Wednesday, June 11, 2014

The real reason why ISO is so interesting in controlling counterfeiting

I recently wrote about how businesses respond to economic restrictions by working around them. And it's not just minimum wages that keep company executives up at night. Some companies have to deal with little intellectual property restrictions that restrict them from issuing their own name-brand jeans or medications. So they counterfeit.

I've been employed by software companies for the majority of my working life, so I obviously don't have a high regard for counterfeiting and other forms of intellectual theft. But if you want to know who REALLY hates counterfeiting, you have to look to ISO.

ISO doesn't just say that counterfeiting is bad. They author standards that battle counterfeiters.

But why would ISO be so interested in setting standards in this area?

Prof. Hyeonho Park, Director of the Institute of Crime Science at Yongin University, Republic of Korea, says that the health risks associated with counterfeiting are diverse.

Examples include lethal amounts of melanin in infant formula, carcinogenic Sudan Red food dye, medicines with little or no active ingredients, aircraft replacement parts that fail, and substandard electrical cords that catch fire.

One of the most harmful forms of counterfeit goods is fraudulent medicines. In recent years, there has been a marked increase in the manufacturing, trade and consumption of these products – often with harmful, and at times fatal, results.

Actually, that's not the reason why ISO is so gung-ho about battling counterfeiters.

The sheer size of the counterfeit industry is staggering. A report from the Organisation for Economic Cooperation and Development (OECD) put the value of counterfeit goods that crossed international borders at over USD 250 billion in 2007. That’s far larger than other scourges of the underworld economy, such as weapons smuggling and human trafficking. It even rivals the international trade in illegal drugs.

It's not that either.

[C]ounterfeiting can significantly reduce the profitability of legitimate businesses. Internationally, the trade in counterfeit products is estimated to cause economic loss to legitimate companies in the range of USD 500 to USD 700 billion annually.

Getting warmer, but that's not the real reason.

Where’s the harm, you might ask ? The truth of the matter is quite startling. Counterfeits create an underground trade that deprives governments of revenue for vital public services and imposes greater burdens on taxpayers.


As you can see, not only are the counterfeiters economically motivated, but the people who battle the counterfeiters are economically motivated also. You don't mess with the tax man, as Al Capone discovered.
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