IP Infringement and Serious Organized Crime

In June 2020, INTA’s New York conference was themed around the influence and responsibility of brands in society. This timely focus on the corporate social responsibility of companies was a perfect fit for a year in which many organizations are reassessing their products, names, and working cultures in response to consumer feeling.

In a previous article, we highlighted that 62% of consumers now want brands to demonstrate their commitment to ethical behavior, while another 66% considered transparency to be at the heart of good corporate image. One of the key ways brands can demonstrate their ethical pedigree is to work proactively against the kind of IP infringement that funds serious organized crime networks, thus helping to reduce negative societal impacts from human trafficking, drugs, and other serious crimes.

Is there really a connection between counterfeiting and organized crime?

Counterfeiting and other forms of IP abuse are sometimes seen as ‘victimless crimes,’ but in recent years agencies such as the United Nations and Interpol have produced reports detailing exactly how the IP black market funds criminality. A good example of this was the 2019 United Nations Office on Drugs and Crime (UNODC) paper, Transnational Organized Crime in Southeast Asia.¹ The UNODC report outlined how Southeast Asia’s $35 billion annual black market is connected to serious organized crime networks which push fake consumer goods, pharmaceuticals, and industrial products through the region.

In Europe, the involvement of Italian groups such as the Camorra, the Ndrangheta, and the Cosa Nostra in everything from fake pesticides to apparel has been known, but pan-European enforcement actions have proven this to be true. In what is possibly the most high-profile evidence of the danger presented by counterfeiting, the 2015 terrorist attacks on the Parisian offices of Charlie Hebdo were partially funded by the sale of fake footwear.

Counterfeiting, piracy, and serious organized crime in 2020

According to a recent joint report by Europol and the EUIPO, we have perhaps the strongest case yet that counterfeiting and piracy are linked to serious organized crime.² Using a range of industry-focused case studies, the report demonstrates that the links between IP crime and organized crime networks have an evidential basis.

How does IP crime support organized crime gangs (OCGs)?

The two primary ways in which IP crime funds OCGs are through ‘support pathways’ and ‘parallel pathways’. In many cases, crimes such as document fraud, forgery, and counterfeiting support the perpetration of other crimes such as illegal narcotics and terrorism. On the parallel pathway, OCGs may be simultaneously committing a variety of interlinked crimes such as the co-shopping of illegal drugs alongside fake clothing or electronics. In both crimes, large-scale criminal networks are often behind both.

According to the report, numerous industries are at high risk within the EU:

Pharmaceutical

Crimes related to the manufacture and distribution of fake and falsified pharmaceuticals include illegal narcotics, crimes against public health, money laundering, fraud, bribery, document fraud, and corruption.

Case examples include:

Operation Vitra – Spanish authorities seized 112 illicit substances, including 4.2 million doses of anabolic steroids and hormones worth EUR 650,000. They arrested 41 individuals and seized cash, narcotics, and weapons from a network charged with money laundering and other offences.

Operation Alphabay & Hansa – A joint Dutch/U.S. operation dismantled the largest network on the Dark Web, seizing millions in cryptocurrencies and disrupting over 250,000 listings for narcotics and toxic chemicals and over 100,000 listings for fraudulent documents, counterfeits, and cybercrime tools.

Apparel & Footwear

Crimes related to the manufacture and sale of counterfeiting apparel and footwear include illegal weapons, illegal working conditions, document forgery, and currency forgery.

Case examples include:

ASAE Operation – The execution of 11 search warrants led Portuguese authorities to seize 27,000 items of counterfeit clothing, rifles, and shotguns from unlicensed factories operating as a parallel textile industry.

Operation Santa Barbara – Greek police arrested three and seized fake clothing, footwear, and accessories from an OCG also in possession of guns, ammunition, and counterfeit money.

Tobacco

Crimes related to the manufacture and distribution of counterfeit tobacco products include smuggling, money laundering, drugs, illegal weapons, and modern slavery.

Case examples include:

Operation Hannibal – In 2020, joint authorities dismantled the first known EU factory illegally dedicated to making and packing counterfeit cigarettes. Although paid, workers were forced to live and work in an underground bunker and exposed to dangerous, toxic conditions. Narcotics and weapons were also seized.

Hungarian operation – Authorities in Budapest raided an illegal tobacco factory containing 6 million fake cigarettes along with the material for an additional 21 million. Workers were locked in the factory and forced to live and work there.

Navigate complex IP challenges with expert support

Although these industries are mentioned, they are emblematic of a much bigger problem. At Corsearch, we understand that the problems faced by companies wishing to protect their IP rights are complex and demand specialist expertise. Although many companies may wish to do more in this field, and to better protect themselves, their customers, and their societies more generally, they often require support.

That’s why our global teams of analysts, leading technology, and largest China-based team in the industry work tirelessly to enforce the rights of our clients. For more on how we can support you, please reach out to us today.

Together, we can all do better.

Speak to one of our experts to learn how we can help you.