OrganizedCrime Involvement
Organized crime can be defined byusing the definition in the UN Convention against Transnational Organized Crime(UNTOC), which is the most important international regulatory instrument onthis subject. It defines an organized criminal group as a “structured group ofthree or more persons, existing for a period of time and acting in concert withthe aim of committing one or more serious crimes or offences … in order toobtain, directly or indirectly, an economic or other material benefit”. Thisdefinition is very comprehensive as it encompasses criminal activitiescharacterized by a certain organizational duration whereby the criminalassociation is implemented in order to conduct criminal acts that allow thegroup to generate profits. The duration of this association is not defined apriori and should be interpreted as any non occasional commitment to perpetratecrimes on the part of group members. The numerical element of the definitionserves the purpose of creating a distinction between the individual criminalwho may be aided by an accomplice and more complex organizations that involvemore people and therefore imply a greater degree of operational capacity,posing a greater threat to public order. This definition is valid for thetraditional mafia-like organizations, which are structured in a hierarchicalmanner with clear division of roles, and strong connections with the territory.At the same time, this definition encompasses modern phenomena such as loosecriminal networks with varying structures operating in different sectors andterritories; such groups are characterized by their links with other criminalorganizations, leading to the loss of rigid hierarchies and strong territorialconnections. The act of committing serious crimes for economic profit is acommon element to all types of criminal organizations.
What is crucial in the analysis ofcounterfeiting is the evolution that criminal organizations underwent duringthe 1970s, creating a network operating in different countries. This networkwas essential for the trafficking of goods whose places of production weredistant from the places of destination, as in the case of the illicit trade innarcotic substances, and required a transformation of criminal groups to adaptto new types of activity and trade. To manage trafficking across differentareas of the globe, criminal groups established alliances with otherorganizations, sharing operational tasks and creating an actual illegalproduction/distribution chain. The new synergies not only guaranteed optimallogistics but also provided for the opportunity to market various goods byusing the same methods and, most likely, the same trade routes. This scheme wasalso applied in the case of counterfeiting by consequently exploiting a set ofestablished practices and relationships already in place for the management ofother illicit traffics.
Before discussing the criminaljustice response to counterfeiting, it is interesting at this stage tohighlight why criminals are attracted to this activity. The most importantelement is surely the profit versus risks ratio. Organized criminals take intoaccount the level of profitability attainable from any given illicit activityas well as its level of risk. An idea of the profitability of counterfeitingcan be obtained from cases in which criminal organizations have been dismantledby law enforcement actions and proceeds of crime confiscated. Digital piracyseems a quite interesting example. In the United States for example, thefederal authorities estimated that the revenues of a dismantled criminalorganization dedicated to this trade could reach USD 1.2 million per year,while in another case, also in the United States, it has been established thata criminal organization remitted to manufacturers of counterfeit goods in AsiaUSD 9.8 million.
On the other hand, for criminals,the risk involved in counterfeiting is significantly low, given that lawenforcers tend not to consider counterfeiting a top priority for action.Penalties in the majority of countries are also usually less severe if comparedwith those applicable to other “serious crimes.” The relatively low level ofapprehension generated by this illegal activity is due to the initialperception that counterfeiting was associated only with luxury or textile goodsand that it did not generate sufficient concern to warrant incisive action bylaw enforcement officials. Illegal trading that is both highly profitable andpresents low levels of risk is certainly appealing to organized crime. Thisappeal is enhanced by the relative logistical simplicity of the commerceitself, the widespread distribution of technologies that allow for a faithfulexternal reproduction of the product and the possibility of exploiting existingtrade routes and synergies previously created by various groups to manage othertypes of illegal trade. The combination of these characteristics ensures thatcounterfeiting is an opportunity that modern organized crime will not fail toexploit.
In addition to these elements, counterfeiting isalso an important instrumental tool for the criminal group to easily launderproceeds from other crimes. Considering that counterfeiting is a huge source ofmoney with a relatively low risk and a tool to launder proceeds of crime, theprofit versus risks ratio is extremely favorable for counterfeiters andconstitutes one of the most important motivations at the basis of organizedcrime involvement in this illicit activity.
CriminalizingCounterfeiting
Several treaties have beennegotiated and ratified in the last 150 years in the field of intellectualproperty. The majority of them—such as the Paris Convention for Protection ofIndustrial Property, the Patent Cooperation Treaty, or the Madrid Agreement onInternational Registration of Marks—aim at establishing in view of protectingthe creativity of human intellect. The TRIPS agreement went a step further andsuggested the importance of providing adequate sanctions for IPRsinfringements, including criminal sanctions. These international legalinstruments provide the necessary resources to harmonize member states'responses to activities of unauthorized replications of protected rights.
In the majority of the cases, theimplementation of these treaties by member states led to the adoption of aseries of civil or administrative sanctions aimed at responding to IPRsviolations. Some countries, especially in recent years, went further andadopted criminal sanctions, but they are usually low, especially if compared tothe provisions adopted for other serious crime. However, and considering thecharacteristics of the phenomenon that we discussed in this article, thisapproach does not seem sufficient to contrast counterfeiting activitiesperpetrated on a large scale by well-organized criminals.
Why this approach was followed bythe majority of the countries and by several IPRs treaties is totallyunderstandable. We have discussed how the awareness of organized crimeinvolvement in counterfeiting increased only in the recent years. Also, theconsequences of counterfeiting have been acknowledged for only a relativelyshort period of time. Thus, it is quite clear that the purpose of IPRs treatieswas to recognize the importance of protecting the result of human creativityestablishing systems for IPRs registration, recognition, and protection. Thesetreaties were not aimed at combating large-scale organized crime activities aswe are now facing in the case of counterfeiting. They are still fulfillingtheir role in a very good way, but the fight against counterfeiting needs ashift, flanking these treaties with the use of instruments aimed at fightingcounterfeiting as part of the broader effort put in place against transnationalorganized crime.
The importance of this approach isstarting to be recognized. The Medicrime Convention of the Council of Europe,for instance, focuses on criminal activities related to falsified medicines andpublic health and is not aimed at protecting IPRs but rather at fightingcriminals. However, and apart from the medicines sector that probably needs tobe treated separately in a specific international legal instrument, there islikely no need to create new legislative instruments because countries canapply the UNCTOC 2000 also in the case of counterfeiting. Counterfeiting isclearly an activity that is conducted on a large scale, with a clearinvolvement by organized criminals, and involving perpetrators that are oftenconnected and operate in different countries.
The existence of these elementsleaves little or no doubt as to the possible applicability of the UNCTOC to themajority of cases concerning counterfeiting. It is very clear that theconvention is intended to ensure its widest application to every form oforganized crime and not only to those that are expressly mentioned in the bodyof the Treaty. In his foreword to the publication of the texts of the UNCTOC2000 and of its protocols, the former UN Secretary General Kofi Annan affirmedthe importance of the UNCTOC as an instrument to combat organized crime as aglobal problem—one that has no boundaries and that is exploiting all theopportunities that globalization is creating. The UNCTOC has the potential tobe a common and powerful instrument, setting the basis for enhanced cooperationamong member states to fight organized crime and the various activities itmanages. This is reinforced by the fact that as of August 2012 the conventionhad been ratified by 170 UN member states (UNODC 2012), which demonstrates thatthis treaty has a very large international acceptance and the potential forwidespread global application.
Article 3 of the conventionidentifies the scope of applicability of the UNCTOC 2000, affirming that itshall apply—apart from the other forms of crime specifically mentioned—tooffenses that are transnational in nature and involve an organized criminalgroup as well as to “serious crimes,” thus potentially covering all theactivities carried out by organized crime. Furthermore, Article 5 of the UNCTOCalso criminalizes the participation in an organized criminal group and itsrelated activities.
The UNCTOC 2000 contains severalarticles aimed at setting the basic standards for a series of very important mattersrelated to organized crime investigation and prosecution, which wouldpositively shift the effectiveness of the fight against counterfeiting. Thearticles on prosecution, adjudication, and sanctioning the crimes included inthe convention address sanctions against participation in an organized criminalgroup, as well as the confiscation and seizure of the proceeds of crime,the equipment used to commit such crimes, the property into which proceeds ofcrime have been converted, and any income or benefits derived from the proceedsof crime.
Even if these provisions have thepotential to enhance the effectiveness of the national and internationalresponse to the problem of counterfeiting, what is needed is the recognitionthat counterfeiting is a crime perpetrated on a transnational scale and that ithas to be properly investigated as a part of the wider strategies put in placeby organized criminals.
This approach is already starting toemerge, and it recently led to the adoption of two resolutions by the UNCommission on Crime Prevention and Criminal Justice, one in 2011 dedicated tofraudulent medicines and one in 2012 dedicated to fighting organized crime inall its forms and manifestations, including the production and trade offalsified and fraudulent products.
Finally, we also have to rememberthat the many aspects and actors involved in the counterfeiting trade as wellas the consequences it creates hinder us in identifying a single solution tothe problem, which requires the elaboration of a strategy involving parallelactions in different sectors. The criminal law approach will need to be flankedby awareness-raising actions, training activities, and pilot initiatives aimedat involving the private sector, creating a multifaceted strategy to properlyrespond to this extremely complex phenomenon.