What is counterfeiting and piracy?

The terms “piracy” and “counterfeiting” of goods refer to manufacturing, distributing and selling inferior copies of products which have been made without the permission of the intellectual property rights holder in the said goods. Inferior copies of goods are intended to appear similar to that of the original product and to be passed off as genuine items. However, the scope of goods differs in both violations. Piracy is the sale of unauthorised copies of usually copyrighted information such as music, films, television show etc. and counterfeiting refers to the selling of an inferior copy of a product like clothing items, bags etc. As these unauthorised inferior copies are circulated in the market, they hamper its original creator in more than one way.  It not only tarnishes the name of the creator but also harms them monetarily.

Piracy and counterfeiting are two concepts, which are generally used to indicate intellectual property rights violations. Under both these violations, certain acts are carried out without the consent of the rights’ holder. Pirated and counterfeit products have profoundly contributed to intellectual property theft around the world. Governments across many countries along with international organisations like the World Intellectual Property Organization (WIPO) have been working tirelessly to fight against these violations and to strive for economic independence and progression. Counterfeit and pirated products cover virtually all areas of consumer goods, including pharmaceuticals, food, books, films, music, compact disc, and textile material, and footwear, among others.

The term ‘piracy’ is a colloquially used word for copyright infringement. It refers to an unauthorised reproduction or theft of someone’s creative work for financial gain. This illegal use results in violation of rights of copyright holder granted to them by law. Individuals and companies who develop new works ensure that they can profit from their creation; therefore, they register for copyright protection. The owner of the copyright may grant permission to other parties to use their work by giving them a license or assignment and charging a fee. However, there are several instances where someone may engage in use/reproduction/distribution/sale of copyrighted work without the creator’s permission and engage in copyright infringement. It is important to note that the ethos of copyright law is to protect the value of the creative work of a creator. When a person makes an unauthorised copy of someone’s original work, they are taking something of value from the owner without their permission, which is just like taking something tangible from a person without their consent like a pen, car, bag.

This crime represents as much as 2.5 % of world trade, or USD 461 billion. Thus, rights holders, governments and the formal economy as a whole are suffering huge losses each year, while the criminal networks that are behind the trade profit enormously.

The situation in the EU is even worse: counterfeited and pirated products account for about 5 % of imports to the EU. Thus the relative impact of counterfeiting is twice as high for the developed economies of the EU as it is for the world as a whole.

But the damage goes beyond the immediate impact of one and another loss. Counterfeiting and piracy are a threat to sustainable business models based on intellectual property and patenting, because they also discourage innovation and work against the economic growth that is based in it.