Published March 2019
This module is a resource for lecturers
Intellectual property crime and terrorism
Intellectual Property Crime (IPC) includes the manufacturing, transporting, storage and sale of counterfeit or pirated goods where the consent of the rights holder has not been obtained. It usually takes the form of trademark, patent, trade dress or copyright infringement, although these are not mutually exclusive. It is estimated that the global trade in counterfeit and pirated products was worth $461 billion per year in 2016, more than double that of estimates in 2008 (OECD, 2016).
The illicit market in counterfeit and pirated goods has expanded rapidly in recent decades and some scholars consider it to constitute the largest black-market economy, surpassing the global narcotics trade (Lallerstedt and Krassen, 2015). Between 2,000 and 3,000 organized criminal groups in the EU are poly-criminal, generating revenue from multiple criminal activities including IPC (Europol, 2017).
Several terrorist organizations have been identified as participating in the illicit trade of cigarettes in various reports (Shelley & Melzer, 2008). In 2007, the WHO estimated worldwide tax revenue losses from the trade in contraband and counterfeit cigarettes to be between $40-50 billion annually (WHO, 2017). By 2015 the US State Department reported annual tax losses in the United States alone to be approximately $3 to $7 billion.Europe too remains vulnerable to intellectual property crime. In 2015, customs authorities registered more than 80,000 seizures containing more than 40 million counterfeit articles valued at an estimated €642 million. Cigarettes were the most frequently seized product, accounting for 27% of total seizures (Europol, 2017). In 2016, terrorist organizations in North Africa were allegedly responsible for a contraband tobacco trade valued at $1 billion (Institute for Economics and Peace, 2016). The smuggling of both cigarettes and counterfeit products is also reported as a significant source of funding for AQIM (Wilson, 2009).
Case Study: Michael Campbell
Michael Campbell ("Campbell") was investigated by UK's MI5 in relation to cigarette smuggling in 2007. He was a person of interest to security services because of his connections with the Real IRA. His brother Liam Campbell, who was a prominent member of the organization, had been named by a Belfast High Court Judge as one of four men responsible for the planning and detonation of a car bomb that killed 29 people in Omagh. Campbell had by this time served separate prison sentences in Lithuania and the Netherlands for attempting to procure weapons and explosives as well as for offences related to cigarette smuggling.
In a combined undercover operation involving UK and Lithuanian security services Campbell confirmed to MI5 operatives that he intended to use explosive devices and wished to purchase explosives and weapons. In 2008, he travelled to Lithuania and purchased a rifle, detonators, explosives and rocket propelled grenades, informing agents that he was a member of the IRA. He was later arrested and convicted for 12 years following a two-year trial in Lithuania for offences related to supporting a terrorist group, attempted smuggling and illegal possession of weapons. He claimed unsuccessfully in his defence that he was a cigarette smuggler and not buying arms for the Real IRA (INTERPOL, 2014).