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On Wednesday, June 6, the European Union Intellectual Property Office (EUIPO) published a study on the impact, scope and economic consequences of the infringement of intellectual property rights (the trade of counterfeit products and pirated content) in the European Union.

The European Observatory on Infringements of Intellectual Property Rights (a body of the EUIPO) has carried out the study over the last five years in collaboration with the European Patent Office (“EPO”).

The results of the study are telling: every year, the European Union internal market stops the entry of almost €60 billion euros (7.5% of the market volume) due to the trafficking of counterfeit products and pirated content. The study concludes that these infringements of intellectual property rights also lead to a loss of 434,000 jobs in the European Union.

Regarding Spain, the report estimates that the internal market has stopped the entry of €6.3 billion per year due to counterfeit products and pirated content, with the most affected sectors being textiles, footwear and accessories (over €2 billion in losses) and the pharmaceutical sector (almost €1.5 billion in losses).

In addition to the direct costs of market losses faced by companies, the study shows that companies spend an average of €115,000 per year on measures to prevent, fight against and destroy counterfeit products and pirated content.

This study is particularly interesting in terms of intellectual property because, in addition to the economic data on the impact of these activities on the market, it analyzes how intellectual property rights, patents and trademarks registered in the European Union are breached, which facilitates the work of companies in eradicating these practices.

Thus, the EPO states that the counterfeiting market has diversified from traditional activities focused on luxury goods and well-known brands to pharmaceutical products, automotive spare parts, cleaning products, cosmetics and various components of electronic items (such as batteries or screens).

In addition to the nature of the counterfeit goods, the study shows that there has also been a change in their distribution methods. Large sea shipments of goods (still the main method of trafficking counterfeits) are giving way to a large volume of small shipments by mail.

On the other hand, of course, the online market has gained special importance in recent years insofar as its use (i) represents great cost savings for violators, (ii) reduces the risk of being identified and prosecuted, and (iii) allows for a market diversification that generates extra income for illegal activity (such as the charging for advertising on fraudulent websites). In Germany, Spain, Sweden and the United Kingdom alone, the study has detected 27,870 virtual stores suspected of trading in products that violate intellectual property rights.

This study also links the trafficking of counterfeit products and pirated content to criminal organizations located outside the European Union that are also engaged in more serious crimes such as tax fraud, money laundering and human trafficking, since the risk-reward ratio of these activities against intellectual property rights is much more attractive than drug trafficking, for example.

Lastly, the study provides the interesting information that young Europeans do not find the purchase of counterfeit products or the downloading of pirated content reprehensible if the price is attractive and there is a lack of legal content available.

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