IPR infringement at €85bn annually. EU analysis goes further by splitting costs into 13 particularly vulnerable key industrial sectors. Clothing and Footwear copies were the largest single sector, with costs set at €23bn for the EU in 2015. Pharmaceuticals were not too far behind at €16bn.

With the growing trade seemingly unstoppable the EU has attempted to shift the focus towards providing help and assistance to enable legitimate manufacturers to defend the integrity and value of their intellectual property rights. These include the EU trademark registry, initiatives to crack down on file sharing breaches of digital copyright, as well as work with police forces to address the supply of goods both within and outside the EU. Even so, with technology offering new opportunities, and an already valuable market constantly growing, an already complex problem is unlikely to be won quickly.

Advice to business operators who are at all concerned about their vulnerability to intellectual property infringements must be to seek professional advice as early as possible and register all rights that are capable of registration as soon as possible.

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If you would like to speak to one of our solicitors to understand more about intellectual property and your rights, contact our Corporate Law Department.This article was written by Edward Garston, a company commercial solicitor at Pinney Talfourd LLP Solicitors. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of June 2018.