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EUIPO-ITU Report: The Economic Cost of IPR Infringement in the Smartphones Sector


This report was prepared by the International Telecommunication Union (ITU) and the European Union Intellectual Property Office (EUIPO) in 2016. The Report aims to estimate the scale of the economic impact of counterfeiting in the legitimate sector of Smartphones devices. This sector was selected as it  is one of the most  Intellectual Property Right (IPR) intensive industries whose products are known or thought to be subject to counterfeiting. The exercise of determining the impact of counterfeiting in the Smartphone sector was very challenging from a methodological point of view, as it attempts to shed light on a phenomenon that by its very nature is not directly observable. To pave the way towards quantification of the scope, scale and impact of IPR infringements, a step by step approach as well as econometric models were developed to evaluate the negative impact of counterfeiting and its consequences for legitimate businesses, governments revenues and consumers, and ultimately for society as a whole.

This EUIPO-ITU estimates that 184 million fewer smartphones were sold by the legitimate industry in 2015, due to the presence of counterfeit devices in the marketplace. In 2015, 12.9 % of legitimate sales of smartphones were lost worldwide due to the presence of counterfeits in the market – equivalent to EUR 45.3 billion.
It is important to note that 1.3 billion smartphones were sold worldwide in 2015, meaning that approximately one out of every six people on the planet purchased a smartphone that year, at an average cost of EUR 275. 

Loss of Sales

The figures in the EUIPO-ITU Report refer to sales of new smartphones. In some regions, particularly in low-income countries, there is an important market for second-hand and refurbished smartphones. In the refurbished market there is a further potential for intellectual property Right (IPR) infringement, for example when the outer shell of a genuine branded smartphone is combined with non-original components.












Lost of Smartphones sales by region

It is estimated that in 2015, 14 million smartphones fewer were sold by the legitimate industry across the EU than would have been the case in the absence of counterfeiting. This translates to approximately 4.2 billion EUR lost due to the presence of counterfeit smartphones in the EU marketplace, corresponding to 8.3% of the sector’s sales.​​  Worldwide, the effect of counterfeiting on smartphone sales is estimated at 184 million units, valued at 45.3 billion EUR or 12.9% of total sales.