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This issue carries a guest editorial by Marius Schneider. Like Arnaud, Marius is an editorial board member; his special expertise however lies in the field of border measures for detaining and dealing with counterfeit and infringing goods. In this editorial Marius urges readers to support an exciting and potentially valuable experiment in seeking to assess the scale of IP infringement more accurately than has previously been possible. Marius writes as follows:
"The Rand experiment: don't prevaricate—participate
Commissioned by the EU Commission and the Observatory on counterfeiting and piracy, Rand has come forward with a novel methodology for assessing the scope, scale, and impact of IPR infringements within the EU (on which see a Current Intelligence article in this Issue: ‘Measuring the scope and impact of IPR infringement in the EU’, Marius Schneider, Journal of Intellectual Property Law & Practice (2012) 7(5): 313–316). It is undisputable that previous pan-European multi-sector studies on the phenomenon of counterfeiting and piracy have their shortcomings, either because they do not allow evaluating the scale of IPR infringements within the EU internal market, or because they are financed by industry, rendering them vulnerable to criticism. Rand's approach is to return to the roots of IPR infringements, to companies themselves, since they should be the first to notice that ‘something is wrong’ in their market.
This methodology builds on economic theory and takes as a starting point the unexplained annual change in unfulfilled demand for legitimate product—the decreased quantity of goods sold which could not be explained retrospectively by company-specific supply chain factors, industrial issues, or other market shocks. This figure is aggregated with institutional, economic, and social indicators in order to determine the factor that is highly correlated to counterfeiting and piracy. The approach is in keeping with Rand's interdisciplinary and quantitative problem-solving philosophy, translating theoretical concepts from formal economics and the hard sciences into novel applications in other areas.
Rand's top academic minds believe that this methodology will work. Pilot companies are now being sought to test the model. One would expect that many of those committed to the fight against counterfeiting and piracy will come forward to seize a unique opportunity to test and shape the model which will, according to the declared intention of the EU authorities, be the one multi-sector pan-European means of measuring the impact of IPR infringements. This new methodology—if it works—will be determinative for law-makers, enforcement authorities, and right-holders: It should allow singling-out ‘counterfeiting hotspots’, that is to say countries and regions where legislative and enforcement action is needed in curbing levels of IPR infringement. It should also let companies assess the degree to which they are affected by counterfeiting and piracy, to compare themselves with other right-holders in the same sector, and to make a sector-by-sector comparison.
While there are many good reasons to participate as a pilot in this project, it appears that there is limited enthusiasm among right-holders to participate. This may be due to the novelty of the approach as well as fears relating to the protection of confidential business information. Since the methodology proposed by Rand has been applied in other areas, applying economic theory to solve social and legal problems is one of its specialities, scepticism as to the methodology—although understandable because of the unusual starting-point—is not constructive for as long as it is not tested in practice. A dry-run does not tell us whether the methodology will hold water: only the actual testing of the model will allow confirmation that the Rand methodology is appropriate, whether it requires adjustment, or whether an alternative should be envisaged.
Concerns relating to the confidentiality of the data have been addressed by the EU Commission and Rand: the data and identity of each participating company will be anonymized, stored on Rand's network, and inaccessible to third parties, such as the EU Commission and its services.
As the Rand methodology will not work without company data, the pilot phase will not ‘take-off’ without cooperation from companies and organizations that are willing to contribute actively in building an effective and solidly based policy to tackle IPR infringement. It should be expected that the methodology will produce at least some results—possibly no more accurate than other data that are currently available, yet neutral, which is the aim of the exercise. Through actual testing, Rand and the Commission will learn valuable lessons which should assist in the fine-tuning of the model and in creating alternative methodologies (because the proposed model cannot be applied to non-deceptive IPR infringements—for which an alternative model is paramount, given their importance). However, if not enough companies volunteer, then ‘industry’ may be left holding the bag for the failure of the methodology, which would be undesirable in a climate of widespread criticism of ACTA and every strengthening of IPRs".
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