Risks of Illicit Trade in Counterfeits to Small and Medium-Sized Firms
This report analyses the economic impact of illicit trade in counterfeit goods and other types of IPR infringement on small and medium-sized enterprises (SMEs). It also provides a deeper analysis of this threat in the EU context
SMEs play an important role in most economies. In OECD countries, they make up the majority of businesses and account for around two-thirds of total employment. Even though the use of intellectual property rights among SMEs is relatively low, innovative SMEs report higher IP ownership rates as they actively look for ways to improve existing products, services and business processes. In this study, the impact of infringement on SMEs is analysed by combining data on customs seizures from the European Commission, the World Customs Organization and the US Department of Homeland Security with data from EUIPO’s SME Scoreboard and information from the ORBIS database of European companies.
Main findings
- Counterfeiters target all type of innovative goods produced by SMEs, with electrical machinery and electronics, clothing and fashion goods, perfumery and cosmetics, and toys and games being the most frequently targeted.
- Counterfeit goods infringing SMEs’ IP mostly come by mail from China and Hong Kong (China). Fewer transit hubs are abused by criminals to smuggle fakes infringing SMEs’ IP than to smuggle goods that infringe large companies’ IP.
- The damaging effects of IPR infringement on firms’ performance tend to be more dangerous to SMEs than to large firms that have the experience and capacity to deal with the risks.
- An SME whose IP has been infringed has 34% lower odds of survival than SMEs that did not experience infringement. The negative impact on survival chances is particular pronounced in cases of patent infringement.
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