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GAO concludes piracy cost estimates are bogus ARRR

ArsTechnica reports today that a new GAO report debunks the many private industry- and govt agency reports on the economic impact estimates of information and industrial “piracy.” GAO states that the “lack of data hinders efforts to quantify impacting of counterfeiting and piracy.” They go on to highlight in particular 3 reports often linked to the government and commonly cited by industry groups that are bogus.


Three commonly cited estimates of U.S. industry losses due to counterfeiting have been sourced to U.S. agencies, but cannot be substantiated or traced back to an underlying data source or methodology.

First, a number of industry, media, and government publications have cited an FBI estimate that U.S. businesses lose $200-$250 billion to counterfeiting on an annual basis. This estimate was contained in a 2002 FBI press release, but FBI officials told us that it has no record of source data or methodology for generating the estimate and that it cannot be corroborated.

Second, a 2002 CBP press release contained an estimate that U.S. businesses and industries lose $200 billion a year in revenue and 750,000 jobs due to counterfeits of merchandise. However, a CBP official stated that these figures are of uncertain origin, have been discredited, and are no longer used by CBP. A March 2009 CBP internal memo was circulated to inform staff not to use the figures. However, another entity within DHS continues to use them.

Third, the Motor and Equipment Manufacturers Association reported an estimate that the U.S. automotive parts industry has lost $3 billion in sales due to counterfeit goods and attributed the figure to the Federal Trade Commission (FTC). The OECD has also referenced this estimate in its report on counterfeiting and piracy, citing the association report that is sourced to the FTC. However, when we contacted FTC officials to substantiate the estimate, they were unable to locate any record or source of this estimate within its reports or archives, and officials could not recall the agency ever developing or using this estimate. These estimates attributed to FBI, CBP, and FTC continue to be referenced by various industry and government sources as evidence of the significance of the counterfeiting and piracy problem to the U.S. economy.

Read on at:

Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods
GAO-10-423 April 12, 2010

[Thanks @ArsTechnica!]

CC BY-NC-SA 4.0 This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.


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