Impact of Counterfeit and Piracy Issues on Economy

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Table of Contents

Introduction
Main body
Conclusion
References

Introduction

The economy of the world is facing many serious problems, which have affected both developed countries and developing countries. One of the most serious problems is counterfeit and piracy. Generally counterfeit goods are defined as products with the same characteristics as original one. Many authors have their definition of counterfeit. Burnett (2007) states that “Dealing commercially in fake goods by using similar or identical trade marks to those of the genuine products is illegal, even without a registered trade mark….” Bosworth (2002) defines counterfeit that to simulate the shape of product of another to trick a consumer, or to use trade mark or brand name. It can also copy packaging and many other important characteristic of the origin product. This paper will discuss some problems caused by counterfeit and pirated goods. Not only will the problems be discussed but also the paper will suggest some possible solutions. This will be followed by evaluating if counterfeits goods are because of high prices of brand name.

Most Important of all, economic losses are one of consequences of counterfeit goods. As Bosworth (2006) has indicated, the producer of the branded goods may lose profit, especially, when consumer buys a fake product rather than their product. Additionally, they may lose future revenues because consumers will buy competitor goods, if they experience a lower quality in their goods. Also, Tungate (2005, 205, 206) reports that the amount of counterfeit goods is 500 billion all over the world a year according to the international Chamber of commerce, most of this trade is made in China. China is considered a fundamental resource of counterfeit goods and fake products globally. To quote from (Loke-khoon in Tungate 2005, 206), “China is the biggest factory of fakes in the world”… usually, when factories finish producing guanine goods at the end of day, counterfeiters imitate the same product just within hours.

The fact of the matter is that, counterfeit and piracy of intellectual property is an international crime. There is a link between organized crime and a huge increase in counterfeit products which threaten employment, invention, economic growth, and the health and safety of people throughout the world (Heath 2008). Similarly, (Arnault in Tungate 2005, 206) stated “…when you buy a counterfeit product, you are funding crime, misery and hardship.” Conversely, the counterfeiters and pirates can make more profit than selling illegal drugs with less likely to be caught (Haie-Fayle and Hubner 2007, 206). Counterfeiting has increased significantly, all the people in the world must work together to stop this criminal activity. As (Haie-Fayle and Hubner 2007) say:

Main body

“Counterfeiting is a global issue and governments; industries and consumers must take action together if they are to fight it. An obvious place to start is in legislation, by building on exiting global initiatives, including the WTO’s TRIPS agreements to enforce IPR and exact penalties. While any countries have adequate legal frameworks and regulations in place, enforcements is often a weak link, reflecting a lack of resource, or corruption. Inaccurate information can also hamper efforts: the authorities might know there is a problem, but need more coherent data and intelligence before they can act”.

Counterfeiting threatens people’s life. There are thousands of products which are being affected because of the same such as food, drugs, cosmetics, shoes, and car parts. For instance, in china, there are many children who died and hundreds are enduring diseases after drinking counterfeit milk. Technical solution can help consumers to distinguish between genuine goods and fake goods which are called radio-frequency identification (RFID) tags. This tag consists of encrypted ID code which will be read by reading device. Unfortunately, RFID tags are useful just for supplier and retailers, not for consumers, because the reading devices too expensive (Fox 2004).

Consumers usually cannot differentiate between genuine products and end up buying a fake product, because of a high quality of copying and packaging (Haie-Fayle and Hubner, 2007). Similarly, (Loke-khoon in Tungate 2007) says “this rise in expertise has led to the ‘super fake’, an item almost identical in quality to the real thing. He goes on to say that investigators frequently went missing”. However, Consumers have the potential to conserve themselves. If they buy goods from the internet or shopping center, they should have the same rights rather than buying goods from street, they have right to refunds and cancellation. For example, if they buy products using credit card , they can make a claim either from the seller or the credit card company if the goods are fake (Burnett 2007).

Another problem caused by counterfeiting is that the real brand name gets spoiled and the same damages the reputation of that particular brand name. Loke-khoon in Tungate (2007) found that companies need a long-term scheme to conserve prestige of trademark from tarnishing for good. They also should take in their account a budget of fighting fakes. Tungate (2005, 206, and 2008) for example, Louis Vuitton has its program of keeping the brand name, and working police forces throughout the world. In addition, it spends about 15 million a year to protect its copyright. Although, Louis Vuitton believes that initiation should come from consumer to look for an origin product carefully.

Another problem which has appeared is not counterfeiting goods but fake money, which is a much bigger problem than the counterfeiting of goods. Nowadays, the misuse of new technology gives rise to this problem. For instance, all-in-one machines that consist of printers, copiers and scanners are available for cheap price. Thus counterfeiters make copies of banknotes that can be used as original one. To solve this, the Central Bank Counterfeit Deterrence Group has evolved a telltale mark which is hidden inside banknotes to prevent any digital imaging software licensed by the CBCDG to copy those (Fox, 2004).

This is also undeniable that the high prices of origin goods provoke consumers to buy counterfeit goods and same is the case with piracy too. For instance an original movie DVD costs about 25-30 dollars on the other hand the same DVD can be bought for as little as 5 dollars; this is the only reason why piracy and counterfeiting are thriving. The consumers feel that it is not worth buying the original products because the workers who work day in and day out are paid very less wages and the lion’s share of the profit goes to the manufacturer. All these were some of the most realistic problems which are faced by the manufacturers of original goods.

High price of the original goods is not the reason which causes counterfeit but it is because of the people who want cheap and duplicate goods. The demand gives rise to supply, this is very genuine point, and if there will be no demand for the counterfeit goods automatically the cheats who indulge in counterfeiting will be out of work. It is purely because of the people who want to buy counterfeit goods this industry is flourishing. Only if the demand of such products can be kept in check, this menace can be brought to an end or else it will continue for ages to come.

Conclusion

To conclude, it is clear that counterfeiting of goods is a global problem which poses many difficulties at the countries level as well as at the individual level. One of the biggest problems is related to the health and safety of consumers. In addition, fake goods can destroy industries by exploiting their trademarks and by producing low quality products. The consumers should be made well aware of the consequences of buying fake or counterfeit goods, to counter this problem all the countries and the consumers have to join hands and work towards eradicating this menace from our society.

References

Avery, P. Cerri, F. Haie-Fayle, L. Bjerring, K. Scorpecci, D. Stryszowski, P. 2008. THE ECONOMIC IMPACT OF COUNTERFEITING AND PIRACY, 54, 63. France: OECD.
Bosworth, D. 2002. THE ECONOMICS AND MANAGEMENT OF GLOBAL COUNTERFEITING. The Sixth World Congress on Intellectual Capital and Innovation, 2002.
Burnett, R.2007. Counterfeit goods. The British Computer Society.
Fox, B. 2004. Fighting the tide of dangerous fakes. New scientist. 182 (2451):24
Haie-Fayle, L. and W, Hubner. 2007. Counterfeiting and Piracy: Fakes, facts and figures.OECD Observer, 2007: 9-11.
Heath, R. 2008.Global Anti-Counterfeiting-a pragmatic industry view. European Internet Forum, 2008.
Sheth, J. and R. Sisodia. 2006. Does Marketing Need Reform, 212. London: M.E.Sharp.
Tungate, M. 2005. The faking name. In FASHION BRANDS: branding style from Armani to Zara, 205-208. Great Britain and the United States: Kogan Page Limited.

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Impact of Counterfeit and Piracy Issues on Economy

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