The Italian economy is innovative, knowledge-intense and globalised. Numerous Italian industries produce high-quality products that are highly valued and in demand around the world. These features are the hallmarks of a modern, dynamic economy; however, they also make Italy vulnerable to the global risks of counterfeiting and piracy.

Italy produces high valued products and benefits significantly from its intellectual property and trademarks. It is also well integrated in the global economy, through active participation in global value chains. This makes it particularly susceptible to the damaging effects of counterfeiting and piracy.

Trade in counterfeit goods is a longstanding, worldwide socio-economic problem that is growing in scope and magnitude. It challenges effective governance, efficient business and the well-being of consumers, even as it becomes a key source of income for organised criminal groups.

This chapter lays the methodological groundwork for the study. It places in both quantitative and relative perspective the reliance of the Italian economy on IP, as well as the considerable damage caused by infringement. It goes on to introduce two distinctions: that between counterfeit products smuggled into Italy and IPR infringements on Italian right holders; and that between primary and secondary markets for counterfeit and pirated goods. The chapter concludes by outlining the seven categories of effects of this illicit trade, each of which will be examined in detail in the discussion that follows.

This chapter profiles the victims, volume, and economic consequences of counterfeit and pirated imports in Italy. It lists the top provenance economies for products seized by Italian customs, and compares the ongoing likelihood of each country to be a source of counterfeit goods sold in Italy. It then describes the product types most likely to be fakes, and – employing new, purpose-built methodology – quantifies the degree of counterfeiting for each. The discussion goes on to distinguish between primary and secondary markets, and explores the factor of “consumer detriment”. The chapter concludes with an elaboration of the deleterious effects of counterfeiting for the Italian economy, in terms of consumer welfare, lost sales, lost jobs, and lost government revenue.

This chapter appraises the damage caused by infringement of Italian intellectual property rights in world trade. Having described who suffers in particular from this illicit activity, the discussion goes on to consider the scope and volume of such infringements. The top destination and provenance economies for counterfeit goods that infringe Italian IPR are enumerated. The focus then shifts to the Italian products that are most susceptible to counterfeiting, with a unique quantitative analysis establishing their actual degree of susceptibility. Distinctions are made between primary and secondary markets. Finally, stock is taken of the detrimental effects of IPR infringement on the Italian economy – once again, in terms of lost sales, lost jobs, and lost government revenue.

This study presents the direct, economic effects of counterfeiting on Italian consumers, the Italian retail and manufacturing industry, and the Italian government. The findings of this study should assist public and private decision-makers in formulating effective, cohesive, and evidence-based responses to this risk. In addition, the methodology developed for this report could be re-used to determine the scale of harm caused by counterfeiting on the Italian economy on a regular basis.

Precise quantification and measurement of the losses to Italian consumers, retail and wholesale industryand government attributable to counterfeit products smuggled into Italy and to infringements of Italian residents’ IPR in global trade can prove elusive. This is because the clandestine and illicit nature of counterfeiting means the available data is likely to fall far short of what is needed for robust analysis and policy making (). Put differently, the point of departure for any quantitative analysis in the area of counterfeit trade is to establish the sort of statistical data available for analysing the issue.

Provenance economy