Ensuring that products available on markets are safe is a keen concern of governments, which have set up legislation and created regulatory bodies to oversee markets and identify unsafe, or dangerous, products. In many countries, responsibility for the market oversight is assigned to multiple agencies, with each covering different sets of products. Food and drugs, for example, are sometimes treated by one agency while automotive and other consumer products are treated by others. When dangerous products are detected, they are generally subject to recalls or other measures to eliminate the potential risk to consumers.
The agencies responsible for overseeing product safety generally focus on the safety requirements of the products, without specifically focusing on the counterfeit angle. Counterfeit items raise important challenges as they masquerade as genuine products but are not subject to the same production scrutiny; they therefore free ride on the performance and testing done on the genuine products. While the genuine products may be considered safe, the counterfeit items might thus have undetected defects that raise health and safety concerns. Overall, US authorities have deemed automotive parts, electronics, safety equipment, prescription drugs, and cosmetics as the most dangerous counterfeits due to the potential threats they present to public safety and health.1 EUIPO found in its qualitative study on risks posed by counterfeits to consumers that in particular goods aimed at children could present serious risks when they are counterfeited, including toys, childcare items and children’s clothing2.
As noted above, genuine products can also pose health, safety and environmental threats, which is why regulatory bodies are actively engaged in market surveillance. While, in general products may be considered safe when they are manufactured, subsequent handling can pose problems. This can happen for example, if goods are illicitly diverted outside legitimate supply chains, and are subsequently improperly stored or transported. For instance, medicines often require transport and storage in special, temperature-controlled conditions in order to maintain their therapeutic value.
Apart from pharmaceuticals, many other products can pose health, safety and environmental risks, even when they do not necessarily violate IP rights. These would include for example substandard goods that fail to meet either quality standards or specifications, or both. It also includes unregistered or unlicensed products that have not undergone evaluation and/or approval by national or regional regulatory authorities for the market in which they are marketed/distributed or used. As an interviewed enforcement officer noted “Counterfeit products are just a sea on a big ocean of dangerous products”. This study takes note of the broad scope of potentially dangerous counterfeit products, using existing concepts.
Two important issues should be kept in mind in the context of the scope of the study.
First, even though counterfeit products are often substandard, it is not their quality that determines whether or not they are counterfeit. In fact, some counterfeit goods may seem to be of good quality, although interviews with enforcement and industry experts indicate such cases are rare.
Second, counterfeits have a variety of socio-economic effects on economies, threatening legitimate businesses, governments, consumers and the society as a whole (OECD/EUIPO, 2016[2]); (OECD/EUIPO, 2019[3]), (OECD/EUIPO, 2021b[1]). This study focuses on health, safety and environmental risks posed by such goods, which is only a subset of the overall threat posed by counterfeits.
To establish the scope of counterfeits that can pose health, safety or environmental harm one can take several approaches.
One looks at all products that need to meet product specific health and safety standard, before entering the market.
A more narrow approach, looks at specific product recalls and alerts, and identify the product categories that were most frequently subject of such safety incidents.
Due to lack of systematic checks of actual safety, health and environmental risks of seized counterfeit products, the available information is scarce and based only on anecdotal evidence. Notably, it is not sufficient for carrying out the actual risk analysis for the broad set of counterfeit products available in the seizures data. The main assumption in this report is therefore that counterfeit products are less likely to meet the product specific health, safety and environmental standards than the goods put on the market by the original rights’ holders and therefore they pose greater safety risks. Further to this assumption, the term counterfeit dangerous goods should be understood as referring to the counterfeits:
in those products’ categories that need to meet product specific safety standards and/or are under the scope of the US Food and Drugs Administration and/or are subject of the draft United States bill – the SHOP SAFE ACT (the broad scope);
in product categories of foodstuffs, pharmaceuticals, cosmetics and categories that are most frequently subject of safety incidents as evidenced by product recalls and alerts (the focused scope).