The document discusses a study commissioned by the Swedish Confederation of Enterprise focusing on the impact of counterfeiting and intellectual property (IP) crime on major companies, revealing that 80% are affected by product counterfeiting, with significant concerns about trademark damage and human safety risks. It highlights China's role as the primary source of counterfeiting, with a majority of companies believing that government prioritization of IP rights enforcement is too low. Additionally, it notes that quantifying the overall economic impact of IP crimes remains challenging for companies, despite recognizing it as a strategic threat.

2. How counterfeiting and IP
crime affects leading
companies
A project commissioned by the Swedish Confederation of
Enterprise
OECD, March 2014

3. Underlying logic
Problem:
Lack of public data on impact of illicit trade on business
= Lack of political prioritisation
Solution:
Collecting data - a prerequisite for further action

4. NASDAQ OMX 30 Stockholm index
- IP intense and internationally active companies
- Manageable number of companies to interview
- Market cap 470 billion US dollars (23 January 2015)

5. Methodology
Hypothesis: Companies themselves best placed to (gu)estimate
impact of intellectual property crimes on their own activities
- Questionnaire & interviews
- Anonymise (in order to reduce reluctance to share info)
- 17 companies whose core business activity could be
significantly affected by counterfeiting, patent theft or copyright
infringement. 14 (+1) participated in the study

6. The results

7. Counterfeiting and piracy
- 80 percent subject to product counterfeiting or piracy
- 93 percent affected by counterfeiting of trade marks, and/or
patent losses due to counterfeit products
80
%
13
%
7%
Subjected to
counterfeiting or
piracy
Losing patent income
to counterfeits
Not affected

8. Trade mark damage
- 80 percent whose products counterfeited indicated concern it
could damage their trade marks
0
20
40
60
80
100
April
80 % concerned

9. Risk to human health and safety
- 73 percent whose products counterfeited indicated risk to
human safety/health
0
20
40
60
80
April
73 % risk

10. Growth trend
Grown past 5 years? - 73 percent YES
Grow next 5 year? - 80 percent YES
“Growth driven by online fora”
“It will become bigger as we expand in emerging markets”
“We may see a revolution like in the music industry, when content
became digital. With 3D printing the customer will become
manufacturer. In the future digital blueprints will be a key
commodity”

11. Countries
Counterfeiting biggest problem in non-OECD countries
China
- identified as main source country by all companies affected by
counterfeiting
- Chinese websites enormous sales points for counterfeits,
some efficient at removing offending material
- some companies viewed “China Inc.” as pursuing a strategy of
intellectual property theft, others viewed Chinese authorities as
more cooperative

12. Organised crime
- Companies do not look for organised crime connection - seen
as law enforcement responsibility
- Four companies confirmed organised crime involvement;
including European, Russian, Chinese, Asian and Latin
American groups
- Three companies confirmed cases where perpetrators of IP
crime were also involved in other serious crimes, including
narcotics and firearms
- One company named a Middle Eastern terrorist group that had
been involved in counterfeit trade of its brands

13. Government
80 percent stated Swedish government prioritisation of enforcing IP
rights too low (others did not know or indicate a view)
Common views:
- EU could do more to bring issue on global agenda (US more
focused)
- Need higher punishments for IP crimes
- Need to promote public awareness

14. Shareholder, financial analyst and
media questions
Shareholders at annual meetings
-Two companies, one in relation to high profile cases, other stated
questions not serious
Financial analysts
- Only one single question reported by one company
Media interest
- High profile incidents
- Only one company reported media doing an analytic piece
covering the sector

15. Challenges quantifying problem
- Overall corporate impact assessment difficult as companies
have several markets, product categories and trade marks
- Few companies could (or were willing) to quantify the
economic impact of IP crimes, despite that 60 percent saw it
as a strategic threat

16. Views on extent of problem
“For some product categories it’s 20-30 percent counterfeits, for others less than 10 percent.”
“A study estimated 3-5 percent counterfeits in our sector, resulting in a total damage (adding
trade mark damage to sales volume losses) as being equivalent to 10 percent of turnover. I
believe that would be a reasonable estimate in our case.”
“Counterfeits have been estimated at 2 percent of global output, I think it’s about the same for
us.”
“We are losing billions of SEK every year on our patent rights.”
“The majority of products sold are unlicensed products.”
“Counterfeiting is endemic in the spare parts market.”
“For us it’s more of an inconvenience, resulting in sales losses of a few million Euros a year.”
“The pirates offer more content at lower prices.”
“It’s my personal opinion, but maybe counterfeiting is not bad for all brands.”
“In my industry illicit trade is bigger than the market leader.”
“It’s a catastrophe — in some countries over 50 percent of the after sales market is fake.”

17. Concluding questions
- Will the findings help mobilise political action?
- Interest in replicating for other stock market indices?
- Survey of stock analysts?

18. Thank you!