Forty-six percent of companies surveyed in the German mechanical and plant engineering sector stated that they were affected by product or brand piracy, and surprisingly, that is 26 percentage points lower than the last survey conducted 2 years ago by the VDMA, the largest network organization and voice for the mechanical engineering industry in Germany and Europe.

Every two years, the VDMA conducts a study on product and brand piracy among its member companies. The 26% reduction in piracy reported in this study is significant as it suggests that companies have become more aware of and are implementing anti-piracy protection technologies like Wibu-Systems CodeMeter.

For the purpose of the study, the VDMA defines product piracy as “reproduction in violation of special protection rights (e.g., trademarks, patents) or reproduction without infringing special protection rights, but which infringes copyright and/or has been copied in an anti-competitive manner. Counterfeiting is anti-competitive if, in addition to the imitation, an unfair act also occurs. This unfair act is usually a deception about the manufacturer of the original product (risk of confusion) and the associated exploitation of the good reputation.”

Some of the key findings in the study on product piracy include:

• The estimated damage caused by product piracy in the fiscal year 2023 totaled 4.1 billion euros, a significant decrease of 2.3 billion euros compared to the 2022 study. The average damage for affected companies also fell to 3.5% of annual turnover, down from 4.9%.
• The People's Republic of China continues to top the list of countries of origin of counterfeits with 82%. India follows in second place with 18 percent, ahead of Germany in third place (16%).
• At 58%, direct competitors appear less frequently than before as plagiarists or customers of plagiarism (2022: 70%).
• Customers and suppliers are no longer relevant plagiarists: after recent increases, customers now only account for 6% (2022: 26%) and suppliers were not mentioned by any company.

This year, the study was expanded to include the topic of industrial security for the first time in order to consider the increased digital networking of products and the associated digital threats to mechanical and plant engineering. As well publicized by recent attacks, cybersecurity incidents can be destructive, such as the infestation of ransomware, or they can lead to industrial espionage and thus to loss of IP.

Industrial security was defined as the protection of technical systems in production, manufacturing, and intralogistics against basically unknown attacks and disruptions with operations. Industrial security was defined as a process that provides protection against failure, loss of expertise, espionage, and manipulation of machines, systems, and industrial data. Security incidents from the "office environment" (IT/cybersecurity) are also relevant if they have an impact on machines or systems.

Key findings relating to industrial security include:

• Approximately one in four companies has been affected by a significant cybersecurity incident in the past two years.
• 96% of respondents secure their business premises with at least one cybersecurity measure. In addition to regular backups and updates of operating systems and applications, 80% of the companies surveyed use measures to detect attacks in order to be able to initiate countermeasures at an early stage.
• The willingness to get involved in a local or regional cyber alliance is high: 13% are already involved and 50% can imagine getting involved in principle.
• Counterfeit products demonstrably remain a safety risk: 41% of companies report counterfeit products that pose a risk to operators or users. More than half of those surveyed (54%) believe that the counterfeits discovered pose a risk to the safe operation of the system.

The VDMA continues to focus much of its anti-piracy efforts on informing and raising awareness among politicians and society while improving law enforcement and the exchange of information between affected companies. For more information, you can download the complete 2024 study.

Developing and implementing new protection measures to reduce the frequency and impact of product piracy is an ongoing battle as are the cybersecurity mechanisms required to protect the systems and operators of industrial systems. At Wibu-Systems, we remain focused on protecting digital assets and intellectual property in an increasingly connected world. We help our customers implement the requirements of the EU Cyber Resilience Act and enhance product security. Learn more about our technology solutions, used globally by software publishers and manufacturers of intelligent devices across a myriad of industries.