Silicon Valley/San Jose Business Journal - April 18, 2005

Business News - Local News

From the April 15, 2005 print edition
Guest comment

Act Now to Stop the Spread of Fakes

Global effort needed to resolve issue that injures valley
Franca Gargiulo

Once seen as a threat mainly to the recording industry and high-end luxury goods makers, the theft of intellectual property is now so widespread that it touches nearly every company, every country, and Silicon Valley is particularly vulnerable.

Take medicines. According to the World Health Organization, close to one out of ten drugs sold around the world is counterfeit, and the situation is worse in developing countries, posing a real threat to public health and safety.

Or take software, where losses reached nearly $29 billion in 2003. Or, indeed, the music industry, where two of every five recordings worldwide are pirate copies.

And the list goes on. In fact, almost all industries and products are affected, including electronics, batteries, toiletries, automotive and airplane parts, toys and, yes, luxury goods.

This illegal activity is spiraling out of control, costing society some $600 billion annually. The spread of fakes is a major threat -- a cancer that creates a significant drain on the global economy. The FBI predicts that counterfeiting and piracy will become "the crimes of the 21st century."

And make no mistake: These are not victimless crimes. Counterfeiting and piracy hurt creators and industries directly, but also hurt governments, who lose hundreds of millions in tax revenues, economies that are deprived of new investment and consumers who are put at risk from sub-standard goods. Product fakery is an increasingly lucrative business for organized criminals and is funding many terrorist groups.

Ron Noble, the secretary general of Interpol, said recently: "What I find absolutely amazing is that this is a multi-billion dollar problem that affects the safety of people, the security of governments, that is connected to organized crime, drug trafficking and terrorism, and nobody pressures me to say what I'm doing about this problem -- there is no pressure to produce results."

In the International Chamber of Commerce's statement to G-8 leaders last year, we urged governments to reinforce respect for intellectual property rights and pressed them to take the lead in improving enforcement of existing laws.

At last year's ICC world congress in Morocco, senior corporate executives appealed to ICC -- which is represented on the ground in over 140 countries, including many hotbeds of counterfeiting and piracy -- to take a leading role in the fight against fakes.

So last October, at the United Nations, Jean Rene Fourtou, chief executive officer of Vivendi and chairman of the International Chamber of Commerce announced the launch of a new initiative under the ICC umbrella, Business Action to Stop Counterfeiting and Piracy, or BASCAP. Through BASCAP, we aim to:

At a time when the creation and distribution of intellectual property has become a key driver of world economic growth, it is clear that this initiative is necessary to ensure healthy and dynamic societies, and to help developing countries improve their standards of living.

There is a solid base of support for concerted private-sector action at the global level, with executives recruited from more than 25 countries, including Brazil, India, Pakistan, Russia, Israel, Japan, France, Germany, England and the United States. Key implementation meetings were held on March 9 and 10 in Paris and chaired by David Benjamin, senior vice president of Universal Music. Key Silicon Valley firms that participated in the meetings included Cisco, EBay and Hewlett Packard. But the efforts need more companies around the table.

It is imperative that business unite at the global level to combat the plague of fakes. Failure to do so will consign our top brands and most of our cutting-edge technology to "death by a thousand cuts." But, perhaps more importantly, it will eventually choke off the flow of private investment to the countries that need it most.

Franca Gargiulo is the western region representative for the United States Council for International Business which is the U.S. counterpart of the International Chamber of Commerce.

2005 American City Business Journals Inc.

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