Annex C. EU practices to combat the online sale of counterfeit goods

(Extracts from EC, 2020b)

Rights owners report fighting counterfeiting at its source as a top priority, with the focus on tracing manufacturing facilities, supply routes and criminal networks, thereby facilitating law enforcement efforts to seize counterfeit goods and shut down factories and warehouses involved in manufacturing and distributing them.

Most rights owners and online platforms have set up dedicated internal teams responsible for IPR enforcement globally. These teams work with law enforcement authorities, including customs authorities. In key jurisdictions, rights owners are providing up-to-date descriptions, photos and samples of their goods, and training to facilitate the identification of counterfeit goods. They are also working with law enforcement authorities to investigate and take down international counterfeit distribution networks.

Rights owners report that they are providing online platforms with training and/or training materials, guidelines and tips facilitating the identification of counterfeit goods and permitting the recognition of high-risk sellers. They have also contributed to awareness-raising events and inform online platforms, where appropriate, of i) new product releases, to alert them to goods that are particularly susceptible to being counterfeited, ii) goods that are not manufactured by a specific brand, iii) keywords used by sellers to refer to counterfeit goods and iv) the latest trends. Online platforms confirm the value of these initiatives, while expressing interest in more active involvement of a larger number of rights owners.

Online platforms indicated that they have several processes in place to vet sellers and identify bad actors, to ensure they do not negatively affect the experience of customers. These checks are usually carried out when a new seller applies to open an account, and, depending on the platform in question, may include examination of identity documents as well as payment instrument verification. Online platforms have developed various proprietary systems to analyse hundreds of unique data points gathered by the online platforms, to identify potential bad actors.

Rights owners are also monitoring online marketplaces to identify actors offering counterfeit goods. While some rights owners have set up monitoring teams in their IPR enforcement or brand protection departments, others outsource monitoring online websites to specialised consultants. Rights owners also work closely with anti-counterfeiting associations and payment processors, and work on developing new technologies to help identify counterfeits. In that context, rights owners have indicated the usefulness of enabling automatic scanning using a search and enforcement application programming interface (API).

Online platforms report that they are continuously developing policies and tools that make it possible to verify offers before publishing them on the online marketplaces they manage. The online platforms started working on those policies and tools before joining the MoU, but in some cases, their involvement in MoU-related work has facilitated the roll-out of measures proactively identifying offers of counterfeit goods. Their efforts rely on input from rights owners and feedback from consumers.

Rights owners acknowledge that many online platforms use automatic filters to identify offers of counterfeit goods, but believe that such filters should explore the possibility of including keyword-based filters and image-based filters (to detect digital fingerprinting embedded in images of goods, blurred logos, QR codes, etc.). Rights owners have proposed a list of indicators they use in their own enforcement efforts and which they believe should also be considered part of PPM by platforms:

Most online platforms which are MoU signatories have created specific brand protection programmes. Brands that decide to participate in brand protection programmes with platforms gain access to tools such as upgraded and/or simplified notice and take-down (NTD) procedures, dashboards with additional feedback on the follow-up given to the notification, or integrated search tools facilitating the identification of listings infringing IPR using text-based and image recognition. The IPR violations reported through such programmes are used by online platforms to train their machine-learning algorithms, which then use the information provided to boost their PPMs. At least one online platform has launched a brand protection programme that gives rights owners access to a self-service tool permitting the immediate takedown of goods violating trademark rights.

Rights owners confirm the value of NTD procedures and are eager to see them further developed to enhance their effectiveness and simplify their use. Online platforms, which reportedly invest heavily in developing NTD procedures, agree that cooperation under the MoU has had a positive impact on their work on NTD procedures. Cooperation with and feedback from the rights owners, and the exchange of ideas and experiences with other marketplaces, have helped them improve existing processes, and in some cases introduce new functionalities.

In response to an EC recommendation on tackling illegal content online, platforms have established special notification channels for “trusted flaggers”, which are governmental entities with specific expertise in identifying illegal content online. The flaggers include customs, police and market surveillance authorities, consumer protection authorities, competition authorities, any other enforcement authorities and administrative authorities.

In the context of the MoU, online platforms have undertaken a voluntary commitment to assess the completeness and validity of notifications, and deal with notifications in an efficient and comprehensive manner, without undue delay. They have also committed to ensuring that valid notifications of offers of counterfeit goods lead to a swift removal or disabling of the notified offer, and to take deterrent measures in relation to sellers that have placed such an offer. Moreover, relevant sellers are to be informed when an offer has been taken down, including the reason, and should be provided with the means to respond.

Online platforms are using proprietary systems to analyse data of every new user who wants to register as a seller at their marketplace. The systems analyse various unique data points and user information to identify potential counterfeit or other infringement risks, including verifying whether the account could be related to another account previously removed from a given platform. Such monitoring systems are based on various risk indicators depending on the platform, including, but not limited to, data provided through NTD procedures by users and rights owners. They also incorporate automatic filters to prevent the re-appearance of the same content, and make it possible to examine all accounts linked to a specific user. The platforms also rely on information provided by rights holders to complement their efforts in this area. While considerable progress has been made in addressing issues concerning repeat infringers, it has been flagged as an area where further co-operation is needed.

Online platforms are using graduated measures restricting a seller’s activity on their service to deter those who offered counterfeit goods in the past from continuing to do so. These measures include, depending on the platform, warnings, temporary account restrictions, temporary account blockage, and permanent account blockage. Once the seller is permanently blocked, re-registration is forbidden. Some platforms, under specific circumstances, would withhold payments for goods confirmed to be counterfeit. Applying these measures has a direct impact on a seller’s rating and their possibility of becoming a recognised/certified seller.

All online platforms report that they have developed clear rules on protection and enforcement of IPR on the websites they operate. Some provide users with additional documents such as anti-counterfeit policy or specific guidelines for sellers.

During discussions during the MoU meetings, signatories indicated the following key elements for robust seller account policies:

  • a clear indication that only genuine goods can be sold and the sale of goods infringing IPR is forbidden, and will lead to a sanction of the seller;

  • clear requirements on providing correct information about the goods offered;

  • an explanation of the PPM used, the NTD procedures, and policies against repeat infringers, including sanctions that can be applied, so sellers are aware that their listing may be removed and their accounts blocked;

  • a requirement to use authorised pictures that sellers are authorised to use, and to use pictures of the actual goods offered.

While the MoU did not set out commitments on publishing transparency reports showing the effectiveness of the measures the signatories put in place, many stakeholders do so, either as part of a public consultation launched by the Commission or in their publicly available transparency reports.

Under the MoU, the signatories have committed themselves to exchanging information to facilitate legal proceedings and investigations into the sale of counterfeit goods. To this end, platforms have undertaken to cooperate with rights owners in accordance with the applicable laws, and, to disclose, upon request, relevant information. This includes the identity and contact details of alleged infringers and their usernames, as permitted by applicable data protection laws. Rights owners have undertaken to submit disclosure requests in good faith and in compliance with applicable law, including data protection laws.

Signatories agree that one of the main achievements of the MoU has been the creation of direct contact points with competent representatives of the signatories. This made it possible to build trust and ensure quality exchanges, speeding up the receipt of feedback.

Rights owners and online platforms both reported that they regularly co-operate with law enforcement authorities. They do so in particular by launching proceedings against individual infringers, and by assisting law enforcement authorities in their own investigations. The signatories said that they cooperate both with the European authorities and authorities in third countries (mostly in Asia) to address the problem of counterfeiting at its source.

Some online platforms reported that they had put in place dedicated internal teams and processes to cooperate with law enforcement authorities and meet their information needs.

Many of the rights owners have long-standing specific programmes in place to cooperate with customs, police and other law enforcement authorities to detect and investigate the sale of counterfeit goods and prosecute counterfeiters. They often assist these authorities as experts on the authenticity of the goods, answering queries, providing expert reports, and sending experts directly on site to support the authorities’ actions.

Rights owners regularly meet with law enforcement authorities, participate in enforcement operations, and launch criminal proceedings jointly with the authorities. Many of them organise training sessions for customs and other law enforcement authorities, to make it easier for them to recognise counterfeit versions of their goods.

Many rights owners are users of the IP Enforcement Portal managed by the EUIPO. The IP Enforcement Portal enables rights owners to:

  • securely share information on their IPRs with law enforcement authorities, along with contact information and product details, production and logistics;

  • send alerts to law enforcement authorities;

  • help law enforcement authorities to recognise counterfeit goods and act, including by helping the authorities to quickly verify suspicious cases;

  • streamline the process of filing an application for action, by offering a translation module.

Both rights owners and online platforms have suggested inviting representatives of law enforcement authorities to the MoU meetings, to start a discussion of how the signatories can support those authorities in their anti-counterfeiting actions in a more effective manner.

All platforms make it possible for consumers to report violations of IPR, with the help of dedicated notification tools. All of them allow consumers to approach the sellers directly to obtain confirmation of goods’ authenticity or other qualities, and make available product reviews and seller ratings, based on user feedback and selling history. They assist consumers who have unintentionally purchased counterfeit goods in obtaining compensation, by either directly refunding the purchase or by initiating a refund procedure with the seller. Some platforms have put in place special protection programmes for buyers.

Rights owners report that they are also approached by consumers who have questions on the authenticity of goods purchased online. They answer such questions both through dedicated tools to report counterfeits and through general customer service. In addition, some of them have put in place training programmes for their retail staff on how to answer the queries of customers reporting suspicious goods. Many rights owners use authentication systems (e.g. codes, labels) that allow consumers to verify the authenticity of the goods directly. Rights owners actively participate in various campaigns to raise consumers’ awareness of risks related to purchasing counterfeits.

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