The authors state that -
Motivated by enormous returns on investment from mark-ups that are potentially greater than drug trafficking and with low levels of perceived risk, the counterfeited goods industry has expanded considerably in recent years because of globalization and changes in consumer preferences. Commentators, including the US Bush Administration, have estimated that the market for counterfeit goods in the early twenty-first century constitutes between 5% and 7% of all world trade. The 2008 OECD report calculated that in 2005, the level of trade in counterfeit and pirated products was ‘up to’ $200 billion, with possibly ‘several several hundred billion dollars more’ if domestically produced and consumed counterfeit and pirated products and the significant volume of pirated digital products being distributed via the internet are also included in the estimation . Europe-wide, it reckoned that over 20% of the sales of clothing and shoes are counterfeit. Within the United Kingdom, the Rogers Review reported that criminal gain in 2006 from intellectual property crime (mainly counterfeits) was £1.3 billion, with £900 million flowing to organized crime.
Yet, comparatively little is known about counterfeiting, despite its apparent prevalence and the serious risks it poses for public safety and corporate stability, plus the alleged links to organized crime and the funding of terrorism. Even less is known about counterfeit luxury fashion goods, which, it will be argued, are significantly different in character from counterfeit safety-critical goods because of the different combinations of public and private interests that are involved. Such a distinction between the various interests will inform future anti-counterfeiting strategies and the maintenance of the United Kingdom's Intellectual Property (IP) Crime Strategy during a time when public sector spending is likely to decrease in real terms and demands for policing IP crime will increase. To emphasize this latter point, one of the three areas specifically recommended by the Labour Government's 2006 (Gowers) Review of Intellectual Property was to strengthen the enforcement of IP rights by clamping down on piracy and the trade in counterfeit goods. Informing the United Kingdom's IP strategy are statistics provided by the IP Crime Group's Annual IP Crime Report, which regularly shows a year-on-year increase in the level of IP Crime.
The topic of counterfeiting raises some interesting intellectual questions for criminologists, criminal justice policy makers and brand owners, not least because it differs from many of the regular types of offending that traditionally form the regular crime diet of the criminal justice system. It also differs because there is not a clear pattern of victimization and debates about counterfeiting oscillate between three victim groups. The first group are the consumers who may be exposed to health and safety risks from some counterfeit goods, but generally do not tend to see them as a problem because their primary focus is to spot a good bargain, which counterfeit goods represent to them. It is their insatiable desire for goods that display prestige brand marks that arguably inflates the unit value and creates the main market driver for counterfeiting. The second group regarded as victims are the owners of the goods or brands being counterfeited whose business is threatened. The third group are victims indirectly affected by adverse knock-on effects of the counterfeiting industry upon the environment or national taxation systems.
These contrasting positions not only shape criminal justice responses to counterfeiting, but they simultaneously blur its regulation and policing by creating confusion in the protection of private and public interests. Where, for example, do we draw the line between the responsibilities of consumers to act sensibly in their own interests; the responsibilities of IP owners to uphold their private corporate interests; and the responsibilities of governmental agencies (trading standards, the police and customs) to uphold the public interest? Core to these questions is whether or not the taxpayer should be funding anti-counterfeiting measures, or should the financial responsibility be thrown back to those whose goods are being counterfeited?
This article therefore explores where the public interest lies in the counterfeiting of luxury fashion goods. In so doing, it seeks to address a range of academic and practical questions relating to the regulation of intellectual property and contribute to the current debate about public spending on anti-counterfeit measures. It brings together a range of available literature and research mostly conducted for the fashion industry and further develops the UK findings of COUTURE, a two-year EU-funded project on the regulation of counterfeiting in the luxury fashion industry.
The first part sets out the range of issues found in contemporary debates over counterfeiting luxury goods before looking at the scale of counterfeiting. The second part considers what counterfeiting is and outlines the arguments that underpin policing interventions. The third part deconstructs the economics of branded luxury fashion goods in order to map out the criminology of desire for them and to consider how it shapes consumer behaviour. Such desire is the main incentive for counterfeiting and related criminal activity. The fourth part outlines the impact of counterfeiting luxury fashion goods upon the brand and society and explores links with organized crime. The fifth and final part considers the public and private interest implications of the above for policing counterfeiting.
