On February 11, the Office for Harmonization in the Internal Market (OHIM, to be renamed EU Intellectual Property Office on March 23), acting through the European Observatory on Infringements of Intellectual Property Rights, released the fifth and sixth set of reports concerning the economic cost of counterfeiting in specific industries. This time, they chose to focus on the jewelry, watches, handbags, and luggage markets. Previous reports, have looked at counterfeiting in toys and games, sports goods, clothes, shoes, and accessories, and cosmetics and personal care items.
The report revealed that 13.5% of sales of jewelry, watches, and 12.7% of sales of handbags and luggage in the EU are lost due to counterfeiting. This translates into a loss of 27,000 direct jobs across the two sectors.
António Campinos, the President of OHIM, said the following on the extent of the harms of counterfeiting to companies within the two sectors:
“The jewelry and watches sector and the handbags and luggage sector in the EU are overwhelmingly made up of micro-enterprises, which employ fewer than ten people. The average number of employees per enterprise in the jewelry and watches sector is just three people. Such businesses are particularly vulnerable to the economic effects of counterfeiting.”
Furthermore, the report illustrates the loss to society that counterfeiting activities incur: the total yearly loss of government revenue in terms of household income taxes, social security contributions, corporate income taxes and VAT can be estimated at €1.1 billion.
Italy is particularly hit by counterfeiting. According to the report, more than half of the EU’s total manufacture of handbags and luggage takes place in Italy; in 2012, this sector alone was worth €6.5 billion. Italy also accounts for a whopping 40% of EU exports, as well as 35% of the sector’s total EU employment. However, the €520 million that the Italian handbags and luggage sector loses every year to counterfeiting represent one-third of total EU sales lost.
Moreover, the report emphasizes the negative economic effects that counterfeiting within those sectors has on France (€435 million annually), Germany (€478 million), and Spain (€327 million) which, together with Italy, account for approximately two thirds of the total lost sales in the jewellery and watches manufacturing sector across the EU-27 (data for the newest Member State, Croatia, was not yet available).
This report illustrates the urgency of the need for effective anticounterfeiting measures and, together with past and upcoming IPR infringement studies, are designed to inform policy-makers in order to help them develop effective enforcement policies. Future studies by the Observatory will focus on tobacco; alcoholic beverages (beer, wine and spirits); computers; and other sectors, depending on availability of data.
For information about INTA’s anticounterfeiting activities, please contact INTA Anticounterfeiting Manager, Maysa Razavi, at email@example.com.