The Worst Crime against Fashion outside the Red Carpet

Published on 22 May 2017

Despite the international recognition of the Spanish Fashion Industry, Spain appears be one of the EU member states that is most impacted by intellectual property rights infringements.

Consuelo Álvarez Pastor Consultant & Abogada LLM +34 93 487 58 94

080 Barcelona Fashion, Bisutex Madrid, Lineapelle, Luxury Spain Fashion Summit, Mercedes Benz Fashion Week… February is certainly one of the months with most fashion events in Spain. In particular, Barcelona and Madrid have gained undeniable fame and international reputation in the fashion industry thanks to the investment made by fashion designers and businesses. Despite these efforts and its international recognition, Spain appears to be one of the EU member states that is most impacted by intellectual property rights (hereinafter, “IPR”) infringements.

During the years 2015 and 2016, the European Observatory on Infringements of Intellectual Property Rights issued several studies on the economic impacts of the Intellectual Property Rights infringements in the fashion industry. Among others, the Observatory has studied the impacts of IP infringements in clothing, accessories, footwear, jewellery, watches and handbags.

Let’s focus, for instance, on the report made on the clothing, footwear and accessories sector. The study covered the manufacture of outerwear, underwear, other wearing apparel and accessories and footwear. Further it referred to the agents involved in the sale of textiles, clothing, fur, footwear and leather goods, wholesale of clothing and footwear, retail sale of clothing in specialized stores and retail sale of footwear and leather goods in specialized stores. The study found that due to counterfeiting 9, 7% of sales and €26, 3 billion of the annual revenue from sales are lost by the sector. The infringement does not only affect the sector of clothing, accessories and footwear but it also has a negative impact on the sectors related, which makes the losses grow up to €43,3 billion. The infringement of the IPR in clothing, accessories and footwear caused 363 000 direct job losses. The number of job losses together with the indirect job losses reaches up to 518 000. The counterfeiting also has a negative influence on the public sector. The total loss of government revenue can be roughly estimated at €8,1 billion. The three main types of tax, which were considered, are Value Added Tax (VAT), taxes on household income, and taxes on the income or profits of companies.

The most impacted states on their national level are Spain, Greece, Romania and Bulgaria and the most sales revenue losses in comparison to other Member States of the EU can be found in Italy, Spain, United Kingdom, Germany and France. Consequently, the job losses in these countries also reach the highest numbers in the EU. We can put figures on the economic impact of counterfeiting in terms of lost revenues and jobs. The main victim is fashion since innovation and creativity are discouraged and investment diminished.