GENEVA — The problem of product piracy and counterfeiting “is growing at a more dangerous rate than ever” and is draining the world economy of an estimated $600 billion a year in lost sales, said a report by the International Chamber of Commerce.

The report, released Monday by the Paris-based global business group with affiliates in 140 countries, urges governments to take firm steps to end the costly abuse.

The report said many small and medium enterprises rely heavily on intellectual property rights.

“Design rights, copyrights, patents and trademarks are essential for numerous industries…such as textiles, toy, publishing, biotechnology and retail,” the ICC report said.

The study, “Intellectual Property: Source of Innovation, Creativity, Growth and Progress,” produced by Business Action to Stop Counterfeiting and Piracy — which is backed by 800 companies and trade groups worldwide — said better protection can “add value to consumers and can provide a guarantee of source and quality.”

In India, said the report, fast-moving consumer goods lose about 15 percent of market share to counterfeits. It also noted that the California economy loses about $34.5 billion to counterfeiting and piracy.

The report said a recent study estimated that counterfeiting and piracy cost the European Union lost tax revenues of about $9.1 billion in the apparel and footwear sector, $3.6 billion in perfumes and cosmetics, and $4.5 billion in toy and sports articles.

“When buying counterfeit and pirated goods, consumers are often deliberately misled into thinking they are obtaining the quality expected of branded products,” the report said.

A study earlier this year by the U.S. Chamber of Commerce said that, based on estimates by the Federal Bureau of Investigation, Interpol and the World Customs Council, counterfeit goods cost U.S. companies between $200 billion and $250 billion annually.

Brad Huther, director, counterfeiting and piracy initiative at the U.S. Chamber of Commerce, said in an interview here last week that the organization would also like to see “much stronger statements…in the Doha global trade talks on enforcement of intellectual property rights.” Counterfeit merchandise is responsible for the loss of more than 750,000 American jobs, according to U.S. Customs & Border Protection.

This story first appeared in the October 26, 2005 issue of WWD. Subscribe Today.

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