The 2010-2011 report on the intellectual property crime, publishes some interesting facts and figures.

It is widely recognised that intellectual property rights are valuable. UK business invests more in intangible assets than physical ones and nearly half of that intangible investment (£65 billion in 2008) was in intellectual property. Therefore the value and importance of intellectual property rights to their owners and the UK economy and the global marketplace is significant.

Intellectual property crime has arguably gained more headlines in the past year than ever before. With online technologies offering ever increasing consumer choices, options for those involved in intellectual property crime are equally mirrored.

With such illegal activities often being linked with other criminality, including fraud and identity theft, intellectual property crime is a real and serious threat.

In the past year, the UK intellectual property Crime Group, which was set up to fight intellectual property crime, has:

Ø  produced a toolkit, that describes how counterfeit products can enter the genuine supply chain and how businesses can enforce their intellectual property assets;

Ø  developed an electronic guide, which describes to businesses how intellectual property can be infringed in the workplace;

Ø  coordinated training and awareness activities, which support group members, industry bodies and law enforcement officials.

The UK IP Crime Strategy, launched in 2004 and updated in 2006, provided a focus on practical activity, to improve the group’s response to counterfeiting and piracy. Other strategies are being developed which include the creation of a National Crime Agency in 2013. This new organisation is intended to strengthen the operational response to serious and organised crime and secure UK borders more effectively.

What is “intellectual property crime” and why we should care to fight it.

The term “intellectual property crime” is used to describe certain types of infringement of intellectual property rights. The willful infringement of registered trademarks (also known as counterfeiting) and the unauthorised copying and use of material protected by copyright (piracy) are both criminal offences and are most often prosecuted, where such acts are carried out on a commercial scale and/or for direct or indirect commercial gain, intellectual property crime does not, in the UK, include infringement of patents or design rights. However, not all infringements of trademarks or copyrights will amount to criminal offences; some acts will only be civil infringements, such as the unauthorised downloading of digital files from the internet. Generally speaking there are two types of intellectual property crime:

The Digital intellectual property crime that affects content protected by copyright, which is stored in electronic form and is capable of being sent, shared or distributed over the internet.

The Physical intellectual property crime which relates to counterfeiting of a variety of goods, ranging from pharmaceuticals, to clothing, personal care items, car parts and electrical goods. It also relates to digital content, which is being stored on physical discs, such as pirate DVDs or video games.

Digital IP crime in context: cyber crime

The increase in online technologies over the past 20 years has provided new opportunities for crime generally. Such crime includes hacking, industrial espionage over the internet, phishing, identity theft, online card fraud and many other types of criminal acts. The National Fraud Authority published their Annual Fraud Indicator Report in January 2011, which identified the following statistics:

Ø  total loss to the UK economy from fraud is £38 billion;

Ø  organised crime is responsible for the quarter of this loss;

Ø  illicit on line activities, such as illegal ticket sales, results in a total fraud of £168 million;

Ø  online banking fraud increased by 14% to £60 million, an overall increase in £48 million since 2004.

Pop-up websites, auction sites and social networks all provide opportunities for criminals to offer fake goods for sale to consumers. The rise of superfast (fiber optic) broadband and the greater bandwidth it provides has also allowed the easier and faster sharing of digital files.

It is generally acknowledge that, the internet is now one of the primary marketplaces for counterfeit goods and pirated copyright work.

The consequences of counterfeit and piracy

Counterfeiting and piracy have great economic consequences and their impact is wide. Businesses that own intellectual property may be affected by reductions in sales, when people buy fake instead of genuine items and through loss of future custom and brand reputation, especially if low quality fakes damage consumer confidence. Lost sales may not be easy to track, but it is thought that even a 10% substitution rate on fake trainers can have a sizeable impact on profit margins.

The economic impact also impact retailers, who are deprived of genuine custom and income, when consumers chose to purchase through unofficial and illegal routes. They may also suffer a loss of custom, if poor quality fakes affect customer demand for legitimate products.

Some figures:

- The Organization for Economic Cooperation and Development (OECD) in November 2009 estimated that, global trade (cross border) in physical fakes was worth around $250 billion per year. A figure from EU Customs on the number of goods suspected of infringing IP rights detained at the EU external border in 2009 was 118 million, with China being reported as the main source of these products (64% of the total amount of articles). Over 4 million items were seized at the UK border in 2009/10 with an estimated value, based on the price of genuine items, of around £40 million.

- In November 2009 a tracking study by British Video Association estimated lost sales for the audio visual sector were around £535 million in 2009.

- 23% of Small and Medium Sized Enterprises have had their businesses significantly affected by IP crime. A recent survey by the Professional Publishers Association reported that, over 80% of their members experienced incidents of illicit use of copyright material, with 89% of this infringement being online or digital violations.

All articles are for general purposes and guidance only and do not constitute legal or professional advice.