Barry Brager, CEO, Perception Partners
A billion crimes a day. In January 2018, the U.S. General Accounting Office (GAO) released a purchasing study showing the pervasiveness of counterfeit goods sold on websites alongside authentic products. For example, 43 percent of GAO-purchased items (20 of 47 Nike Air Jordan shoes; Yeti travel mugs; Urban Decay cosmetics; UL–certified phone chargers) from third-party sellers on popular consumer websites were counterfeit, according to rights-owners’ tests.
With nearly 2 billion products listed daily on just Amazon and Alibaba—and dozens of other global marketplaces, social media sites and search engines hosting millions of products each—there are likely a billion counterfeit listings online at any one time. The International Trademark Association (INTA) announced a five-year counterfeit & piracy forecast projecting growth in fakery to $4.2 trillion (!) by 2022. They declared that “measures to fight counterfeiting have not been sufficient,” which is an unfortunate truth in a world of high-quality manufacturing, low counterfeiting penalties and cheap shipping from Asia. As a result, easily available fakes are destroying trust and raising transaction costs worldwide.
Your brands. If you sell your own brands online, your very business model is under attack. Counterfeiters consume your advertising budget by constantly bidding against you for your own brands. They divert sales, especially harming companies that offer only a few hit products. Counterfeits erode prices, cause health and safety issues that damage customer relationships and cause false relationship experiences to be forever recorded as negative feedback.
Others’ brands. If you offer a diverse range of brands online, your need for an intellectual property (IP) strategy has never been greater. Sellers face increasing liability if inauthentic goods are suspected to be coming from their supply chain. There are more demands than ever on sellers to demonstrate their authorized selling rights to marketplace partners, empowered IP rights owners and third-party brand enforcers. Unfortunately, millions of third-party sellers may find it difficult to properly document their resale rights for the products they list.
Good news. Recent trends indicate that the right to sell desirable brands online is an increasingly important right to defend. There are new techniques that retailers can use to retain premier selling rights by leveraging other rights—classic IP rights—in order to continuously scrub the Internet of unwanted counterfeits and unauthorized sellers.
IP rights power sales. E-commerce revenues can increase significantly if you can successfully challenge online suspect infringements with your IP portfolio (or any IP portfolio you have the rights to enforce). Intellectual property has evolved from being a cumbersome, costly, purely legal instrument to an effective tool for speedy takedowns of infringing sales listings, fake websites and improperly used payment gateways.
From the legal obligations of the Digital Millennium Copyright Act (DMCA) to the economic penalties of the Visa Rules for Brand Protection, the laws and policies of the 21st century Internet are on the side of the rights owner. Today, there are several effective IP enforcement mechanisms for responding to infringers of valid trademarks, copyrights and patents. When a responsible online retail IP strategy is pursued effectively, you can protect the sales of your brands and/or preserve the rights to profitably sell the brands of others.
Trademark required. A U.S. trademark (ideally with an equivalent trademark in China) is the foundational IP asset required to initiate successful IP enforcement online. Counterfeiting is a trademark crime. Just one U.S. trademark opens the door to participating in online brand protection alliances such as the Amazon Brand Registry or eBay Verified Rights Owner Program. These types of rights owner platforms offer priority complaints with advanced tools to counterattack fakes as they appear.
Depending on where you sell online, there are several rights owner platforms to keep track of. Each major marketplace offers its own interface and the burden remains on the brand owners to police their own marks. Trademarks are also essential for using IP as a means of blocking shipments via customs and border enforcement.
In the United States, there are both federal and state trademarks. Don’t overlook the speed of getting a state trademark if you have a product launched and it needs quick protection. State trademarks can issue in a matter of weeks versus a U.S. trademark, which can take many months with an opposition period after grant.
Copyright capitalization. The weight of many years of lawsuits against movie/music downloaders by motion picture and recording rights organizations has cemented a bedrock of copyright protection on the Internet. Web platforms take piracy allegations very seriously, and act quickly. Beneficially, the images placed on your website and in your listings are also copyrighted (or should be). Branded packaging graphics can also be copyrighted, and this IP is quite often infringed by counterfeiters. Low-cost copyrights (you can file hundreds at a time in the United States for one low fee) enable quite effective piracy claims when digital or creative content is appropriated for a fake product.
Design patents persuade. There is more than one type of patent. The type of patents that cover smartphones, for example, are known as utility patents. Utility patents generally protect the functionality of a product and are defined by textual claims supported by images. Design patents are a bit different—they protect the ornamentality of an item, and only images define the bounds of protection.
While utility patents can be challenging to enforce quickly on the web (and cases take many years in U.S. courts), online retailers can experience quick successes enforcing design patents online, as platforms seem willing to make a quick visual judgment against knockoffs and often side with the rights owner. Design patents overlap with copyrights in some respects, where ornament and artistry coincide. Thus, a combined rights portfolio of several IP assets can be quite effective in online enforcement.
Continuous brand protection monitoring. Facing widely distributed counterfeits and wielding just a few IP assets, how do online retailers implement a responsible and profitable online IP strategy? Leading merchants and marketers are adding brand protection software to their technology stack with return on investment expected from increased online sales, eliminated minimum advertised price violations, reduced advertising costs and diminished negative feedback.
Brand protection software utilizes artificial intelligence that continuously connects a targeted web crawler to a rule-based rights management database. Within the database, machine learning predicts the words and images likely to be covered by your linked IP portfolio. Brand protection software saves significant user time and aggravation by simultaneously monitoring thousands of marketplaces, social media portals, search engines and websites to document potential infringements and unauthorized sellers. It is often a collaborative tool, with views for brand owner, legal counsel, investigator and/or partner team members to draft and review accurate infringement notices with just a few clicks.
Via APIs, brand protection software acts as your digital agent, filing thousands of takedown requests with infringement evidence, IP certificates and business licenses (in multiple languages) from/to authorized brand alliance platforms. Takedowns or responses can be monitored and measured at scale.
Anti-counterfeit ROI timeline. It can be surprisingly easy to see quick improvements to online pricing and sales when implementing brand protection software for IP enforcement. Most IP has never been enforced, and counterfeiters have had free reign online. When a brand owner or agent properly registers IP with key platforms and undertakes a concerted effort to clear online counterfeiters, competing listings quickly disappear, advertising costs drop and available prices normalize.
After about three months of online IP enforcement, nuisance counterfeiters begin to look for easier targets. Over the next several months, it is possible that more serious infringers are revealed and/or evolve. The timestamped web evidence and seller data captured from discrete brand protection efforts (or automated by continuous brand protection software) will be invaluable for legal counsel and law enforcement to step in for seizures, raids and/or arrests.
By the end of one year, savvy online retailers that have integrated brand protection should experience a more profitable and compliant e-commerce environment that makes the most of the hard-won IP assets they own or represent.
Perception Partners is a provider of intellectual property protection software.
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