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IP Outreach Research > IP Crime


Title: Study: "Effects of counterfeiting on EU SMEs and a review of various public and private IPR enforcement initiatives and resources"
Author: Simon Rodwell [Hunter Rodwell Consulting], Philippe Van Eeckhout [Contratak S.A.S.], Alasdair Reid and Jacek Walendowski [Technopolis]

European Commission

Year: 2007


Subject/Type: Counterfeiting
Focus: Aircraft and Auto Parts, Apparel and Shoes, Brands (deceptive counterfeits), Brands (non-deceptive counterfeits), Consumer Electronics / Electronic Equipment, Mechanical / Electrical Engineering, Toys
Country/Territory: Austria, Belgium, Bulgaria, China, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands (Kingdom of the), Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom
Objective: To obtain information about the extent and nature of intellectual property rights (IPR) abuses experienced by EU-based small and medium-sized enterprises (SMEs) across all sectors as well as in specific sectors, and to identify effective solutions to tackle counterfeiting and other IPR abuses.
Sample: 155 small and medium-sized enterprises, 24 sectoral/business associations based throughout the EU
Methodology: Online surveys

Main Findings

Companies of all sectors are affected by intellectual property rights (IPR) abuse: 83% of surveyed small and medium-sized enterprises (SMEs) reported that IPR abuse was a significant concern, with only 13% disagreeing. Almost three quarters (74%) stated that their own products had been affected by IPR infringements. The main sources of counterfeits named were: China (by 56.6%), followed by other EU/home markets (slightly over 20% each), Turkey (14%), other Asia (13.3%), and India (12.6%).

35% of SMEs considered that their businesses were affected significantly or quite significantly by IPR abuse, and most thought that the extent of IPR abuse would increase over the next five years. Hardly 6% maintained that their businesses would be less affected by IPR abuse in the coming five years. Final mass products were most often affected by counterfeiting.

IPR infringements concerned designs (with 44.1% reporting infringement of this IP right), look-alike products (37.1%), trademarks (28.7%), patents (26.6%), utility models (14.7%), and confidentiality agreements (6.3%). Fakes were most commonly discovered by customers, at trade fairs, on websites, or by employees, but only rarely by public authorities. A majority of respondents estimated lost sales as a result of counterfeiting to be in the range of 5%-25% of total sales. For the workforce that number amounted to 5% or less.

The sectors most concerned about health and safety issues arising from counterfeits were toys and mechanical engineering. In terms of qualitative effects of counterfeiting, respondents stated that it reduces incentives to innovate and invest in R&D (research and development), that it can negatively affect the image of the legitimate company, and that there are significant cost implications when companies decide to prevent and pursue counterfeiting. 38% of SMEs had undertaken civil procedures against infringers. Over 20% reported taking no action at all.

Most sectoral/business association representatives of the mechanical engineering sector acknowledged that SMEs tend not to act against counterfeiters. Some companies reportedly tried to fight counterfeiting in China, but in view of the many obstacles they gave up.

Toy sector associations stated that SMEs in their sector protect their IP, but that they lack adequate resources to enforce their rights, and, as a consequence, would often ignore the problem of counterfeiting. They especially felt that proceeding against Chinese counterfeiters was impossible.

Textile and clothing sector representatives contended that their SMEs find the costs of registering IP (especially designs) too high, and that they are reluctant to adopt preventive measures to avoid IPR violations.

Automotive parts sector associations emphasised that bigger companies are able to establish strict enforcement strategies against counterfeiters, as well as start legal action, and take precautionary measures and invoke proceedings against IPR violations.

[Date Added: Nov 20, 2008 ]