Counterfeiting as corporate externality: intellectual property crime and global insecurity |
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Authors: | Simon Mackenzie |
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Institution: | (1) Scottish Centre for Crime and Justice Research, University of Glasgow, Glasgow, Scotland, UK |
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Abstract: | Corporate negative externalities occur when corporations place some of the costs of their profit-seeking activity onto society.
This paper suggests that the current global problem of intellectual property crime is such an externality, and that it has
not been recognised as such because corporations present product counterfeiting and piracy as crimes which reduce their revenue,
rather than as predictable side effects of corporate production and merchandising, including branding activity, which have
considerable socially deleterious consequences. It is argued that corporate actors are responsible for the socially harmful
effects of the global counterfeiting problem in the following respects. Branding, advertising, and other corporate activities
drive the market for goods which have a fashion value over and above their use value. While corporations ‘create’ this desire,
they cannot prevent it being applied to the desire for fake or replica goods. Outsourcing of corporate production activities
to developing countries to take advantage of cheap manufacturing and labour costs presents considerable opportunities to producers
in those countries to copy and distribute the goods in an unauthorised way. Serious measures are not taken against product
counterfeiters by rights-holding corporations, since market expediency dictates that the costs of counterfeiting are not so
adverse to corporations to incentivise them to change their business methods. Counterfeit and pirated goods cause a range
of social harms above and beyond the spuriously-costed financial damage corporate rights-holders suggest they suffer - these
include the health and safety issues created by some fake goods, and the creation and maintenance of highly profitable organised
crime activity in international markets for fake goods. |
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