When it comes to intellectual property (IP), everyone in the economy is at risk, especially manufacturers, distributors, government, consumers and even the U.S. workforce. For example, the loss of more than 750,000 jobs is attributed to counterfeit merchandise, says the U.S. Customs and Border Patrol. Underwriters Laboratories estimates that the annual global costs of counterfeiting stand at more than $500 billion. The U.S. economy's share is as much as $250 billion annually.

And be careful where you buy medicines -- the World Health Organization estimates that 10% of all drugs are counterfeits. For some developing countries the counterfeit drug share can reach 60%, the WHO reports.

Foreign governments play a key role in fighting IP theft, but unfortunately, there is a wide variance in how countries are attacking the problems of counterfeiting and IP theft, according to a 30-nation study by the OECD (Organization for Economic Cooperation and Development). The top performing countries are: U.S., UK, Germany and France. Also among the best performers, in descending order: Japan, Switzerland, the Netherlands, Singapore and Australia.

At the other end of the spectrum, responders named China and Russia, respectively, as the two worst performing countries, followed by India, Brazil, Indonesia, Vietnam, Taiwan, Pakistan, Turkey and Ukraine.

"The mention of these bottom-performing countries shows the problem is indeed worldwide and requires a global solution," says International Chamber of Commerce secretary general Guy Sebban. "Focusing on one or two problem areas is simply not enough."

When Schneider Electric's Square D Co. discovered counterfeiting of its circuit breakers by Chinese plants, the reaction was more than lawsuits and confiscation of fakes. Square D also enlisted the help of the Chinese government to raid and shut down counterfeiters such the operation shown in this photo.

Adds Bob Wright, CEO of media and entertainment giant NBC Universal, "This issue needs to be moved up on the agenda of every business leader, every trade organization and every policymaker. At risk is every sector of our economy where creativity, innovation and invention drive the creation of economic value and of high-wage jobs."

Regarding business strategies to rein in fake products, respondents to the OECD study say they spent over half their R&D investment on anti-piracy technologies and product differentiation. The investment of around 50% of R&D in technologies to thwart copying indicates that companies are working hard to stay a step ahead of the pirates, Sebban adds.

The OECD study may seem to suggest that IP theft and counterfeiting is a well recognized problem, but in reality many firms are just coming to terms with it, says Brian Monks, vice president of anti-counterfeiting operations at safety certification organization Underwriters Laboratories (UL). And even if an organization hasn't been victimized yet, chances are good it soon will be, he warns. Brand volume and good margins increase the risk.

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