1. Introduction
Globalisation, policies for improving trade facilitation and the rising economic importance of intellectual assets are important drivers of economic growth. These intangible assets in the global trade context have shifted the attention of industry leaders and policymakers towards intellectual property (IP). For modern industries, IP is a key value generator and enabler of success in competitive markets. Meanwhile for policymakers, IP plays a crucial role in promoting innovation and driving sustained economic growth.
However, this rising importance of IP in the globalised world has created new opportunities for criminal networks to free ride on others’ intellectual assets to pollute trade routes with counterfeits. The growing magnitude and broadened scope of counterfeiting, particularly in the context of trade, is seen as a significant economic threat that undermines innovation and hampers economic growth.
To provide policymakers with reliable empirical evidence on this threat, the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO) joined forces to develop an understanding of the scale and magnitude of the IP infringement problem in international trade. The results are published in a series of reports that provide a general overview of this threat: Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact (OECD/EUIPO, 2016[1]), Mapping the Real Routes of Trade in Fake Goods (OECD/EUIPO, 2017[2]), Trends in Trade in Counterfeit and Pirated Goods (OECD/EUIPO, 2019[3]) and Global Trade in Fakes: a Worrying Threat (OECD/EUIPO, 2021[4]).
Apart from these core reports, further studies have deepened our understanding on specific aspects of trade in counterfeit goods. These include Trade in Counterfeit Goods and Free Trade Zones: Evidence from Recent Trends (OECD/EUIPO, 2018[5]); Why Do Countries Export Fakes? (OECD/EUIPO, 2018[6]); Misuse of Small Parcels for Trade in Counterfeit Goods (OECD/EUIPO, 2018[7]); Trade in Counterfeit Pharmaceutical Goods (OECD/EUIPO, 2020[8]) and Misuse of Containerized Maritime Transport in Counterfeit Trade (OCDE/EUIPO, 2021[9]).
Altogether, these reports provide robust evidence of the significant volume of counterfeiting and piracy in global trade networks. In addition, they document the threat IP infringement poses to business efficiency and consumer well-being worldwide.
The existing literature has refocused policy attention towards combating counterfeit trade and piracy. This has been paralleled by increased efforts by the private sector to raise awareness of this global threat.
In addition, several recent developments could affect the counterfeit trade landscape. One key trend is the boom in trade in small parcels, which has been boosted by the COVID-19 pandemic. Furthermore, the lockdowns and border closures the on-going sanitary crisis has created – and will continue to create – have greatly impacted illicit trade in counterfeit goods. The effects of these developments occur through several direct and indirect transmission channels by shifting consumer demand, changing priorities in customs controls and re-shaping trade routes.
In recent years, counterfeit trade conducted through e-commerce platforms has played an increasingly important role in shaping illicit trade. E-commerce is also associated with trade in small parcels, so counterfeiting in e-commerce influences counterfeiting in trade in small parcels as well.
The purpose of this report is to provide policymakers with updated information on the links between illicit trade and e-commerce. The report provides measures comparing the frequency of online purchases with the number and value of global customs seizures shipped by mail, express courier (EC), and other conveyance methods. This methodology is used with a new set of world data on seizures of counterfeit and pirated goods and data on e-commerce which leads to a set of objectives and a robust illustration of economy- and industry-specific patterns in the trade of counterfeits.
The quantitative analysis in this report predates the COVID-19 pandemic. The pandemic has impacted both licit trade and the trade in counterfeit goods. While some initial effects on counterfeiting having already been observed, the longer-term impact is expected to emerge more gradually. Given the fast pace of change, a precise quantitative analysis of these effects has not yet been possible. Nevertheless, discussions with law enforcement officials and industry representatives, along with monitoring ongoing law enforcement actions, have shown that the main impact thus far has been an accelerated transition to e-commerce, with a boom in offers of counterfeits online. With consumers being forced to move to the internet, they are more motivated to use e-commerce platforms for their shopping needs. This has presented new opportunities for illicit actors to exploit e-commerce marketplaces and has likely contributed to growing levels of counterfeiting and piracy conducted online (OECD, 2020[10]); (OECD, 2020[11]) (UNICRI, 2020[12]).
This analysis refers to two phenomena: counterfeiting and piracy and e-commerce.
Counterfeiting and piracy are terms used to describe a range of illicit activities related to the infringement of intellectual property rights (IPRs). Following the (OECD, 2008[13]), (OECD/EUIPO, 2016[1]) (OECD/EUIPO, 2019[3]) and (OECD/EUIPO, 2021[4]) studies, this report refers to the definitions as described in the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). Consequently, this report focuses primarily on the infringement of copyright, trademarks, design rights and patents. The term counterfeit used in this report refers to tangible goods that infringe trademarks, design rights or patents, and the term pirated describes tangible goods that infringe copyright.
Three relevant aspects should be kept in mind in this context:
This wording is used for the purpose of this report only and does not constitute any definition outside its scope. In particular, this study does not include intangible infringements, such as online piracy or infringements of other IPRs.
Substandard, adulterated or mislabelled products, such as pharmaceuticals, that do not violate a trademark, patent or design right, for example, and replacement automotive oil filters and head lamps that are made by firms other than the original equipment manufacturer (OEM) (provided the replacement parts do not violate a patent, trademark or design right) are beyond the scope of this study.
This study largely draws on statistical data on counterfeiting and piracy, which due to their nature are incomplete and limited. Consequently, the quantitative results presented in this study illustrate only certain parts of counterfeiting and piracy. Despite this, the methodological apparatus was tailored to the available dataset to ensure the conclusions are clear and based on fact.
In addition, defining e-commerce is a challenging tasks. The understanding of e-commerce is not universal, and the usage of the term varies in different contexts. For instance, the Eurostat manual definition differs from the US Census Bureau definition since the United States considers sales negotiated on extranets, email, and mobile devices (m-commerce) as e-commerce whereas Eurostat does not. Similar discrepancies exist between almost all organizations so it is important to underscore that the underlying data in this report comes from distinct sources that use slightly different definitions of e-commerce.
It is important to highlight that this report does not introduce any new definition of e-commerce, rather it uses the working description used in other similar OECD reports. This report looks at e-commerce as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing orders, in line with the OECD definition established in 2001 and revised in 2009.1
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Note
← 1. OECD (2019), Unpacking E-commerce: Business Models, Trends and Policies, OECD Publishing, Paris, https://doi.org/10.1787/23561431-en.