Counterfeiting issues in the pharmaceuticals goes beyond monetary. It has far-reaching public health implications and have therefore attracted considerable concern from public bodies, in particular from the World Health Organization (WHO). Counterfeit medical products are defined by the WHO as ones that are “deliberately and fraudulently mislabeled with respect to identity and/or source” (WHO/IFPMA, 1992). The products may include correct ingredients in incorrect quantities or composed according to a wrong formula, non-active substances all together, toxic substance, or correct content but in fake packaging.
The developing countries are mostly affected because of the weak drug regulation controls and enforcement. In general, most developing countries have a local production of generic drugs that infringe on patents owned by international pharmaceutical companies simply because intellectual property protection is not available for pharmaceuticals in these countries. Counterfeiting of drugs has been reported since the beginning of the 1980s and gained press coverage only in the past few years. The WHO has a team devoted to improving protection in the developing world and intelligence gathering.
However, companies are reluctant to release information on incidences of counterfeiting of their products for fear of undermining sales of, and confidence in, their legitimate products. One of the most counterfeited drugs is Viagra, a medicine for erectile dysfunction, registered under Pfizer. Now, counterfeit drugs for heart and lung diseases, vaccines, and contraceptives, are emerging like mushroom in China Estimating the financial impact of counterfeit pharmaceuticals is very difficult. The total losses
for the legitimate chemical and pharmaceutical industry have been estimated in excess of US$17 billion (Jayasuriya, 1997). The global sales for counterfeit drugs reaches to US$ 35-40 million a year. The US Food and Drug Administration (FDA) also estimates that counterfeit drugs make up 10% of the global medicines market. Toy Industry Toys are classified into two – traditional and electronic. The industry is dominated by few manufacturers which also served as distributors. Production of counterfeit toys are increasing each year.
Like the pharmaceutical industry, the issue goes beyond financial losses but on the health and safety risk of the children. Last 2007, several toy manufacturers ordered a product recall in most of their products due to suspected lead contents put in toys manufactured from China. Electronic toys meanwhile is considered as one of the fastest growing segments in the industry. The industry estimated that losses reached US$90 million a year due to production of counterfeit video games and other video game products.
Nintendo, producer of video game products, claims, that China is the largest counterfeit manufacturer for video games in the world. In an interview with Margaret Peterlin, deputy under secretary of Commerce for intellectual property and deputy director of the Unites States Patent and Trademark Office, she said that counterfeiting and piracy drain about $250 billion out of the U. S. economy each year and loses 750,000 jobs. Adidas AG is one of the top three shoe companies hit with IPR problems in the footwear industry.
Last 2005, the company launched a US$370,000 lawsuit against three companies in China for intellectual property rights violations. Millions of counterfeit Adidas products are seized each year. The company has increased its effort to combat counterfeiting problems and has allocated US$ 1 million each year for the project. Nike, the leading brand footwear and the the largest company to be hit by counterfeit footwear in China has also employed different strategy to counter these problems. Nike has 8 employees in China tasked on IPR related problems.
While Adidas targets retailers and manufacturers, Nike focused more on factory raids. Nike seizures have increased over the years and the figures doubles from 2002 to 2006. The company has added more IPR employees and deployed them all over China. The company's IPR budget now tops at $1 million a year, more than Nike's global IPR budget. Gucci sued two Chinese companies last September of 2007 for the same counterfeiting problems. The company demanded US$66,666. 00 total compensation for the use of GG logo. Gucci registered the patent in China October 2006.
Early this year, the company filed another US$68,776 for the use of their logo on notebooks. Another company which suffered losses from IPR in China is Microsoft. The company loses US$18 billion every year from pirated Windows operating systems. In China, 90% of all Windows operating system is considered pirated. Worst of all for Microsoft, the countries with the highest rates of piracy are exactly those with the fastest-growing number of PC purchases. Cracking down on piracy has been the main goal of the Company.
It is also pursuing more means to combat piracy. Its current push for "Genuine Windows" promises a host of special features, additions, and online services for those with non-pirated versions of Windows. If this two-pronged attack on piracy succeeds, Microsoft could reclaim as much as US$ 3 billion by reducing piracy a mere 8%. The pursuit of correcting IPR problems is expensive. In general counterfeits and piracy only means decline in sales and damage for brand names. Worst , small businesses exporting in China might not survive the ruthless effects of piracy.
In the White Paper for IPR protection, it seems that China has made strong efforts to implement IPR laws and improve IPR protection. However in a large developing country with a population of 1. 3 billion, relatively backward economy and low level of science and technology, a complete IPR protection system cannot be established overnight. China has a long way to go in this regard, and is faced with heavy tasks in IPR protection. At present, there are still IPR infringements in certain areas and fields in China, some of which are considered serious.
The awareness of the importance of IPR in Chinese society as a whole needs to be further enhanced. Meanwhile, China's IPR protection work is facing new challenges in the course of economic globalization and rapid development of science and technology worldwide. In accordance with the requirements of the concept of scientific development, the Chinese government will adopt more effective policies and measures in the process of building a well-off society in an all-round way and developing a harmonious society, exerting efforts to raise its IPR protection work to a new level.
For many years China has received active support and assistance from the international community in the establishment of its IPR protection system. In the future, the Chinese government will continue to earnestly execute its international obligations in this regard, enhance its cooperation with various countries and international organizations with a more active, open attitude, and join hands with them in promoting the establishment of a sound system and environment favorable for IPR protection worldwide.
References: 1. ) Gucci says these notebooks definitely lacking style (January 11, 2008), Retrieved from http://china.tdctrade.com/