(Ed Note: The “Innovation Fact of the Week” appears as a regular feature in each edition of ITIF’s weekly email newsletter. Sign up today.)
Companies depend on intellectual property rights, including patents, trademarks, and copyrights, to derive revenue from their innovations. When counterfeiters flout these intellectual property rights to cash in on ideas that aren’t theirs, they undermine the economy by eroding the incentive to innovate. This is a huge problem worldwide. Indeed, by analyzing the manifests of detained shipments of counterfeit goods, the OECD has estimated that this misappropriated revenue stream totaled $461 billion in 2013, or 2.5 percent of global trade.
Counterfeit products impact innovators all along the supply chain and across many industries, with examples ranging from factory machinery to industrial chemicals to consumer products such as apparel and pharmaceuticals. Governments can support innovation by legislating and enforcing robust intellectual property rights.