IP Theft surges to 36% of Global Counterfeiting, says Report

Tuesday March 15, 2005 — Calgary, Canada — Based on the past month of worldwide counterfeit enforcement activity (investigations, raids, seizures, arrests, charges, convictions, sentences, civil litigation, public announcements), as reported through the DOPIP Security Counterfeit Intelligence Report, more than 268 incidents were analyzed from 48 countries.

The most profitable counterfeits (based on seizures and losses):

1. Clothing & Accessories, $38 Million, 21 incidents, average age of the counterfeiter 33.
2. Entertainment & Software, $18.1 Million, 50 incidents, average age 32. (CDs, DVDs, software, games)
3. Drugs, $12.9 Million, 8 incidents, average age 29. (medicine)
4. Financial Instruments, $4.3 Million, 96 incidents, average age 29. (currency, checks, money orders, treasury bonds, credit/debit cards)
5. Other Goods, $1.1 Million, 4 incident, average age 38. (golf equipment, pottery, gambling equipment)
6. Cigarettes, $0.9 Million, 3 incidents, average age 33.
7. Industrial Goods & Supplies (average age 25), Electrical Equipment & Supplies, Food & Alcohol, Other Documents (average age 38), Identification (average age 36), Computer Equipment & Supplies, $1 Million, 86 incidents.

For more information: http://www.goldsec.com/Security_Research.htm

The 82 most popular brands, brand owners and trademarks to counterfeit:

• Louis Vuitton (7.3% of all incidents), Nike (7.3%), Burberry (6.1%), Coach (6.1%), Gucci (6.1%), Microsoft (6.1%), Chanel (3.7%), NFL (3.7%), Viagra (3.7%), Autodesk (2.4%), Christian Dior (2.4%), FCUK (2.4%), Fendi (2.4%), Hugo Boss (2.4%), NBA (2.4%), Pfizer (2.4%), Prada (2.4%).
• Less popular were: Callaway Golf, Canon, Cartier, Chicago bulls, Cleveland Golf, Corel, Duracell, Gillette, Giorgia Armani, Honda, HP, Kaizer Chiefs, Kate Spade, Lacoste, Lance Armstrong, Major League Basebal, Manchester United, Nissan, Oakley, Oki, Oracle, Orlando Pirates, Oxford, Patriots, Ping, Pokeman, Rado, Rangers, Real Madrid, Red Sox, Rockport, Rolex, Starter, Symantec, Tommy Hilfiger, Toyota, Underwriters Laboratories, Yankees, and Zig-Zag.

In summarizing the months activity, Glen Gieschen, Managing Director of Gieschen Consultancy stated "February is continuing the trend towards counterfeiting brands, trademarks and copyrights which increased by more than 15% from January. Given that a number of terrorist and criminal groups such as Al-Qaeda, ETA, Inagawa-kai, Sanbonsugi-ikka, and Yamaguchi-gumi were involved in counterfeit activity in February, this will continue to cause concern for governments, corporations and consumers. Typically bogus items are made of inferior or poor quality components which have caused significant harm or death to individuals. Cases involving cellular phone batteries which exploded and burned children, bootleg liquor which contained 200 times the acceptable methylated spirits killing dozens, condoms which failed to protect against sexually transmitted diseases and contraception, and fake botox and AIDS vaccines which caused deaths have become a reality. Other industries are equally concerned with the use of aircraft or automotive parts such as brake pads, ball bearings or filters which failed to work under normal conditions. Increasingly, the threat of deliberately adulterated or spurious food products is fueling concerns over agroterrorism and bioterrorism as the food supply has been shown to be vulnerable to phony baby formula which killed dozens of children in China.

A record number of incidents were uncovered by brand enforcement personnel involving copied products which used unauthorized trademarks and pirated work relating to copyright infringement. Of the 82 brands identified, 17 brand owners accounted for more than 69% of this activity indicating that those responsible for the unauthorized reproductions are targeting specific brands and IP owners which market their products globally.

In response, there is an increasing awareness of brand protection technologies and intellectual property protection strategies. The use of digital rights management, digital watermarks, document security, intelligence gathering, nanotechnology, RFID (Radio Frequency Identification), and security printing are assisting in anti-counterfeit and anti-piracy efforts. Combined with intellectual property enforcement, IP owners are becoming more effective in reducing losses.

All counterfeit activity should be of concern as it fuels other crimes such as terrorism, identity theft, fraud, forgery, smuggling, parallel trade, product diversion, and a black market for a wide variety of knock off and imitation items. Countries which are most active in reporting incidents are Italy ($18.7 Million), USA ($15.5 Million), Spain ($14.5 Million), South Africa ($12.3 Million), Canada ($4 Million), Taiwan ($3.2 Million), Kenya ($1.7 Million), UK ($1.4 Million). China, reported as the single largest manufacturer of counterfeit items, ranked 9th ($1.0 Million).

Compounding the problem is access to simple duplication methods which allow counterfeiters to reproduce items without incurring a large expense. In some cases, equipment has been obtained using fake ID, only to be used to perpetrate other crimes such as counterfeiting checks or currency. The most common method are as follows: Entertainment & Software, using CD or DVD burners; Financial Instruments, using computers, scanners, printers, and copiers; Cigarettes, obtaining cigarette manufacturing equipment; Identification, computers, printers, scanners, cameras, and laminators.

Assisting terrorists and criminals in facilitating their crimes and avoiding detection, fake identification posses another challenge. As the sophistication and scope of the crimes increase the value of identification desired also increases from drivers licenses and birth certificates to passports, visas and national identity cards. 26% of global counterfeiting now involves the manufacturing of identification. The most common forms of fake ID are passports (27%), drivers licenses (18%), other government identification (10%), identity cards (9%), social security cards (8.5%), birth certificates (6%), visas (6%). Other less common forms are green cards, police and military identification, citizenship papers, home visit permits, immigration papers, resident alien and registration cards. In reponse, technologies such as biometrics, smart cards, RFID, identity management, and federated identity are being deployed."

For more information: http://www.goldsec.com/Alleged_Counterfeit_Suspects_Entities.htm

• 48 Countries reported counterfeit activity in February: Australia, Bangladesh, Bosnia, Brunei, Bulgaria, Canada, China, Cyprus, Czech Republic, France, Ghana, Greece, Hong Kong, India, Indonesia, Israel, Italy, Japan, Kenya, Latvia, Lebanon, Liberia, Malaysia, Malta, Mexico, Nepal, Netherlands, New Zealand, Nigeria, Pakistan, Philippines, Portugal, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Taiwan, Turkey, UAE, Uganda, UK, USA, Vietnam, Yugoslavia.

The current months counterfeit activity: http://www.goldsec.com/

The full report of counterfeit activity for the month can be purchased from Gieschen Consultancy.

About DOPIP SCI Reports

DOPIP is a powerful source of information regarding illegal activities such as counterfeiting, forgery, product tampering and diversion. It provides current news reports, information and analysis relating to document, product and intellectual product security. Security technology providers, enforcement agencies, trade organizations, and brand owners will find this information indispensable for detection, deterrence and prevention. Standard or Premium Sources DOPIP SCI Reports are available as an annual subscription for $295 USD and $835 respectively.

For more information visit http://www.goldsec.com/Security_Updates.htm.


About Gieschen Consultancy

Gieschen Consultancy, provides counterfeit intelligence analysis and security research relating to documents, products and intellectual property. Gieschen Consultancy educates clients regarding counterfeiting issues, and assists in developing anti-counterfeiting, brand protection and enforcement solutions. Providing the knowledge of the criminal Modus Operandi (methods of operation), legal and political issues, security technology, industry reports and statistical information, effective strategies can then be developed, implemented and monitored.

For more information visit http://www.gieschen.com/.

Contacts

Glen Gieschen
Counterfeit Intelligence Analyst
Gieschen Consultancy
Glen@Gieschen.com
Phone 403-256-5680
Calgary, Alberta Canada