Pamela L, a vice-president at a residential real estate company in New York, has a genuine Rolex and a counterfeit Rolex. She is happy with the counterfeit--a cheap quartz watch bearing the Rolex® trademark. "It tells time accurately," she says. She is one of countless satisfied consumers, who view the counterfeit garments and watches as a type of discount merchandise.
Huge consumer demand is the principal reason for the market in counterfeit goods. The demand is based on a simple fact. Although most manufacturers will never admit it, many counterfeit goods are a bargain. For someone who does not have the money to buy a genuine Rolex, the counterfeit may be considered a good purchase. The counterfeit offers something of value, although the value is an intangible one--the goodwill and quality associated with the trademark. The theft appears harmless, since it does not involve an actual theft of the legitimate manufacturer's inventory of goods.
At the end of the twentieth century, digital technology has accelerated the demand for pirated products. Digital copies are nearly identical to the legitimate product. Pirated computer software, music, and motion pictures sell for a fraction of the cost of the legitimate product. The compilation CDs that were for sale in the streets of many Chinese cities in the mid-1990s sold for $10 to $20 and contained hundreds of computer programs. The actual retail cost of the pirated software was between $10,000 and $20,000, a bargain too great to resist.
For the most part, the business community is the primary victim of