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Counterfeit Goods: The Biggest Crime Nobody Is Doing Anything About

I challenge you to guess the crime no one cares to do anything about !

  • It costs U.S. businesses $200 to $250 billion annually
  • It is directly responsible for the loss of more than 750,000 American jobs
  • It has increased from $5.5 billion to approximately $600 billion annually worldwide since 1982
  • It has directly resulted in the death of U.S. citizens, funds terrorism and other criminal activity, undermines our economy and its lifeblood – research and development.

Did you guess counterfeiting? Intellectual property rights? Piracy?

Probably not.

Consider this:

  • The FDA estimates that counterfeit drugs account for 10% of all drugs sold in the United States;
  • The FAA estimates that approximately 520,000 parts installed each year in aircraft are counterfeit;
  • And the Motor and Equipment Manufacturers Association has cited violations due to counterfeiting that include brakes made of compressed grass, transmission fluid made of cheap dyed oil and oil filters made of rags.

Not only is this a crime that hurts the American economy — and therefore results in higher costs for consumers — it is also be the cause of serious illness or even death. If a patient is dependent upon prescription medication and is unwittingly taking counterfeit drugs, her life could be in danger.

And yet, these crimes capture little attention in the media and even less in many law enforcement circles.

Outside of sporadic law enforcement successes by ICE, CBP, the FBI, FDA and state/local law enforcement agencies (LEAs), there appears to be no sustained law enforcement effort to combat this growing problem. Most law enforcement agencies dedicate a minimal amount of resources to investigate Intellectual Property rights cases, and unless the affected manufacturers or property owners go to extraordinary measures to counteract the counterfeiting of their products themselves, little or no action is taken.

Microsoft recently announced the completion of an investigation with multiple LEAs that arguably commenced in 2001 with a U.S. Customs seizure in Los Angeles of a shipping container filled with fake software, including 31,000 copies of the Windows operating system. The criminal organization was responsible for about 90 percent of the fake software that Microsoft found between 1999 and 2004. Microsoft pushed the investigation through 22 countries utilizing an internal anti-piracy team to provide LEAs ammunition to conduct raids and criminal cases in the United States, Italy, Canada, Germany, Singapore, Australia, Paraguay, Poland, and China. As one prosecutor stated, the burden is often on the company holding the brand to travel the world collecting evidence, doing undercover work and coordinating with law enforcement agencies.

One of the few remaining U.S. economic advantages is our research and development of products and technology. It is what has driven U.S. economic development for decades. More needs to be done to protect that advantage.

Government needs to dedicate more resources to investigate criminal organizations that are involved in IPR piracy. Manufacturers need to dedicate more resources to protect their investment in research and development. Both need to dedicate more resources to educate the public about this crime, and the fact that, as evidenced by the statistics above, such crime is most certainly not victimless.

Marty Ficke blogs primarily on federal law enforcement matters, with a particular expertise in financial crime, counterfeit goods, smuggling and conspiracy operations in port. Read More