Intellectual Property (IP) rights underpin investment in research and manufacturing, reward innovation in design and branding, and supports creativity of all types. But these crucial IP rights are undermined and devalued on all fronts by infringements, whether by wholesale sharing of digital content through myriad file sharing and streaming websites, deliberate copying of patent or design protected products, or the importation and sale of counterfeit goods on a massive scale.
The harm that this infringement causes is hard to measure, but it is also hard to understate. Infringement of IP right is not just an economic matter, although it does cause financial loss to legitimate businesses, and to the state. The harms caused by IP infringement goes much further to the heart of communities and the well-being of the citizens. Unsafe counterfeit goods can pose serious risks to safety. This article will attempt to briefly examine the economic effects of these crimes.
DIMENSIONS OF IP CRIMES.
The prevalence of IP crimes such as counterfeiting is closely associated with other serious criminality, and where entire market is devoted to counterfeits, the chilling effect on legitimate traders can result in entire community suffering from a lack of investment and the chance to thrive, economically.
Infringement of IP rights online also causes harm to consumers, with close links between illegitimate websites and the spread of malware and other cyber crimes. The extensive copying and distribution of infringing materials also undermines the ability of our world leading creative industries to invest in new content, reducing the payback for creators, and damaging the long term cultural wealth of the nation.
“IP crimes are widespread and can be found everywhere; from the Internet to traditional markets: It is big business. According to the IP crime group Annual report 2013-2014, it is estimated that approximately 10% of the global trade is in counterfeit goods.”
IP crimes globally take place on a vast scale, reaching virtually into every part of society and enforcement of IP Laws is a complex matter. In 2011 according to the IPO report “ prevention and cure” – The UK IP crime strategy forwarded by Baroness Wilcox almost half of the UK’s £137 billion annual investment in tangible assets was in intellectual property. It is very difficult to accurately assess the level of IP crimes, however all commentators agree that it causes huge financial loss to UK rights owners. A recent estimate is that loses to the UK economy in terms of profits and taxes are in the region of £1.3 billion per year, and the National Crimes Agency recognizes that the threat IP crimes poses to the UK economic growth is such that it has been made a priority for its economic crimes command. The shift of consumer commerce online continues apace along with the ever-rising consumption of digital content. This has led to a parallel growth in the trade of counterfeit and pirated goods online, and the illegal downloading and streaming of digital content. IP criminality continues to evolve as criminals find new ways to exploit opportunities.
Law enforcement agencies have consequently been driven to attempt to find smarter ways to catch them. The cost is not exclusive economic: IP crime endangers consumers as well as cheats them, with a thriving market in counterfeit pharmaceuticals, car and aero parts, food and drink, as well as the more commonplace fake sportswear and pirated DVDs and CDs. The scale of IP crimes continues to increase, often facilitated by technological advances, such as the ubiquity of internet use and the increasing use of social media sites to transact consumer trades, which have transformed the commercial and consumer landscape over the past decades. The Internet continues to be a major facilitator of IP Crimes, and platforms such as social media have presented criminals with new and expanding markets to exploit for the sale of counterfeit goods and infringing materials. According to the IP Crime Group report 2013-2014, the sale of counterfeit goods via social media rose 15%, whereas the rise in sale via online auction sites rose by just 2%. Well-established legitimate online markets such as ebay, Amazon and Konga continue to be the largest outlets for suppliers of counterfeit products online to consumers. The “dark web” sites and content which is not listed by standard search engines is of increasing importance as a marketplace for counterfeit products being sold on a wholesale basis, often for re-supply to consumers.
With respect of Digital IP crimes, the infringement of copyright on contents that are stored in electronic form has dramatically changed the landscape in relation to copyright offence. Technological advances have made it increasingly easy to make unauthorized copies of protected materials and to allow expansive and profitable access to it. Illegal copying and sharing of materials now take place on a vast scale. The borderless nature of the Internet and the extremely widespread participation by individuals in such behavior exacerbate difficulties faced in detecting breaches and enforcing owners’ right. Digital IP crimes represent the most significant challenges facing copyright owners and law enforcement agencies in the field today. The law continues to scramble to catch up with technological developments.
In Nigeria, the extent of IP crimes, regrettably, is unquantifiable. It is widespread and affects virtually every aspect of our commercial life. Some commentators in the course of our research averred that counterfeit products are part and parcel of the Nigerian commodity space. Due to the lack of proper data vis-à-vis convergence point of the contents created especially with respect to copyright, we are unable to come up with detailed findings demonstrating with certainty the degree of damage these IP crimes have done to the Nigerian economy; it is huge. To the best of the writer’s information no NBC findings has produced a verifiable statistics. Regrettably, the IP regimes in Nigeria is still dwelling in the stone age as all our subsisting legislations which were tailored after English statutes that have been long repealed and/or amended in England to meet the present realities of today’s world cannot combat the complexities of the crimes using technology. Thus the urgent need for robust and comprehensive legal framework to address the increasing challenges with respect of criminal infringement cannot be overemphasized. It is not enough to have a “copy and paste” legislation. Given the continuous advancement of new methods by these criminals, the need for continuous engagement of stakeholders in the combat of this huge economic menace must equally be emphasized. Truthfully, there cannot be a specific template that will provide a lasting solution.
In the UK, the IPO published an interesting study in 2015 of the criminal sanctions for copyright infringement available under the CDPA 1988 entitled “penalty fair”. The object of the study was to establish whether such sanctions were currently proportionate and correct. Overall, the study concluded that: while there is no proof that the higher sentences would act as a deterrent to online copyright crimes, there is evidence to suggest that increasing the maximum sanction could be important in facilitating investigation and prosecution, now that there is a better foundation of civil cases on which courts can make decisions (in the absence of criminal case law precedents).
DUTY TO SANCTION IP CRIME.
It is the writer’s submission, that given the seriousness of these crimes which equally has some terrorist affiliation, (e.g. studies show that the sale of illegal and counterfeit artifacts is a major source of terrorist funding in the middle east) it is the duty of every local law enforcement officers from the relevant security agencies to enforce within their area of provision. Forfeiture options should be pursued vigorously, where goods, materials or articles which are connected with relevant offences come into the possession of any person in connection with the investigation or prosecution of a relevant offence, the agencies involve should apply for interim order of forfeiture thereby shifting the evidential Burden of Proof on the state to the alleged offender to justify his possession as applicable under section 17 of the Advance fee fraud Act. See the Case of DAUDU v FRN (2018) 10 NWLR PT. 1626 Pg. 169 and JONATHAN v EFCC (unreported) in CA/L/578/2017 delivered on the 12th day of January 2018.
PROCEEDS OF CRIME.
The proceeds of crime act has been increasingly used in the UK in relation to IP offences, with law enforcement agencies, industry bodies and private enterprises finding that significant confiscation orders can act as a strong deterrent to involvement in IP Crimes. The Criminal lifestyle test as applicable under the proceeds of crime Act 2002 which has particular relevance to IP Crime. A person has a criminal lifestyle if he satisfies one or more of the test set out in the Act- and the first test is that he is convicted of an offence specified in the relevant schedule which will be provided by the enabling Law regulating IP rights protection. One notable example is that in 2003, Victor Tin Yau Cheng pleaded guilty to Trade Mark Act 1994 offences and was fined £200 but confiscation order was £334,791.61 and failure to pay would result in a 5 year prison term. There is a pending bill before the 8th National Assembly (Nigerian Parliament) which proposes a legislature on proceeds of crime.
IP Crimes has become an increasingly commercially sensitive area that cannot be overlooked, especially considering the Nigerian economy that prides itself as undergoing diversification from the core oil sector to other feasible and imperishable sectors like the creative industry with unquantifiable potentials. Regrettably it has not been given the desired seriousness.