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UKEA: Counterfeit Components Cost U.K. Economy £1B
October 21, 2008

Counterfeit electronic components are entering the U.K. market in huge numbers , costing the economy an estimated £1 billion ($1.73 billion) a year, according to research conducted in July by the U.K. Electronics Alliance (UKEA).  UKEA cited estimates from the U.K. Intellectual Property Office that intellectual property (IP) related crime (counterfeiting and piracy) costs the U.K. at least £9 billion ($15.57 billion) a year.  In addition, the U.S. Patent & Trademark office notes that 9% of all counterfeit goods seized are electronic in nature. Electronic goods become counterfeit as a result of components within them.  Taken together, these figures indicate that the value of electronic counterfeit goods entering the U.K. could be up to £1 billion ($1.73 billion).

The UKEA is calling on government to combat this problem by increasing the amount of resources put into detection and prevention, introducing tougher penalties for those caught with counterfeit goods, and by fostering cooperation between U.K. trading partners and their customs services.  The more counterfeits that appear on the market, the greater the risk that a safety critical application, such as public transport network, or even the National Grid, may suddenly fail.  Such a failure would have catastrophic consequences, UKEA said.

According to UKEA estimates, the U.K. has only two HM Revenue & Customs (HMRC) officers directly responsible for intercepting counterfeit goods coming into the U.K.  The UKEA believes that Britain must follow the lead set by European Parliament and the U.S. Customs Service.  It states that more resources must be allocated to HMRC so that it can enforce legislation already in place.  UKEA said a full review should be conducted of whether additional measures already enacted by the U.S. can be applied in the U.K.  Once in the country, counterfeit components have a number of damaging consequences, UKEA said.  Business relationships within the electronics supply chain can be damaged by activities of counterfeiters, whose products often instigate legal disputes between component distributor and manufacturer to recover loss of revenue, profit, jobs and damage to reputation.

To offer meaningful discouragement, the UKEA is calling on government to ensure the financial penalties for convicted counterfeiters reflect the significant profit to be made.  "Counterfeiting has hit U.K. electronics manufacturing hard," said Henry Parker, electronics manager from UKEA member association Intellect.  "We urgently need to give our manufacturers more protection against the threat.  We fully accept that industry has a self-policing role to play and that combating counterfeiting is very difficult.  However, the government must also do all it can to help us," Parker said.

For more information about the UKEA research, visit http://www.ukelectronicsalliance.org.

Source: U.K. Electronics Alliance (UKEA).

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