The invisible threat: Why companies must fight counterfeiting

Nowadays, everyone knows about counterfeit brands and products. Business representatives and consumers are often aware that the damage caused to companies by counterfeits and illegal imitations is enormous. However, the massive negative effects on people, the environment and society are often overlooked. But this is precisely what makes the fight against the illegal machinations of pirates a central issue for corporate social responsibility (CSR) in business, and indeed, corporate social responsibility is important in all dimensions: from economic and legal to ethical and philanthropic.

 

Economic responsibility 

Counterfeit Protection Means Economic Protection

Companies bear economic responsibility: a contribution that is systematically undermined by counterfeiters. For European companies alone, the loss of turnover due to counterfeiting is estimated at around 83 billion euros – year after year. The tax losses are correspondingly massive, and these funds are ultimately lost to the community. In addition, an estimated 671,000 jobs are lost.¹ This directly affects many individual members of society.

 

Legal responsibility  

Anti-Piracy Fights Illegal Activities

Companies have a legal responsibility, and they also have a function as a social role model. Therefore, effective brand protection and the defence against counterfeiting and plagiarism should actually be a standard practice. After all, they are illegal and can violate legal requirements in many ways: from disregarded legal standards for workplaces, production and distribution to neglected environmental protection and safety requirements. Counterfeits and pirated products can also expose individual consumers to tangible dangers; for example, if a fake charger explodes in someone’s own home.² And who should care that the fake sunglasses, handbag or luxury watch from their holiday could be linked to other serious crimes such as drug trafficking, illegal possession of weapons or, for example, human trafficking?³ This cesspool of crime even extends to organised and internationally active terrorist networks.⁴ 

 

Ethical responsibility  

Anti-Piracy Stops Unethical Activity

Companies have an ethical responsibility. Therefore, it is hardly surprising that brand protection can also often mean taking action against concrete human rights violations. In 2020, for example, authorities in Spain – in the middle of Europe – were able to free numerous workers who were being held in an underground factory and forced to produce plagiarised products under unacceptable conditions.⁵ But less extreme cases of poor working conditions can also be prevented; for example, if workers are not forcibly detained, but are exposed to dangers due to a lack of safety standards and occupational health and safety. In some cases, this can even endanger people‘s lives, as shown by a devastating fire at an illegal production facility in Spain demonstrates.⁶

 

Philanthropic responsibility  

Saying No to Counterfeiting Develops Social Consensus

Companies lead the way. Not only as technical or economic, but often also as human, sustainable or even humanitarian drivers of innovation. Nowadays, this also includes consistent action against product piracy and brand piracy. Measures against counterfeit medicines or imitation car parts have shown how human lives can be protected in very concrete ways; for example, when medicines with harmful or ineffective ingredients can be removed from circulation. The World Health Organisation estimates that more than a quarter of a million children die each year from counterfeit medicines, which only includes those against pneumonia and malaria.^7,8 Potentially devastating effects on humans and the environment could also be prevented, for example, by actions against the trade in illegal pesticides that contain banned and partly toxic substances – and with which, for example, an area larger than the entire agricultural area in Germany could have been treated in 2020 alone.⁹

 

Overall, it becomes apparent that brand protection and the fight against counterfeiting are not a self-serving endeavour. Instead, it becomes clear that it is an important part of a company‘s commitment to a sustainable corporate social responsibility. This is a requirement that must be fulfilled to contribute to the greater good of society. It is also imperative that this matter is actively communicated and addressed, to cultivate a sense of awareness among key stakeholders, including employees, consumers, and the public, regarding the potential hazards of plagiarism. 

 

"Counterfeit products not only harm the affected companies themselves, but are also a danger to the health and lives of their customers. In addition, they cause enormous economic damage, are often connected to organised crime and are an attack on our social cohesion. Each company carries the responsibility to protect its trademarks against abuse."

Dr. Tobias Kresse | Managing Director

 

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Sources
¹ EUIPO, Status Report on IPR infringement, 2020
² Macwelt, Apple has one million fake products deleted on Facebook and Instagram, 2021
³ EUIPO/Europol, IP Crime and its link to other serious crimes, 2020 4 UNIFAB, Counterfeiting & Terrorism, 2016
⁵ EUIPO/EUROPOL, IP Crime and its link to other serious crimes, 2020
⁶ Guardia Civil, La Guardia Civil desmantela una organización delictiva dedicada a la falsificación y contrabando de tabaco, 2019
⁷ OECD, Trade in Counterfeit Pharmaceutical Products, 2020
⁸ Automotive Anti-Counterfeiting Counsel, The Online Sale of Counterfeit Automotive Parts, 2020
⁹ Europol, A record number of 1 346 tonnes of illegal pesticides taken off the market in 2020 global operation Silver Axe, 2020

Author

Sabine Carrell, International Communications Manager at SCRIBOS