Switzerland in the fight against counterfeiting and piracy

Speech by Federal Councilor Eveline Widmer-Schlumpf given at the press conference of the IPP “Intellectual property will be protected even better in Switzerland as of 1 July 2008”, Berne, June 26, 2008

Speeches, FDJP, 26.06.2008. The spoken word is valid

Berne. In her speech given at the press conference of the IPP, Federal Councilor Eveline Widmer-Schlumpf illustrated the problem of counterfeits and pirated copies. In a few examples, she showed, how extensive this problem has become. She closed with an appeal to a constructive collaboration of all parties concerned.

Ladies and Gentlemen

1. Why are counterfeits and pirated copies a problem?

There is more and more talk about counterfeiting and piracy. Why all the attention, you might ask yourselves? Aren’t there more pressing problems than counterfeited handbags and luxury watches? Don’t the large brand-name companies already earn enough money? Unfortunately, the situation is not quite so simple or harmless: Counterfeits and pirated copies affect us all! Just how detrimental the various effects of counterfeiting and piracy are is still not widely known.

For example: In February 2008, the EU and the US customs authorities announced that they had seized 360,000 counterfeited computer chips from over 40 different producers. These circuits had not had the quality assurance and production standards of the originals. This explains why counterfeits have a higher failure rate. A lot of them already fail during installation, others fail months later. The immediate consequences are breakdowns in work, equipment and productivity because many people and organizations are dependent on functioning hardware. But that isn’t all: The actual extent of the danger only becomes clear when we know where all of these counterfeited computer chips have been installed: In airplanes, cars and medicinal/therapeutic devices.

2. How extensive is the problem?

These examples show that luxury goods have not been the sole target of counterfeiters for a while - now it is all products: From automobile brakes to photographs, from children’s toys to chocolate, from contraceptives to tools and toothbrushes. Counterfeiting and piracy is spreading rapidly worldwide. And counterfeiters are constantly expanding and diversifying their products. This includes increasingly more products involved in matters of safety. In addition, counterfeiting and piracy no longer impact only large companies. Nowadays, more and more innovative SME’s and artists for whom intellectual property is the most important asset are also beset by counterfeiting and piracy. And the consumers!

Statistics confirm that the problem of counterfeiting and piracy is huge: 

  • The worldwide trade in counterfeited and pirated products is 200 billion dollars, according to a 2007 OECD report. This equals approximately half of Switzerland’s gross domestic product. And it does not even include domestic or internet trade. 
  • 50% of the medicines sold over the internet are counterfeited, according to an estimate by WHO from 2006. 
  • A large portion of the medicines against malaria in circulation in East Africa currently are counterfeited and ineffective as reported by the Rwanda News Agency in May 2008. A test sampling of purchased medicines showed that 35% either had insufficient amounts of the active ingredients needed to fight malaria or could not be absorbed fast enough by the body.

Statistics, however, are only the tip of the iceberg because they simply reflect what has been identified and quantified. We can only speculate about the unknown quantities, but we don’t need to speculate about the circumstances which have led to such a scale.

3. Why has the scale become so large?

How were things allowed to get so far? 

  • Counterfeiting has become easier. For example, copyright protected pictures and texts can be copied cheaply and easily without any loss of quality in no time nowadays. 
  • Unloading counterfeited items has become easier. Globalization has made it easier to reach consumers, while the internet has been established as an ideal sales channel for counterfeiters and copyright pirates. Anyone can comfortably order counterfeited products from home and have them delivered. 
  • Counterfeiting is profitable: In 2002, the president of the French anti-counterfeiting unit estimated that the profits from counterfeiting had become comparable with those of the drug trade. 
  • Counterfeiting carries few risks: Counterfeiters are rarely caught and, if they are caught, they are only mildly punished because violating intellectual property is still seen as a minor crime.

4. The role of organized crime

With this kind of cost/benefit ratio, it is not surprising that the counterfeiting market is now a field day for organized crime. Drug trafficking, prostitution and even counterfeiting and piracy are often in the same hands.

Counterfeiters and pirates profit at the expense of all of us. They disregard standards and no one can make them accountable because no one knows who they are. They also enjoy a huge competitive advantage in that they have no cost for research and development, quality control or taxes and social benefits.

For example, there are 

  • Fake sunglasses with no UV protection 
  • Fake toys coated with lead-based paints 
  • Counterfeited car parts with less protection 
  • Fake olive oil with traces of soap 
  • Dermatologically untested counterfeited cosmetics which cause allergies 
  • Counterfeited clocks containing radioactive materials 
  • Counterfeited electronic devices which can cause fires

5. Need for action in Switzerland

Switzerland is also affected by counterfeits and piracy: 

  • Counterfeited medicines, food and parts of automobiles and airplanes endanger the safety and health of Swiss consumers. For example, in February 2008, Swissmedic reported that they had effectively prevented a weight-reduction product from China from being sold in Switzerland. The preparations were classified as clearly hazardous to health because of the high dosage of the active ingredient. 
  • With the internet, Swiss now have even easier access to products, including counterfeited ones. 
  • Swiss stock up with counterfeited products as souvenirs while on holiday. 
  • Swiss companies and artists are often impacted by counterfeiting and piracy because they are very innovative and creative. 
  • Swiss quality and dependability is an attractive target for counterfeiters and pirates.

6. Switzerland’s involvement

It is clear that the Swiss Federal Council and the Parliament cannot just stand by and watch the growing phenomenon of counterfeiting and piracy.
Federal Council and Parliament 

  • Create the legislative framework to efficiently fight counterfeiting and piracy, 
  • Provide an environment so that Swiss consumers feel secure, and 
  • promote cooperation and coordination between the private and public sector. The Swiss Anti-counterfeiting and Piracy Platform STOP PIRACY was founded under the direction of the Federal Institute of Intellectual Property and the International Chamber of Commerce ICC Switzerland.

Naturally, we are only at the beginning of our efforts. The counterfeiting business is almost like a Hydra: Wherever you cut a head off, a new one grows. Our only chance to effectively fight counterfeiting and piracy is to work in the same direction: Parliament, the Federal Council, the public sector, the Swiss business community and, of course, the consumers. Let’s take the wind out of the counterfeiters’ and pirates’ sails!

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