As far as the intellectual property rights related to these products and services are concerned, we have been witnessing how the economic and reputational impact on a company has changed from being limited to one or several national territories to having global effects.
As the numbers of trademarks, patents, designs and similar applications, with which company protect their products and services, keep increasing in order to adapt to today’s reality of increasing online sales, we can observe in real time how the number of false goods and infringements of these rights are going up as well.
Indeed, digital media are the perfect breeding ground for product piracy, i.e., uncontrolled marketing of counterfeits. According to data published by EUIPO, the European Union Intellectual Property Office, international trade of false goods moves an estimated 460 billion euros, companies lose over six billion euros in sales per year due to counterfeits and more than 50,000 jobs also disappear as a result.
Product piracy poses a major threat to innovation, economic growth and social welfare, not only in the European Union but also in the rest of the world.
Unfortunately, increasing consumer awareness with regard to the negative repercussions of counterfeiting has failed to bring about a turnaround in the popularity of these practices. Quite the opposite: They have increased. One of the many reasons has been the Covid-19 pandemic, thanks to which online sales in 2020 increased by 20% worldwide compared to 2019 (mainly due to temporary closures of physical shops and restrictions on opening hours and customer numbers). This has produced a veritable heyday for piracy, among other issues.
While it is clear that trademark pirates have got the knack of using the weakness of the Internet to their advantage, to make their unlawful transactions easier and boost their illegal but very lucrative gains, we should make no mistake: the underlying problem is not that counterfeiters have more platforms now to showcase their false products but rather that citizens keep buying them despite the negative consequences this entails.
When talking to people who purchase falsifications, the idea that generally comes up is that counterfeits do not really hurt the large corporations that market the originals: “These guys are already loaded, just because of one handbag or one watch I bought they won’t go broke” or something along these lines.
Reality, however, is nothing further from the truth: the consequences of buying counterfeit goods are disastrous. This is true not only for companies that invest large sums in R&D&I, advertising, etc., subsequently watch their earnings drop and are thus obliged to lay off employees; false products can also be very dangerous to public health, reduce public revenue and, most importantly, are often the mainstay of organised crime networks.
Another unknown fact is that four out of five SMEs are victims of counterfeiting on the Internet. In this context, it is worth mentioning that the fashion industry is the one that suffers most at the hands of infringers. Specifically, 92.62% of SMEs in this industry are affected, followed by the electronics sector (82.06%), sports (78.86%), home (73.48%), toys (69.06%) and beauty and personal care (64.81%).
It is no wonder that many of these products, such as cosmetics, children’s toys, clothing, jewellery, etc., being false and selling at a lower price than the original ones, do not pass the same quality and safety controls as the originals. Consequently, their use can be a serious health hazard.
Nevertheless, not everything that has emerged in the aftermath of the pandemic has been detrimental to owners of intellectual property rights. The coronavirus crisis has also demonstrated the immense social value that investment in research and development can have and it has prompted further debate on the growth model of Western societies and its relation to sustainability.
Consumers are becoming increasingly aware that every form of business has an impact on the environment. More and more frequently, people wish to purchase and consume environmentally friendly products and reduce negative consequences for the planet to ensure an equal or improved future for generations to come.
In this regard, trademarks play a key role in enabling consumers to know what they are buying and to have the assurance that the product they are buying meets certain environmental standards.
At the same time, “eco-innovation” is a global priority today. It aims to mitigate the harmful effects caused by companies, with intellectual property playing a key role in promoting the creation of sustainable patents and the use of “green” technology.
We cannot emphasise enough that intellectual property and technology transfer are key elements when it comes to protecting and enhancing the profitability of sustainable technologies. In fact, intellectual property has proven to be a great ally of the “green economy”, a paradigm that favours a production model promoting human welfare, social equality, the reduction of environmental hazards and ecological scarcity, since intellectual property rights are becoming not only tools for the protection of a monopoly but indispensable instruments for the future we are shaping.
From everything discussed above, it is evident that, despite the challenges posed by the Internet, the pandemic and sustainability concerns, not everything is gloomy. New opportunities must be and are being sought, both economically (new markets, more potential consumers) and in terms of companies’ visibility in society and furtherance of their reputation among consumers (creation of sustainable products under “green” brands, technologies with positive environmental impact, etc.).
We would therefore encourage you to look ahead and face the future, embracing the opportunities that technology offers and, with the help of experienced intellectual property professionals, seeking to have a positive effect on the market e.g. by creating and using “green” trademarks and patents; and in the event of any kind of intellectual property infringement, to not remain passive but to protect and defend your rights.