Europol and the European Union Intellectual Property Office (EUIPO) have recently released a report, aimed at informing policy makers and law enforcement on the connection between IP crime and other criminal activity. The report has shown that many organised crime groups that are involved in counterfeiting goods also participate in other criminal activity. These groups can make substantial profits from IP crime with a relatively low chance of detection. If caught, prison sentences are significantly lower than other forms of crime.
One area of concern is pharmaceutical crime as counterfeit medicine creates a significant public health risk alongside the economic damage. Fake medicines are frequently not formulated correctly and can contain dangerous ingredients. Investigations have identified that cases of counterfeit pharmaceuticals can be linked to illicit substances, fraud, money laundering, bribery, and corruption.
Organised crime groups involved in IP crime are often also involved in the production and trafficking of illegal drugs. Especially those groups involved in pharmaceutical crime. Counterfeiters have been found to produce synthetic drugs such as MDMA, amphetamines, methamphetamines along with the trafficking of cocaine, cannabis, and heroin.
Operation Pastela ES exposed how IP crime can be related to violence and manslaughter. The Spanish operation was triggered by a warehouse fire which caused two deaths and sixteen injuries. 27 suspects were arrested and almost ten million euros in goods were seized. The group was dedicated to counterfeiting and smuggling tobacco. The operation disrupted the export of the goods to the United Kingdom (UK), Italy, and Russia.
Other operations have shown that IP crime can also be lined to the possession of illegal weapons which are used to threaten their workers, gang members and competitors. They could also be used against law enforcement. A Portuguese operation seized roughly 27,000 counterfeit goods, mainly clothing along with seven illegal weapons. There were carbines, shotguns, compressed air guns and dozens of twelve calibre cartridges. A Greek operation seized counterfeit clothes, shoes, glasses, bags, wallets, 5,750 fake two-euro coins, two hunting rifles, one sub-machine gun, one army rifle, one replica gun and 426 cartridges.
IP crime operations found organised crime groups trafficking human beings for forced labour which is the modern form of slavery. A 2020 operation known as Hannibal involved illegal cigarette manufacture and drug trafficking. The Europol supported operation included Spain, Lithuania, Poland, and the UK. The operation found people forced to work in dangerous and toxic conditions. One factory was discovered four metres below the ground with workers locked inside. The illegal activity generated about 625,000 euros a week in profit.
Food fraud is another area of concern as counterfeit food and drink also pose a health risk to the public as they may contain toxic ingredients. An Italian operation involved sparkling wine which was portrayed as being French. Another operation involving Italy and Germany was producing counterfeit olive oil which was being sold into the German market. In some areas the fake olive oil had completely replaced the genuine oil. The counterfeit oil was estimated to generate around eight million euros a year in profit. 147,000 bottles of counterfeit rum have been found in a separate operation.
IP crime has been found to involve bribery and corruption. Corruption is one of the methods used by criminal organisations. Corrupt officials are a danger to political, social, and economic stability.
Much like all other criminal activities’ organisations involved in IP crime still need to turn their illegal profits into a legal source of income making money laundering just as prevalent. Governments also loose a substantial amount of money from VAT fraud and excise fraud associated with IP crime.
The report hopes to eradicate the idea that IP crime is a victimless crime as it has shown its links to more serious crime. The full report can be found at, https://www.europol.europa.eu/publications-documents/ip-crime-and-its-link-to-other-serious-crimes-focus-poly-criminality
By Samuel Killoran who is a Law Student at Solent University