The Overseas Investors Chamber of Commerce and Industry has estimated that infringement of the intellectual property rights causes Rs 7.5 billion loss to the government revenue and pushes more than 31,194 persons out of jobs annually. Other sectors such as marketers of lubricants, tea, biscuits, facial creams and lotions, publishing houses, film producers, TV plays, computer programmes and other creative activities put the estimates of revenue loss and job loss at more than Rs 10 billion and 50,000 respectively annually.
The OICCI and other members of the business community fear that the continuation of the violation of IPR will have adverse effect on new investments and discourage investment in brand building by the existing industry. In their opinion there will be increase in cheating and conning of the government by the counterfeiters.
They predicate their arguments on the findings that revenue loss to the government in lubricant industry, the use of which is growing at the rate of 5 percent annually, has a market size of 300 million liters out of which 60 million liters is the share of counterfeit product. The counterfeit market is growing at the rate of 6 percent.
According to market sources, counterfeit products damage machinery and vehicles worth millions of rupees. It drastically reduces life of machines, engines and equipment. At the end of the day the loser is the customer. The damage to the reputation of Pakistan also follows. It adds to the fear that people willing to invest would not do so. The loss of customer's confidence becomes difficult to regain.
Revenue loss to government in cigarette industry is enormous. In the market where 66 billion sticks (legitimate, evaded, counterfeit and smuggled) sell; more than 16 billion sticks are counterfeited.
The share of counterfeit products in terms of money is Rs 1.5 billion and loss to government revenue is Rs 6 billion.
The question one asks is who are really benefiting: probably only the pirates. Who are they? They are a few opportunistic business entities that make money without any investment, without any commitment to users, without any commitment to the society they live in. They do not pay any taxes. They ruin the brand, quality of products, destroy local talent and damage the image of the country.
Though the list that reflects loss of revenue in motion pictures sector ($ 12 million), records and music ($60 million), business software ($13 million), books and publishing ($40 million) is not confined to only these selected items that takes place in Pakistan, it is exhastive. There is an unending list of areas, which suffer at the hands of the counterfeiters who leave little room for any new product to make its way to the local market.
In countries such as Pakistan there is no point of agreement in needs of a consumer and his purchasing power. Generally the prices of daily use articles, PoL and books remain on the increase throughout the year in complete disregard to the purchasing power of a consumer.
The situation where a producer of goods does not take into account the capacity of a consumer to purchase, gives rise to counterfeit market. It would be erroneous to presume that users of counterfeit products in bulk remain unaware of the quality of products. In fact they are the one who patronize these products and find out places to sell them.
The purchaser of a book, CD or a computer programme asks for goods labeled as Number 2 as he knows it would suit his pocket.
In case of PoL and cigarettes, users know their worth and value. Since the difference between the original and the copy or the smuggled goods is not obvious, therefore, for a purchaser a cheaper product remains preferable.
The producers of counterfeit goods say that as long as they can meet the needs of the low-income purchaser, their business would continue to flourish. The question is neither of piracy nor of counterfeiting, it is purely economics that works.
Counterfeiters say, "You cut down on your profit, reduce cost of production and reduce the difference in prices between an original product and a counterfeited product, the Number 2 market would come to an end on its own. No one wants goods free of cost but definetely at an affordable price. As far as laws in respect of IPR are concerned, they could be flouted in a number of ways."
The OICCI has made recommendations to deal with this situation. Its recommendations on IPR violations call for further strengthening of IPR. A Pakistan IPR Organization (PIPRO) should be established immediately and all the relevant departments, which are spread over many ministries, should be brought under the aegis of one organization.
There should be a government funded independent inspectorate under the proposed PIPRO that disseminates information on IPR laws and enforces laws. The existing laws should be further strengthened, modified and made strict to deter counterfeiting. There should be provision in the laws for courts to accept certified independent laboratory evidence and reports for IPR infringement.
The OICCI is of the view that changing inconsistent and overlapping IPR laws, by modernizing the IP department and re-training of its staff can substantially reduce counterfeiting. It would be advisable that computerized registrations and records with web based server should be established that allow for networked IPR offices across Pakistan with a search engine for registered firms.
The overseas investors said that they would recommend harsh punishment for the violator of IPR. They want law enforcement agencies should be empowered to initiate investigations on own accord, which can then be forwarded to inspectorate. Since the Pakistan Penal Code has vague punishments, provisions under PPC for minimum and maximum terms of incarceration for violators should be made.
The law enforcement agencies are not clear how to deal with IPR violations. The IPR violations should be made cognizable to facilitate application of the laws.
There is a feeling that the Patent Amendments of 2002 should be repealed and Patent Ordinance 2000 be restored to bring Pakistan in line with the TRIPS articles.
However, the measures to curb counterfeiting and piracy, the original producers will have to review their cost of production and revise downward margin of profit as the first step towards encountering IPR infringements. Once the producers begin to move in the right direction after taking consumers into confidence by offering them lower prices of their products, the counterfeit market will disappear in due course of time.
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