Counterfeit trade in consumer goods props up shady economy

Buying a fake but convincing designer garment for a fraction of the price of the real thing can be a satisfying experience for the consumer who is attracted to the cachet of the label, but turned off by the price tag.

However, according to one lobby group, by purchasing counterfeit products, buyers could be contributing to a shady parallel economy that costs tax revenue, jobs, and sometimes even lives.

The Anti Counterfeiting Group (ACG) claimed at a recent conference that counterfeit goods cost the Irish economy almost £300 million (€381 million) a year. Legitimate Irish retailers miss out on £150 million worth of perfume and luxury goods sales thanks to counterfeit goods traders, the group claims.

The British-based trade association which represents manufacturers, distributors, agents and solicitors also claims that Irish retailers are denied £50 million worth of CD and tape sales, and £37.5 million worth of video sales.

However, as the ACG concedes, "no reliable figures are available about the scale of the problem". A Customs source says he is not aware of any comprehensive survey of counterfeiting activity in the Republic. "I'm not knocking the figures that are going around, I just wonder where they come from. My best guess is that if you look behind them, they're probably extrapolations from British figures."

Customs investigators have been impressed by the increased sophistication of counterfeit clothing they have seized over the last 15 months.

"Until recently, we were seeing a lot of top quality counterfeit clothing which was destined for the retail sector. If those counterfeits were to make their way into shops, it would be very difficult for Joe Public to distinguish them from the genuine article, unless they were familiar with the security features. Often, even the retailers are not even aware that the goods are counterfeit."

However, he claims that recent major seizures of counterfeit goods have led producers of counterfeit clothing to switch their focus elsewhere.

"We have seen these people move to other jurisdictions and have informed the authorities in the countries they've moved on to," the Customs official said.

"That doesn't mean we've cracked the problem of counterfeit imports, but closed one loophole at least. Now we've got to refocus our strategy to deal with other aspects of the problem," he added.

One of the areas that may be harder for the authorities to tackle is software piracy. The Irish National Federation Against Copyright Theft (INFACT) recently issued a warning about a dramatic increase in the number of pirated CDs for Sony's Playstation games system. The federation estimates as many as one in 10 of all games sold is pirated.

Professional pirates, using sophisticated duplication machines, can sell large quantities of a £50 game for as little as £5 each. Office software is another lucrative area for the pirates.

Because of the sophistication of the packaging the forgers produce, purchasers of counterfeit software often only discover they have been duped when a problem arises with the programme, and they are informed by the legitimate producer that their "warranty" and their software is forged.

The ACG's website features an array of other counterfeit goods seized worldwide which provides food for thought. Featured on the site are antibiotics said to be made from vegetable matter and talcum, eye drops containing no active ingredient and made from contaminated water and health drinks allegedly containing 10 times the recommended safe level of ephedrine. Other dishonourable mentions go to manufacturers of fake car brake pads containing asbestos, aircraft brake parts made from mild steel rather than tempered steel and washing powder made of such highly caustic ingredients that it caused burns.

An investigation by the French newspaper Le Monde suggested that 7 per cent of medicines found in the world were counterfeited. The proportion climbs as high as 25 per cent in Brazil and even 60 per cent in some African countries. In Haiti, 30 children died after ingesting counterfeit anti-fever medications that contained diethylene glycol, an industrial solvent found in anti-freeze, while a counterfeit medicine containing the solvent claimed the lives of 109 children in Nigeria.

While the threat to health from the trade in counterfeit goods in the Republic is less dramatic, lobby groups say the safety of consumers is threatened by the inferior quality of the materials used, the poor quality control standards of the manufacturers and their lack of interest in research and development.

The size of some recent seizures by the Garda and the Revenue Commissioners suggests there is a substantial market for counterfeit goods in the Republic. In one series of raids last year, gardai recovered more than £1 million worth of fake designer clothing. The nine tonnes of counterfeit sports and leisurewear included Nike, Versace, Umbro, Tommy Hilfiger and Calvin Klein.i on the counterfeit trade in Ireland indicate that the ACG's suggestion that the sale of counterfeit goods funds terrorism does not apply here. Det Supt Pat Brehony of the Garda Bureau of Fraud Investigation told a recent conference that the sale of counterfeit goods in this State was mostly organised by small-time criminals.

In this State, legal protections for copyright and trademark owners are relatively strong, lawyers in the field say. Mr Garret Breen of A&L Goodbody Solicitors once described the 1963 Copyright Act as "a terrible example of legislative draughtsmanship" but he says the enforcement provisions it contains, which were reinforced by amendments in 1987, are quite effective.

With the Trademarks Act of 1996 and the Intellectual Property Miscellaneous Provisions Act of last year, the situation has improved even further in this State for legitimate manufacturers, he adds.

"There has been a perception in Ireland that we have insufficient laws in place to realistically take on the counterfeiters. However, this perception has been based on what I feel is an ignorance of how the existing laws operate and how they have been used by many brand owners in Ireland already to prevent counterfeiting."

A copyright reform Bill published earlier this month promises further to improve the protections against counterfeiting. The Bill, which Minister of State, Mr Tom Kitt, says is "one of the longest and most complex non-consolidation Bills ever to have been brought before the Oireachtas" substantially increases penalties for criminal offences in the copyright field and revises the burden of proof in civil actions in favour of the plaintiff.

However, groups trying to combat the problem are frustrated by the public's perception of the manufacture and sale of counterfeit goods as being a "victimless crime".

A MORI poll in Britain found that 40 per cent of the public said they would knowingly purchase a counterfeit product if the price and quality of the goods were acceptable. While anti-counterfeiting groups have fought hard for progress on the legislative front, they will have an even tougher battle to convince a large section of the public that some bargains cost the economy dearly.