In regard to seizures of counterfeit products, a typical reported story in the news media, even in the trade media of the items of product concerned, let’s say cigarettes and tobacco, might read something like as follows:
The Assistant Director, Criminal Investigation, HMRC, said:
“Disrupting criminal trade is at the heart of our strategy to clampdown on the illicit tobacco market, which costs the UK around £2 billion a year, and the sale of illicit alcohol which costs the UK around £1 billion per year.” (28 Jan 2015)
There is the old chestnut of an adage which assures us that there are : ‘lies; – damned lies – and statistics’; but do you ever wonder to yourself from whence originate assured assertions like these, usually alarming in their tenor, which emerge from the lockers of cargo within the minds of those who are termed by spokespersons as being ‘opinion formers’?
Now what I am able to tell you, and it is a veritable fact, is that figures like this item concerning the scale of counterfeit cigarettes smuggling in UK, are, for the most part, compiled and based upon ‘data’ taken from the streets of our major cities.
The UK cigarette manufacturing and marketing industry uses employees of its representative trade body to walk the streets of London, Birmingham, Glasgow, and to pick up cigarette packages which have been discarded by smokers in gutters. These packages are examined and segregated into a) counterfeit, b) duty not paid, and c) duty paid items, and it is from this kind of exercise that statistics like the HMRC guy bandied around arise.
Now this practice of the cigarette manufacturers is one of the better ones amongst those used in industry in general and on which are based statistical aggregations of magnitudes of counterfeiting and piracy. It has going for it one important thing – it is, albeit very broadly, empirically based and evidenced.
Of course one would never accept the calculation of one’s monthly salary based on such a schemata as this cigarette carton collecting entails, but as a very rough and ready ballpark it might just hold an iota of credibility for the tobacco industry? Although for the most part this guesstimate of theirs is on the cusp of acceptability for us simply because one asks oneself: what more is the industry able to do so as to guesstimate its losses? We soften and give them a few brownie points of empathy for their trying so earnestly.
Other industry sectors subject to counterfeiting and piracy almost always use evidence much less solid than the cigarette industry and quite frequently have zero empirical evidence on which to base their claims for scales of losses incurred. Local Government, National Governments and International Authorities all likewise, as often as they pronounce a figure or a percentage in the area of Intellectual Property fraud, are attempting ‘plucking geese out of the air’ – or might as well be.
This is why figures stated for the exact same scenario are very often in huge conflict with their colleagues’ and competitors’ figures in other countries or in other jurisdictions. It is likely, virtually certain, that if every EU nation was asked to give a figure estimate of say illicit ‘Brand X’ denim jeans imported into the EU in the course of a given year; there would be no satisfactory agreement between them. Their individual estimates would fluctuate wildly and merely act to muddy the waters still further rather than go anywhere towards solving the issue.
Why is this? Well, let’s keep it simple. Calculating a company’s money losses to counterfeiters is usually done by means of a concept called a ‘lost sale’. A lost sale in the abstract is the cost to a legitimate company of a consumer buying a counterfeit when the same consumer (had counterfeits not been available) would have had to have bought genuine. Hence the genuine manufacturer loses the price of one item of sale.
The problems begin when the abstract concept of the ‘lost sale’ begins to be applied to actual commercial day to day realities. Questions arise such as:
What is the genuine item’s price? In a free and open market such as the EU retailers are able to compete on prices and to undercut one another should they wish to; and they do. Furthermore identical genuine products are pitched at variant prices in different trading areas across the world. It is not uncommon that genuine items – say bankrupt stock – are offered heavily discounted to consumers. Discounts are also given for bulk buys and also to wholesalers. Many products have variant sets of accessories or bundles, and a like for like cost price is hard to ascertain.
Why use the genuine item’s price? A National Government statistician economically-speaking would be more interested in using the price the counterfeit item was being sold at perhaps?
There is a good argument broadly accepted in the music industry these days that, like mild inflation is desirable in an economy for it to thrive; so also a modicum of piracy and counterfeiting is conducive to greater genuine sales for the entertainment industries. The argument runs that people download free so as to ‘taste’ and if they like they will buy the genuine item thereafter.
In this last case it seems a ‘lost sale’ to the victim of piracy can represent in fact a plus money value sum!
But you will still hear the music companies and musicians beating up on the download and on the downloader, often sending out in the post to ‘culprits’ exorbitant compensation demands, and laying claim in the media to ruinous injuries. Companies on top of sales losses also lay claim to reputational and Brand status losses, and to damage to other intangibles. Music Collecting Societies likewise hit social clubs and old folks’ homes, church services and the gal who likes to listen to radio as she runs her market stall, criminalising them as nascent pirates and asking seriously wild fees for the privilege.
I grow so hot under the collar because there is a whole industry of half-baked statistical offerings which these rights holder guys promulgate and persist in. It is persisted in and promulgated precisely for this reason: to give a specious validity to their claims of grievous injury by the granny who plays The Beatles in her shop, or by the guy who likes to sing The Carpenters at the local karaoke.
One will note, this is a final flourish of mine, that always and without fail year on year, or at whatever period they are reckoned in, the statistical fictions bandied around increase in size and in monies lost to counterfeiters and pirates. They not only keep pace with inflation, they have an inflation bias of their very own. The industries themselves are in sole charge of, in control of, their own compilers of reports and reviews and of pseudo-statistical and other ‘calculations’. There is no balance.
The numbers are increased period on period because of two reasons, and two reasons only. One – to keep the pressures on legislators and the legal executive, which together with Parliamentary lobbying ensure, they believe, the best deals for the business environments of their industries.
And so they maintain a ‘siege mentality’ within all ‘right-thinking-people’ (excuse the pun)
Two – So as to put forward a sympathetic public face for stakeholders and rights owners, the songwriters and the musicians, the actors and the artists, the creatives, and so on; which helps to keep the public sweet towards them and so keep buying their saleables; since so much of the actual value due to them is ‘being lost’ to Intellectual Property theft. (Such incubated sympathy has generated a recent increase in copyright protection term in UK; now standing here at 90 years)
In the first book of The Republic, Thrasymachus attacks Socrates’ position that justice is an important good. He claims that ‘injustice, if it is on a large enough scale, is stronger, freer, and more masterly than justice’ . In the course of arguing for this conclusion, Thrasymachus makes three central claims about justice.
Justice is nothing but the advantage of the stronger
Justice is obedience to laws
Justice is nothing but the advantage of another
This is the way the big Intellectual Property rights’ holder guys see things, is it not?
The original article is located at our anomalist design blog: http://blog.anomalistdesign.com/intellectual-property-rights-enforcement-and-statistical-measurement/
You can also find this article at my linkedin: https://www.linkedin.com/pulse/intellectual-property-rights-enforcement-statistical-matthew-raymer?trk=mp-reader-card