Books: Real evils of counterfeiting

This book explodes the myth that piracy and faking are a fair antidote to corporate profit-making, arguing for cross-border action to protect IP. Eric Nicoli is impressed.

Last Updated: 31 Aug 2010

Anyone who still believes that piracy and counterfeiting are victimless crimes should read Knockoff, which documents the story of the world's fastest-growing crime wave. These offences constitute a global epidemic that is now worth $600 billion. It affects virtually every sector in every country, and is having devastating effects on the economy, our businesses and wider society.

Such statements, especially from the chairman of a record company, are often met with cynicism. There is a perception that somehow big business deserves to have its products stolen; that only the big players are affected; that buying a few fake CDs or a knocked-off bag is just a bit of harmless fun.

Tim Phillips' frank account of the grim realities of the global counterfeiting trade explodes such myths. He describes a senior official explaining how he bought a fake Rolex in Beijing while on Government business - a depressing insight into how casually some policymakers take counterfeiting. The attitude sums up how many consumers feel: buying fakes is a way to hit back at the global luxury brands they feel rip them off.

But, according to the World Customs Organisation, luxury goods account for only 4% of the trade in counterfeit products. The other 96% represent the darker elements of piracy. Knockoff lists things that should concern any consumer anywhere: the counterfeit infant formula that killed 13 babies in China in 2004; the fake brake pads made out of sawdust that killed seven children in Nigeria in 1987; or the defective and recycled knock-off parts for planes that may be responsible for 10% of recent aviation accidents, according to the European Parliament.

Phillips argues that since banking regulations were tightened after 9/11, the money from organised crime once hidden in bank accounts has been pushed into counterfeiting, as it is easy, profitable and cash-based. As a result, since 2001 we have seen a rise in the knock-off trade. It's certainly true of CDs. The recorded music market has declined by nearly 25% over the past five years, largely as a result of devastating levels of piracy, both physical and digital.

The book explores the links between piracy and organised crime and terrorism.

There are many examples, from the CD racket in London linked to a credit-card forging operation run by Russian gangsters to the spoiling of Disney's launch in Northern Ireland of the Lion King in 1995, when a million pirate copies of the film flooded the market, largely supplied by the IRA, which 'earned' about £4 million. Small film companies have not always been able to recover from piracy, exploding the myth that only big players get hit.

From the many detailed interviews Phillips conducted with people engaged across the counterfeit cycle, one thing is clear: the nature of counterfeiting has changed - it's now connected with a world of intimidation and violence.

Trading standards officers now wear stab-proof vests on checks at markets.

The lack of international co-operation between law enforcers is highlighted as a key failing in the fight against piracy. In contrast, criminals often transcend local politics in pursuit of profit - Israeli and Palestinian criminal gangs have been known to work together.

Phillips argues for a co-ordinated international response to the problem.

This is partly why Business Action to Stop Counterfeiting and Piracy (Bascap) was established - to promote greater cross-border enforcement by moving intellectual property (IP) protection up the global political agenda.

We need the fight against counterfeiting to change from being 'no-one's priority but everyone's problem'. Bascap will help different industries share their experiences of piracy, identifying gangs operating in different product areas and spreading best practice.

Phillips concludes with the widely held view that any hope of curbing piracy's spread will depend on how the world values and respects IP. It's refreshing to hear an independent voice dismiss the notion that IP exists to stifle creativity, and argue that it lets honest people use their brains and talent to make a living and will help developing countries to grow strong brands to compete with established ones.

Phillips reminds us that Thomas Jefferson, who created the first IP laws in America, encouraged 'liberal thought', and that respecting people's hard work and ideas is a core pillar of a civilised society.

Knockoff leaves us with a plea for collective responsibility. We can all do more to stop piracy and think about the consequences of our actions.

Counterfeits destroy businesses, reduce vital investment and, as Phillips reveals, even kill people. Think before you buy one.


Tim Phillips

Kogan Page £16.99 MT price £14.99

To order, visit

Eric Nicoli, chairman of EMI Group, is also co-chair of the Business Action to Stop Counterfeiting and Piracy (Bascap) CEO Group.

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