1 1 The OECD Study on Counterfeiting and Piracy The Food and Drink Sectors FIVS Autumn Meeting Luxembourg – 20 October 2006 The views expressed are those of the author in his private capacity and do not necessarily represent those of the OECD or its Member governments.

2 2 Objectives I have been asked to address the following issues: –Outline the OECD Study on Counterfeiting and Piracy, –Discuss in some detail the draft report on the food and drinks sectors. My own agenda is to convince you to provide additional information to strengthen study.

3 3 The problem of counterfeiting & piracy is growing –both scope and magnitude; –affects firms, consumers, governments and workers There is a broad range of effects –economic, health, safety and security Concern is increasing –over role of organised crime –about economic and social well-being of economies which harbour counterfeiters and/or condone the sale of counterfeit goods Why is the OECD doing this study?

4 4 Phase 1: Counterfeit and pirated products ( ) –Scope: Tangible products that infringe trademarks, copyrights, patents or design rights Phase 2: Digital piracy (2007) –Technical meeting on scoping before moving forward Phase 3: Other IPR infringements (2007) –Technical meeting on scoping before moving forward, taking account of progress in Doha Development negotiations Structure of the project >>> Three phases

5 5 Questionnaires to Governments: disappointing response Questionnaires to Industry: excellent responses from some sectors Survey of Customs Authorities: has provided some useful information However, significant information gaps remain ► Phase 1 Information Gathering

6 6 The magnitude and scope section will: Analyse overall trends and developments Identify “drivers” (globalisation, outsourcing, Internet, technology) Examine production and distribution channels ► Phase 1 Report structureSection 1 Magnitude and Scope of Counterfeiting & Piracy

7 7 Effects on firms whose IPRs are infringed –prices, –costs (defending rights, technology to counter counterfeiting), –sales revenues and volume, –firm value (share prices, brand value etc.), –investment, –innovation, –potential legal liability, –workers/employment, –consumer confidence Effects on counterfeiters and pirates –economic and legal risks ► Phase 1 Report structureSection 2 Effects of Counterfeiting & Piracy Effects on consumers… –health and safety –security & welfare effects (utility, jobs, consumer confidence) Effects on governments… –in all economies: tax receipts, terms of trade enforcement costs –in economies where counterfeiting is widespread: jobs, production, level and scope of criminal activity, international trade, foreign investment, internal development of brands, innovation

8 8 Policies and measures to combat counterfeiting and piracy government and industry policies and measures at the national and international levels will be examined, based on: –survey responses –independent research effective “best practice” policies and measures will be identified ► Phase 1 Report structureSection 3 Policies and measures

9 9 Sectors Selected pharmaceuticals food/drink products automotive spare parts and accessories tobacco products music, motion pictures and other video content luxury goods, perfumes and fashion clothes electrical equipment Others Considered sportswear and other branded clothing books industrial and consumer motor lubricants aircraft components toys computer software Consumer electronics personal care, toiletry and household products chemicals and pesticides ► Phase 1 Report structureSection 4 Sectoral case studies

10 SOME OUTCOMES FROM THIS SECTOR There is a sense in parts of this sector that counterfeiting is not a great problem -We would not agree with this assessment, but we need data to back up this judgement The definition of “counterfeiting” -There must be clear infringement of Intellectual Property rights -copycat products, generic goods and look-alikes may not fall under our definition ► Phase 1 Report structureFood/Drink Sectors

11 SOME OUTCOMES FROM THIS SECTOR Deceptive goods of great concern when health & safety are at risk - Food/drink joins pharmaceuticals, motor parts and toys The entry of deceptive counterfeited products into legitimate supply lines may have very serious consequences ► Phase 1 Report structureFood/Drink Sectors

12 SOME OUTCOMES FROM THIS SECTOR The task of identifying, intercepting and neutralising IPR infringements has escalated enormously and is a major cost for the industry. While governments consider counterfeiting as an important issue, not always accorded commensurate priority - compared to other illicit activities such as drugs, weapons and people smuggling ► Phase 1 Report structureFood/Drink Sectors

13 SOME OUTCOMES FROM THIS SECTOR Laws & regulations often ineffective –Not properly enforced –Insufficient public enforcement resources –Low priority in courts –Protection of locals –Courts often lenient because counterfeiting not considered to be serious crime ► Phase 1 Report structureFood/Drink Sectors

14 SOME OUTCOMES FROM THIS SECTOR Penalties do not appear to deter –Civil remedies (including damages) generally insufficient to deter –Criminal penalties and fines, even if available, rarely applied to full extent –High rates of repeat offenders ► Phase 1 Report structureFood/Drink Sectors

15 To better measure extent and magnitude of counterfeiting in these sectors To improve understanding of centres of counterfeiting and means of distribution To more clearly lay out effects of counterfeiting, especially those related to health To strengthen assessment of the role of organised crime ► In which areas do we need your help?

16 Danny Scorpecci Structural Policy Division ► Further information available >>> Contact us OECD 2, rue André-Pascal Paris CEDEX 16 France Phone: (331) Fax: (331) Website: