The report (available here) identifies 11 countries as being on its “Priority Watch List” for lack of protection of the intellectual property of US companies. Those 11 are: 

• Algeria
• Argentina
• Canada
• Chile
• China
• India
• Indonesia
• Pakistan
• Russia
• Thailand
• Venezuela

While the report notes some positive trends in China of late, including its largest ever prosecution over IP theft, “the overall level of IP theft in China remains unacceptable,” and “China’s IP enforcement regime remains largely ineffective and non-deterrent.”

It may be surprising to many to see Canada on the Priority list, but the report says the country’s support for copyright protections is weak, and that it does not do enough at its borders to prevent counterfeit goods from entering into Canada.

On the positive side, the report notes marked improvement in intellectual property protection in several Eastern European countries, such as Poland, Czech Republic, and Hungary.

As with similar trends in cargo theft, the report notes that “Counterfeiting has evolved in recent years from a localized industry concentrated on copying high-end designer goods to a sophisticated global business involving the mass production and sale of a vast array of fake goods, including items such as counterfeit medicines, health care products, food and beverages, automobile and airplane parts, toothpaste, shampoos, razors, electronics, batteries, chemicals, and sporting goods.”

In other words, counterfeiting is moving from local operators trying to make a buck to organized criminal enterprises.

The report also says the sales channels for counterfeit products are moving rapidly from “street vendors” to on-line sales, with unsuspecting shoppers not realizing what they are ordering are not the real thing but in fact fakes.

The growing sophistication of counterfeiters shows up in many ways. For example, the report says another notable trend involves shipping counterfeit products separately from labels and packaging to evade enforcement efforts.

For example, infringers in Russia reportedly import unbranded products, package these products with unauthorized packaging materials bearing the rights holders’ trademarks, and subsequently export the products to various countries. Infringers in countries such as Paraguay reportedly facilitate these illegal activities by exporting label and packaging components to these counterfeit and pirated product assemblers.

The issue of counterfeit products and lack of IP protection continues to grow – with no clear answers what to do about it other than further stepping up investment in enforcement and pressuring more country’s to step up their own efforts, as the Eastern European countries have.

Just how bad is the counterfeiting problem? What if anything more can be done? Should traditional supply chain play much of a role in any of this? Let us know your thoughts at the Feedback button below.