Counterfeiting and Piracy - A major problem for the Swiss Economy

Speech by Federal Councilor Christoph Blocher given at the media conference on the presentation of the STOP PIRACY campaign launched by the Swiss Anti-Counterfeiting and Piracy Platform, Zurich Airport, January 16, 2007

Speeches, FDJP, 16.01.2007

Speaking at the media conference on the presentation of the Stop Piracy campaign by the Swiss Anti-Counterfeiting and Piracy Platform, Federal Councilor Christoph Blocher warned of the consequences and risks counterfeiting and piracy may entail. Swiss business enterprises loose as much as SFr. 2 billion each year and fake medicines may jeopardize the consumer’s health, Mr. Blocher said.

1. Why are forgery and pirate copying a problem?

Every one of us has heard of fake commodities and pirate copies, but no one admits to having seen them up close. But, frankly, can anyone of us say that they have never been in contact with some sort of fake object or pirate copy? Have you never been approached by someone on a Far Eastern beach or on the shores of the Mediterranean Sea, selling fake commodities concealed beneath a coat, or, perhaps, on the Internet, on your children’s MP3 player, or even on your very own MP3 player?

One may be tempted to argue, “a fake handbag or a bogus watch bought from the Internet - so what? It does not harm anyone!” I beg to differ. Let me tell you right here and now, the forgery trade has serious consequences, for all of us!

In the World Economic Forum (WEF) held in spring 2004, there was talk of more than US$400 billion that the international corporate economy had lost each year owing to the trade in forgeries and pirate copying. But do not be mistaken. Far more is at stake than mere financial loss. There is no denying the involvement of organized crime. Profits made from the trade in forged products and pirate copying help finance other criminal activities such as trafficking in drugs and human beings, prostitution and terrorism. One may be tempted to presume that only other countries are affected by forging and pirate copying but not Switzerland. Wrong! In fact, Switzerland is equally affected and concerned.

In its June 30, 2005, issue, the Swiss financial magazine CASH estimated that Swiss business enterprises loose as much as SFr. 2 billion each year due to forgeries and pirate copying. Last fall, for instance, a major Swiss retailer was found to stock fake Davidoff perfumes. Such examples may have costly consequences for a business. But then, consequences may be much worse, particularly if fake household appliances that have not undergone safety assessment make their way onto the market.

Not everything is about money in Switzerland. Rather, lives, safety, and quality standards are of foremost concern. And there is reason for concern. For example, if fake medicinal substances or lifestyle products that are not safe are ordered from the Internet, they may jeopardize the consumer’s health. Forgers trade on the designation “Swiss made” or simply “Swiss” to pass off products of inferior quality as high-quality Swiss products. The reputation of Switzerland as a manufacturer of quality products may thus be jeopardized. Pirate copiers compromise the works of Swiss artists and musicians by doing them out of their due percentage of the profits and royalties.

2. Further need for action in Switzerland

The Swiss authorities are not standing idly by and doing nothing. The Swiss Federal Institute of Intellectual Property (IIP) especially, the Swiss Agency for Therapeutic Products, Swissmedic, for short, and the Swiss Customs have long been taking a firm stand against the forgery and piracy business.

The Federal Institute of Intellectual Property takes a leading role regarding issues of intangible property rights on the national and international level. Advocating stricter enforcement of the law, the institute also proposes amendments to legislation appropriate to strengthen the effectiveness of rules and regulations.

Swissmedic especially is committed to combating nationally and internationally the trade in counterfeit medicines, also referred to as pharmaceutical crime. To date there has been no report in Switzerland of counterfeit medication in the officially approved distribution channels. However, medication ordered from the Internet can harbor a considerable risk to consumers’ health, as online medication resources largely elude government control.

Swiss Customs is central to fighting the trade in forgeries and piracy copies. Constantly faced with fake commodities, Swiss Customs strictly cracks down on shipments of such goods to Switzerland. Indeed, over the past years Customs has intercepted an ever increasing number of forged goods.

Despite all efforts to undercut the flow of illicit commodities, forgers continue to transport fake goods through Switzerland. The latest statistics by the European Union reveal that five percent of the fake commodities seized by European customs in 2005 came from Switzerland. This shows that Switzerland ranks second among those countries whence fake commodities originate, coming only behind China and preceding the United Arab Emirates. Correct reading of statistics is no doubt debatable. However, it is safe to say that there is no forgery industry in Switzerland. From this it can be deduced that illicit commodities that reach countries of the European Union via Switzerland are transit goods. Still, this is a problem we have to tackle.

3. Revising patent law—a key to solving the transit problem and improving the basic legal framework for law enforcement

Commodity-forging organizations abuse Switzerland to market fake products and pirate copies. The Federal Council is intent on bringing this to an end by introducing a new patent law. This law is intended to improve the customs’ scope of action regarding all aspects of intellectual property and thus to put a stop to the transiting of forged commodities across Switzerland. Under the new law, customs officers will be able to inspect not only imported and exported goods but also goods in transit. It will be possible for goods suspected of having been forged to be handed over to the true beneficiary for examination. And goods found to be forged can be destroyed without the necessity of going through prolonged bureaucratic procedures. What is more, the penalties for trading in forged commodities will be stricter. The draft bill is currently being discussed in Parliament. The law is scheduled to come into force in 2008.

4. Laws are not a panacea to all problems: citizens and authorities alike need to cooperate with a view to heightened awareness of problems linked to forged commodities

The new patent law should help curb the transit of forged commodities across Switzerland and improve the legal framework for law enforcement. However, the new law will not help change people’s attitude. A great many people will refuse to comprehend that a fake watch or pirate software does, indeed, cause harm.

This lack of awareness is precisely why we are convened here today. The Swiss people need to know that we do inflict harm if we purchase forgeries and pirate software. They must know that this is not only about fake handbags. In fact, it is about much more. We are talking about fake medicaments and machine parts, commodities we rely on. But how can we rely on something that has not undergone proper scrutiny? How can something be relied on if in producing such products standards on safety and hygiene are not observed?

There is a need for greater awareness. Corporate Switzerland and the federal authorities need to cooperate. For this reason, the Swiss Federal Institute of Intellectual Property (IIP) and the Swiss chapter of the International Chamber of Commerce (ICC Switzerland) have founded the Swiss Anti-Counterfeiting and Piracy Platform, a partnership of cooperation between federal authorities and corporate Switzerland. This partnership does not burden the taxpayer unduly, for the costs of the awareness campaigns will be borne by private industry. The federal authorities chiefly contribute know-how.

Today marks the beginning of the initial campaign. Poster placards sporting the slogan STOP PIRACY will be posted the day after tomorrow in nine major metropolitan areas. These posters are to appeal to the consciousness of each of us. The STOP PIRACY campaign and the Web site dedicated to this topic pick up on the following line of thought: Pirate copying and counterfeiting is foul play: no rules, no fair play. It’s a looser’s game. This campaign aims to show that there are rules to abide by. Conversely, there are consequences if one does not play by the rules. One set of rules governs intellectual property. This is about property worthy of protection; the products and inventions created by individuals and business enterprises. These creations need to be guarded against unfair inroads to ensure that corporate businesses may continue with their research and development.

In conclusion, the overall objective of this campaign is to strengthen our awareness that by purchasing counterfeit products and pirate software, we not only jeopardize our health but also encourage unscrupulous criminals. In short, this is all about one thing: fair play.