IPR Infringement: RAND Study Highlights Causes and New Ways to Assess Losses

October 17, 2012
Categories: Intellectual Property

Accurate measurements of the damages caused by Intellectual Property Rights (IPR) infringement are difficult at best. Recently, RAND released a study assessing past measurements of IPR infringement, and offering multiple insights into the causes behind IP theft, and ways in which companies can become better at measuring their own losses.

Drivers behind IPR infringement:
Supply Side:
•    The growing prevalence of digital and networked technologies
•    The globalization of trade, the growing importance of international brands
•    The presence of large integrated markets supporting free trade
•    Low or weak enforcement of penalties targeting violators of IPR infringements
•    The growing presence and involvement of organized crime in the production and distribution of counterfeited and pirated goods
•    Industry-specific factors

Demand Side:
•    Social acceptance to buy products that violate intellectual property rights
•    Limited availability of authentic goods
•    The high price of authentic goods
•    The rising quality of counterfeit goods

RAND Methodology:
Methodologies to measure IPR infringement include surveys of producers and suppliers, econometric models, and mystery shopping. The RAND methodology examines the relationship between a firm’s sales forecast errors to country-level indicators (such as rule of law, international tourism, and internet access) to estimate what portion of an unexplained forecast error comes from counterfeits.

While this new methodology adds valuable information to the advancement of accurate measurements of IPR damages, it will no doubt generate a good deal  of debate on how close it gets to the exact monetary amount lost due to IP theft. Further work on obtaining a more precise picture of the costs of IPR infringement is important because it can provide businesses with important data to advocate for stronger enforcement, inspire cooperation among organizations that are impacted and motivate the sharing of best practices across industries to protect IPRs.

  Download the Full RAND Report here

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