The German Engineering Federation (VDMA) reports that more than two-thirds of the companies in the machine industry are affected by illegal imitations.

According to a VDMA investigation, the biggest loser, as far as product piracy is concerned, is the valve industry. A survey of companies in the industry showed that 14% of valve manufacturers were affected last year. Losses of about €60-million are being incurred by the German valve industry.

In the previous year, only 5% of the companies had indicated that counterfeits were harming them. Actuators are the second most seriously affected area. The German federation reports that the high quality of German valves makes them attractive.

British manufacturer of valve actuators Rotork took an imitator to court where the latter was prosecuted for contravening design rights and copyright laws. The Asian company had copied Rotork’s IQ and IQT actuator ranges. Trademark laws were also infringed by the company. The product pirates were then forced to take down their stands at trade fairs in both Germany and the Netherlands.

Rotork is not an isolated case. Affected companies are taking legal action in an attempt to stop counterfeiting, to protect their products and to avoid sales losses. However, companies generally try to avoid publicising the fact that they themselves have been victims. They fear it would have a negative effect on their business activities if it became known that their products had been copied. A damaged reputation can cause a further reduction in turnover.

Product piracy is no longer a worldwide marginal phenomenon. The threat has been increasing steadily in recent years. This form of business crime is currently estimated to cost com- panies €660-billion, which amounts to 9% of the world trade volume. In the past, the main focus of copiers was on consumer goods but now counterfeiters are increasingly turning to industrial products.

Mechanical and plant engineering and, therefore, the valve industry, has been particularly hard hit by these developments. In particular, complete machines are being imitated as are spare parts and components. German companies are frequent victims of product pirates.

As a consequence of increasing piracy, wrongdoers are being targeted to a greater extent by customs inspectors and public prosecutors. Successful searches for fake machines and components have occasionally been made at trade fairs.

Significant damage can be done to manufacturers at trade fairs as product pirates can scrutinise the latest innovations but counterfeiters can also be easily seized at trade fairs.

A large percentage of the imitations and counterfeits stem from China. According to a survey done by the VDMA, China was named by 71% of the affected companies as being the country where the imitations originated, followed by Taiwan (12%), India (11%) and South Korea (10%).

Infringements are made primarily against patent rights followed by breaches of brand rights, utility patents and registered designs. Another problem is the fact that some companies delay registering their rights because they have too little time and because of the financial burden involved.

A patent awarded by one country or a registered brand may, in certain circumstances, not offer any form of protection in another country. Scores of registrations and translations are necessary and the costs involved are considerable for companies.

A start has been made by governments in countries like China to make a determined effort to get to grips with counterfeiters.

The European Union (EU) commission has set up the Euro- pean Observatory on Counterfeit- ing and Piracy. The new institution will take action against counterfeiting and other violations of intellectual property rights. Business and official authorities are acting together to combat the rising problem.

The new EU observation body aims to bring together representatives from member states, experts from private industry and consumers to improve their efforts. It will collect data relating to the counterfeiting industry, evaluate the scale and extent of the problem, exchange information, spread proven strategies and suggest solutions for the most pressing problems. The new institution will also be looking to make improvements to the way the Europewide coopera- tion is coordinated.

As far as counterfeit safety is concerned, a specific market offering products and strategies to protect against imitators has now evolved. Bayer Technology Service developed a process which is able to register and recognise the natural surface structure of an object, while German manufacturer Sick has developed solutions to detect visible and invisible markings.