Counterfeiting and You

You've never bought a pirated DVD or software package. You're not tempted by the lovely imitation Louis Vuitton bags on sale in cities everywhere on Earth. You haven't picked up a knockoff Rolex wristwatch, and, let's be honest, you're past the age where fake designer jeans are a good idea.

So the massive global trade in counterfeit goods really doesn't affect you, right? Wrong.

In the article "Bogus!" in this issue, Michael Pecht and Sanjay Tiku describe in sobering detail the surging global traffic in counterfeit electronics parts. Even the biggest electronics companies, Pecht and Tiku say, are finding it impossible to assure themselves that counterfeit chips, rechargeable batteries, capacitors, and other components are not finding their way into their circuit boards. Sometimes the results are merely annoying and costly, such as when a computer fails because its cheap capacitors have burst. Other times the outcome is dangerous or even life-threatening, as when a cellphone's counterfeit lithium-ion battery explodes.

Putting a dollar figure on this illicit trade is difficult. Lost business is often estimated by simply tallying up, say, the number of pirate DVDs sold and assuming that each one displaced a legitimate sale. Of course, that's a lousy methodology; just because someone pays US $50 for a fake Louis Vuitton bag doesn't mean she would have paid $1200 for the real thing.

Still, Pecht, who directs a laboratory that analyzes counterfeit electronics at the University of Maryland, and Tiku, who works for Microsoft, estimate that the world's electronics companies miss out on at least $100 billion in revenue every year because of counterfeiting. To put that figure in perspective, consider that the National Association of Manufacturers, a trade group in the United States, estimates that the buying and selling of fake goods worldwide is a $500-billion-a-year industry.

In an attempt to cut into this massive market, this past 16 March, U.S. President George W. Bush signed into law the Stop Counterfeiting in Manufactured Goods Act. It stiffens the penalties in the U.S. for various counterfeiting infractions and also directs courts to destroy seized counterfeit goods, among other measures. But it will probably do little, experts say, to cut into the brisk trade in bogus electronics components.

For that, there's no silver bullet. There's just a host of small, painstaking prescriptions and, of course, more vigilance in general. Let's hope the world's manufacturers get serious about this issue before some critical computers—or some airplanes—crash.

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