Online Extra: Uniting Business to Fight Fakes
Jean-René Fourtou made the battle against counterfeiting one of his top priorities during his recently ended two-year term as chairman of the International Chamber of Commerce. Under his leadership, the ICC last year launched Business Action to Stop Counterfeiting & Piracy, an organization of corporate leaders that will seek greater cooperation between business and government on curbing fakes, while publicizing the risks posed by their spread.
It's a problem that Fourtou knows only too well. He's chairman of Paris-based Vivendi Universal (V ), whose Universal Music Group is part of an industry that loses billions annually from piracy. And before taking the reins at Vivendi in 2002, Fourtou was co-chairman of Franco-German drug company Aventis. The pharmaceutical business also is plagued by counterfeiting.
Fourtou recently talked with BusinessWeek Paris Correspondent Carol Matlack in his office near the Arc de Triomphe. Edited excerpts of their conversation follow:
Q: Why are business leaders raising the alarm now, when counterfeiting has existed for such a long time? A:
Q: Why are business leaders raising the alarm now, when counterfeiting has existed for such a long time?
A:It's increasing in amplitude, and manifestly there is organized crime involved, developing this activity on a scale that is unimaginable. Seizures of counterfeit goods have increased ninefold in the European Union, just since 1998. There are container ships loaded with counterfeit goods. The luxury goods industry has been battling this for years, but now it's becoming a danger to public health and safety.
Yet most of the laws against counterfeiting don't have strong penalties. Often there are no criminal penalties at all.
Q: What has been your experience in the music business? A:
Q: What has been your experience in the music business?
A:Our industry has an advanced case of gangrene. Pirated music accounts for about two-thirds of global sales [including illegal downloads as well as counterfeit disks]. In some countries, 80% of CDs on sale are counterfeit. The speed of the counterfeiters is amazing. The [fake version of] the latest disk by Eminem goes on sale on street corners in, say, Barcelona the same day it is released.
We can see some improvement in the U.S., where we have been taking aggressive legal action against piracy. We filed more than 5,000 suits last year [against people who illegally downloaded music]. We are educating the public that it is theft. But outside the U.S. we are not seeing much progress yet.
Q: What about the pharmaceutical industry? A:
Q: What about the pharmaceutical industry?
A:Until now, the pharmaceutical industry has not made a lot of noise about this problem. The U.S., Europe, and Japan account for 85% of pharmaceutical spending. Customs seizures show that some [counterfeit drugs] get into these markets, but it's quite limited.
On the other hand, there is a huge problem in many developing countries. People traveling to some parts of Africa are advised to bring their own medicines, not because no medications are available, but because of the high risk that what they will be sold is counterfeit.
Q: So, what is the ICC now trying to do? A:
Q: So, what is the ICC now trying to do?
A:One of our top priorities is public education. Unfortunately, the public until now has accepted a certain level of piracy and counterfeiting. We have to explain more clearly why it is unacceptable. Also, companies have to build a united front, to work together among themselves and with the authorities. Until now there has not been a coordinated effort by business. Now we will provide this.