Intellectual Property Theft: Get Real

Facts and Figures

The Research: Facts and Figures Illustrate the Extent of Intellectual Property Theft

Not only is the United States the wealthiest country on Earth, but it is also the world’s greatest producer of intellectual property. American artists, entrepreneurs, inventors, and researchers have created a nation with a rich cultural fabric. Every day, Americans can avail themselves of consumer goods, entertainment, business systems, health care and safety systems and products, and a national defense structure that are the envy of the world. It is frequently said that the American imagination knows no bounds, and that is probably true. In fact, the U.S. Patent Office recently issued its eight millionth patent (Cyber Attacks and Intellectual Property Theft, Defense Tech, August 22, 2011). The U.S. Copyright Office has issued more than 33.6 million copyrights to date (U.S. Copyright Office).  The U.S. Chamber of Commerce Intellectual Property Center has calculated the worth of intellectual property in the United States as being between $5 trillion and $5.5 trillion (Counterfeiting and Piracy: How Pervasive Is It?, Electrical Contractor magazine, 2008, retrieved November 12, 2011).

The role of intellectual property in the U.S. economy is undisputed. It accounts for half of all exports, for example (Counterfeiting and Piracy: How Pervasive Is It?, Electrical Contractor magazine). Unfortunately, counterfeiting and piracy costs the U.S. economy more than $250 billion in lost revenue and 750,000 jobs every year, according to one estimate (Counterfeiting and Piracy: How Pervasive Is It?, Electrical Contractor Magazine). Up to one-third of software products and music CDs are thought to be fake (Counterfeit Goods and Their Potential Financing of International Terrorism, Volume 1, Issue 1, University of Michigan Journal of Business,  January 2008).

More than 250,000 more people could be employed in the U.S. automotive industry if it weren’t for the trade in counterfeit parts (Counterfeit Goods and Their Potential Financing of International Terrorism). According to the Council of State Governments (Intellectual Property Theft: An Economic Antagonist, September 7, 2011), the U.S. economy loses $58 billion each year to copyright infringement alone—crimes that affect creative works. That includes $16 billion in the loss of revenue to copyright owners and $3 billion in lost tax revenue. Furthermore, the problem is transnational: The U.S. Department of Commerce puts the value of fake products—such as CDs, DVDs, software, electronic equipment, pharmaceuticals, and auto products—at five to seven percent of world trade (Protect Your Intellectual Property  booklet, U.S. Department of Commerce).

Many people think of intellectual property theft as a victimless crime. However, many Americans are hurt or injured each year by faulty products or made sick by fake or improperly prepared or labeled drugs.  While actual numbers of injuries are hard to come by, it’s important to note that counterfeit drug sales in the U.S. were expected to amount to more than $75 billion in 2010 (Counterfeit Drugs: Real Money, Real Risk, Wellescent.com, retrieved November 11, 2011). Worldwide, illegal drug sales amounted to an estimated $320 billion in 2010 (Wellescent.com).

The U.S. Food and Drug Administration estimates 15 percent of the pharmaceuticals that enter the United States each year are fakes, with that number having increased 90 percent since 2005 (Counterfeit Drugs: Real Money, Real Risk, Wellescent.com). Some are manufactured domestically, but more than 75 percent of these drugs come from India (Counterfeit Drugs: Real Money, Real Risk, Wellescent.com). Frequently, online pharmacies that distribute fake drugs purport to be located in Canada, but a recent study conducted at the University of Texas found that of 11,000 online sites that claimed to located there, only 214 were actually Canadian (Counterfeit Drugs: Real Money, Real Risk, Wellescent.com). According to an article published on the Secure Pharma Chain Blog on March 22, 2008 (Counterfeit Pharmaceutical Statistics, Secure Pharma Chain Blog), 60 percent of all counterfeit drugs have no active ingredients, and the U.S. Food and Drug Administration warns that “even a small percentage of counterfeit drugs in the drug supply can pose significant risks to thousands of Americans” (FDA: Drugs: FDA Initiative To Combat Counterfeit Drugs, retrieved November 11, 2011).  Moreover, counterfeit drugs are commonly made and distributed by criminal gangs (Bad Medicine in the Market, AEI Outlook Series, Institute for Policy Research, American Enterprise Institute, retrieved November 11, 2011). 

Shoddy counterfeit products, including airbags, also put American drivers at risk. According to the Canadian Broadcasting Corporation, fake car parts cost the U.S. auto industry $12 billion each year (Counterfeit Culture: Ripped-off Consumer Good: The Top 10 List, CBCNews, cbc.ca, retrieved November 11, 2011). The Anti-Counterfeit Products Initiative estimates that counterfeit electrical products valued at $1 billion, many of them shoddy and not manufactured to U.S. safety standards, enter the United States each year (Working With Confidence: Counterfeits, CounterfeitsCanKill.com, retrieved November 11, 2011).

Intellectual property theft hurts everyone. Artists and performers lose the income that is rightfully theirs, corporations lose money and pass the additional costs along to consumers, and people may be hurt by shoddy goods used in the manufacture of cars and airplanes or be made ill by counterfeit drugs. Governments at all levels suffer from the loss in tax revenue and programs suffer. People are hurt when crime escalates in the neighborhood, the result of profits made by gangs that traffic in counterfeit goods, providing them to retailers at hefty markups. Intellectual property theft is a very serious crime.