Pirated goods pose long-term threat to growth

Pirated goods may look like the real thing and feel like the real thing, but society pays a price when the black market flourishes.

It looks like the real thing. It feels like the real thing. Should it matter then, that it is not?

To a salesman arrested three times in a month for selling counterfeit goods in Dubai, it certainly does. The 23-year old Indian, SD, was convicted of trying to sell 260 wallets, 80 handbags, 15 purses and seven belts with the Louis Vuitton label on them. He is the first person to be deported from the UAE for selling pirated goods.

This is serious business: an authentic handbag from the French designer sells for more than $1,000 (Dh3,700); a knock-off, depending on its quality, can sell for more than $200. But making the debate about fake Louis Vuitton wallets or Mont Blanc pens masks the greater importance of combating piracy. While consumers pay far less for counterfeit goods, society pays a larger and longer term price.

Whether it's the latest blood pressure medication, a vehicle's anti-lock brakes or the newest DVD, the labour, ideas and investment that created it came at great cost. Those responsible should be rewarded. When consumers buy pirated goods, imitators, not innovators, benefit. Gucci purses are not the same class of product as photo-voltaic cells, but the same principle applies.

By investing in more affordable ways to harness the sun's energy at Masdar or in smaller, faster microchips at Globalfoundaries, the UAE is spending billions on developing new technologies. Yes, there is value in inventing something new, but there is less of an incentive to do so if copy-cats claw back rewards from creators. The UAE is planning to become a hub for new ideas. It will be far more difficult to do so if it is a hub for the sale of counterfeit goods.

There is no easy way to combat piracy. The laws are on the books and, as shown by SD's recent deportation, they are being more consistently applied. But smugglers too are constantly changing their tactics. To throw off law enforcement, they "have developed their techniques by repackaging the whole set of counterfeit products to misguide inspectors as to the content of the cargo", said Ola Khudair, a spokeswoman for the Arabian Anti-Piracy Association. "Once inside the country, it has become difficult to identify the core supplier of the pirated products and take action against them."

That's why consumers have an important role to play. A black market will exist as long as there is demand, no matter what a government does. Buying counterfeit goods usually benefits the crime syndicates who manufacture them. Many of these products are unsafe. As consumer demand for pirated goods decreases, society will become both healthier and more innovative.