New Method for Measuring Intellectual Property Rights Infringements
Infringements of intellectual property rights (IPR), such as counterfeit goods or unauthorised downloads, are estimated to cost between $200 billion and $600 billion per year globally, but current methods for estimating these impacts are unreliable.
Given the estimated size of these markets, there are potentially serious economic, social and health impacts to individuals and businesses across the globe. But without reliable data, it is difficult to debate the effectiveness of policy efforts or interventions. RAND Europe was commissioned by the European Commission, DG Internal Market & Services, to consider the current levels and impact of IPR infringements in the EU.
The researchers, drawn from both RAND Europe and RAND Corporation, performed the most comprehensive review to date of existing estimates and methodologies, finding that none was sufficiently objective, transparent or reproducible to answer their needs.
The researchers therefore developed a new objective, standardised, transparent and low-cost methodology to quantify the scope, size and impacts of IPR infringements, and tested this for counterfeiting.
The method relies on comparing previous sales forecasts with actual sales data to estimate "unfulfilled demand" for a product, and presuming that the difference is — at least in part — caused by counterfeit products.
This methodology delivered very credible results when applied to confidential data made available by a multinational technology company producing consumer goods known to be targeted by counterfeiters. Further piloting of the method is required among more companies and in different markets, and on data for unauthorised downloading, before conclusions can be drawn about its wider applicability.
This report aims to contribute to quantifying the scope, scale and impact of IPR infringements, such as counterfeiting and piracy. It offers a methodology, based on economic theory, for measuring trends of the lost revenues due to IPR infringements.