NEWS

Web Exclusive: Product Antipiracy Programs' Return on Investment

By Matthew Harwood

The writing is on the wall: counterfeiting and piracy continue to rip revenues from companies all across the world.

In a Security Management Web exclusive, Rich LaMagna, CPP, the former Director of Worldwide Anti-piracy Investigations for Microsoft, scoured reports to show the incredible amount of legitimate economy activity siphoned off the global and U.S. economies.

The Organization for Economic Co-operation and Development (OECD) in The Economic Impact of Counterfeiting and Piracy released in 2007 estimated that international trade in counterfeit and pirated products could have reached as high as USD 200 billion in 2005. The estimate does not take into account the number of domestically produced and consumed counterfeit products nor does it include music, video, software, games and printed materials increasingly being distributed online. The United States Chamber of Commerce estimates that Intellectual Property (IP) makes up more than one-half of all U.S. exports, driving 40 percent of the country’s growth. Clearly, as manufacturing jobs move to developing countries, intellectual property becomes more critical to the economic survival of developed countries. The FBI estimates that the theft of IP costs the U.S. economy $250 billion per year and has resulted in the loss of 750,000 jobs.

Furthermore:

The U.S. Department of Homeland Security reported an 83 percent increase in the number of seized items for 2005-2006 and a total value of $196.5 million for 2007 seizures representing a 27 percent increase over 2006. Between 2000-2006, the European Union reported an 88 percent increase in the seizures of counterfeit goods.   The World Health Organization estimates that 7 to 10 percent of all pharmaceutical products sold in the world are possibly counterfeit, with a rate as high as 30 to 40 percent in some African countries. The Business Software Alliance’s 2008 Annual Report asserts that the worldwide PC software piracy rate was 38 percent in 2007. Clearly the trend is toward more counterfeiting which poses higher risks to the public and has a significant impact on legitimate commerce.  Lastly, the impact of counterfeiting, often controlled by organized crime, on governments in the form of corruption and weakened public institutions, disrupts global commerce and erodes public confidence in government.

But companies aren't helpless, LaMagna argues. By following his advice, companies can create antipiracy programs that reduce the number of their pirated products worldwide while boosting their bottom lines.

Read LaMagna's full article, "Developing an Antipiracy Program," here

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