Extract

In recent years, multinational companies (MNCs) have repeatedly warned the public about the unprecedented and staggering financial losses that they claim to be suffering due to a surge in the global trade in counterfeit goods. Recent industry estimates place annual worldwide losses due to counterfeiting and other forms of commercial piracy in the hundreds of billions of dollars per year. MNCs ñ owners of the worldís most commercially valuable intellectual property ñ claim that they suffer the vast bulk of these losses. MNCs claim that counterfeiters located in developing countries are the main culprits of this surge in counterfeit goods. According to MNCs, corrupt governments in many of these countries ñ in particular, China ñ protect or support counterfeiters that harm their businesses and the global economy. Despite their claims, however, MNCs are not really harmed by counterfeiting. Upon closer examination, the financial losses that MNCs claim to suffer from lost sales caused by counterfeiting are based on methods that grossly exaggerate both the levels of counterfeit goods sold and the losses suffered. These claims of severe financial losses are unsubstantiated and based upon dubious assumptions that do not withstand scrutiny. The actual losses suffered are most likely only a tiny fraction of the amounts claimed; in dollar terms, lost sales of genuine products due to counterfeits are likely insignificant and cause little or no financial damage to a majority of MNCs.