Companies of All Size in the Crosshairs of Product and Brand Pirates

Seventy-two percent of the companies surveyed in the German mechanical and plant engineering sector stated that they were affected by product or brand piracy, with estimated damages amounting to 6.4 billion euros annually. That is one of the key takeaways from the VDMA’s 2022 Product Piracy Study. With over 3,400 members, the VDMA is the largest network organization and voice for the mechanical engineering industry in Germany and Europe.

Every two years, the VDMA conducts a study on product and brand piracy among its member companies. This year, 68 companies took part in the study that was conducted in February – March 2022. The study is concerned only with the illicit reproduction of products, defined as:

• imitation of products in breach of special proprietary rights (e.g. protected brands or patents), or
• imitation of products without any breach of proprietary rights, but against accepted competitive practice.

In the context of the study, a product is considered a reproduction against accepted competitive practice if the simple fact of the imitation is accompanied by another illicit act, which can mean deliberately obscuring the original product’s maker (increasing the likelihood of confusion) and benefiting illicitly from the original brand’s good reputation.

The 2022 study showed that while annual damages from piracy are actually falling, the many counterfeits still pose a threat to machine and plant operators. According to the VDMA, “The dangers of piracy and the loss of know-how in mechanical and plant engineering are very diverse. The digital transformation in particular poses new challenges for the protection of data and information, both in product development and in the operation of machines and plants. At the same time, digital services and protective measures are a good way to distinguish oneself from plagiarists with added value and to make simple copying more difficult.”

Some other key findings in the study include:

• China (87%) remains the leader in the origin of counterfeits followed by India (26%) and Germany (19%).
• Direct competitors were found to be the most frequent plagiarists (70%) followed by business partners, which could be customers, suppliers, licensees, or joint venture partners (41%), and professional large-scale plagiarists (30%).
• Infringement on intellectual property rights was identified as unfair copying (53%) and trademark piracy (47%).
• The most frequent types of plagiarism are found in components and external appearance (design), as well as copying of websites and online shops.
• 41% of companies report that counterfeits pose a risk to machine operators or users, while more than half see a danger to the safe operation of the plant.
• Larger companies (more than 1,000 employees) were the most frequent targets of plagiarists, but even medium-sized enterprises are victims of piracy. 

The study also delved into the types of countermeasures companies are taking to identify and protect against plagiarism as well as the actions taken against plagiarists. Those countermeasures included out-of-court actions (58%), civil action (35%), confiscation by customs (19%), criminal proceedings (15%), and others.

The VDMA continues to focus much of its anti-piracy efforts on informing and raising awareness among politicians and society while improving law enforcement and the exchange of information between affected companies. For more information, you can download the complete 2022 study.

Developing and implementing new countermeasures to reduce the frequency and impact of product piracy is an ongoing battle. At Wibu-Systems, we continue our singular focus on protecting digital assets and intellectual property in an increasingly connected world. You can learn more about our technology solutions that are used globally by software publishers and manufacturers of intelligent devices and the customers who use them across a myriad of industries