2. Issues

Governments, platform operators and brand rights holders have actively pursued mechanisms to combat counterfeiting and piracy in e-commerce. Some of these are described Part III of this report. Despite the actions that have been taken, counterfeiting remains a significant problem, which many believe is getting worse as counterfeiters find new and innovative ways to expand their sales. Following are some of the issues that were raised in the discussions carried out with stakeholders in recent webinars and follow-up discussions with experts.

In dealing with emerging challenges, several stakeholders have stressed the importance of providing the platform operators with flexibility so that they will be in position to innovate and adapt their technologies and processes to counter the evolving activities of bad actors. Approaches would likely differ among operators, given their different business strategies and situations.

Rights holders noted that the lack of uniform approaches among platforms, while understandable, was nonetheless burdensome, particularly with regards to the anti-counterfeiting mechanisms available to them. It was hoped that the situation could, in general, be simplified and somewhat standardized at least with regards to vetting third-party sellers, disclosures and take downs, and that the burdens placed on rights holders could be lightened.

There is general agreement among stakeholders that collaboration is key to combatting counterfeiting successfully. Much has in fact been achieved in this regard and efforts to expand the collaboration are promising. However, the extent to which it expands may be limited by legal constraints, and private business may be reluctant for various reasons to engage in such voluntary collaboration and information sharing. Efforts to overcome such obstacles need to be considered and pursued.

Such collaboration is critical for developing improved techniques for unravelling and dismantling rings of counterfeiters and dealing with repeat offenders. The counterfeiting rings are usually not acting alone, and they are not focused on a single platform; collaboration could be used to address problems more effectively through co-ordinated, collective efforts.  In this regard, it was suggested that it would be helpful if platforms could find a way to share at least some information provided to law enforcement in cases involving confirmed counterfeiters more broadly. There is also potential for the industry to start helping identify trends. During the COVID-19 pandemic, for example, there were shifts in counterfeiting activities, and sharing knowledge between stakeholders would have benefitted governments as well as the platform community.   

In setting up collaborative mechanisms, it was suggested that careful attention needs to be paid to the goals of the mechanism. To be successful collaboration would need to be proactive, candid and consistent. If the participation of some stakeholders inhibited the process, consideration should be given to modifying by setting up different groups.

It was noted that leveraging partnerships with financial intermediaries may be of significant value in enhancing the ways that counterfeiting challenges are addressed, given the underlying mercenary nature of counterfeiting activities. Initiatives that are being taken in this area need to be continued and strengthened.

In addition, given the need for proactive responses to emerging counterfeiting challenges, and the need for speed in addressing these challenges, it was suggested that industry self-regulation could play an important role in developing fluid, timely responses. This might be facilitated by giving an industry body administrative, rulemaking and enforcement authority. Traditional government regulation is viewed as too reactive and slow to address problems, given the speed with which counterfeiters adapt to regulation and their noteworthy abilities to identify and exploit weaknesses in anti-counterfeiting measures.

With respect to international co-operation and collaboration, it was noted that increased information sharing among countries and companies on the actions that they are taking to combat counterfeiting and piracy would be beneficial and contribute importantly to the development of best practices.

The platform landscape is diverse, populated by the major, large platforms and many smaller ones. Most attention is focused on the larger ones, given their impact and the limited resources available to move against counterfeits. Learning about effective practices from the larger platforms may, however, have value for the smaller platforms as they develop their strategies for combatting counterfeiting.

Strong measures are needed across the board as bad actors will naturally explore ways to overcome obstacles to their illicit trade by exploiting weaknesses. In this regard, the landscape is continuing to evolve, with the emergence of social media raising new issues with respect to ecommerce; it is an area that counterfeiters are actively exploiting, which is of great concern. Another area requiring attention is the activities of the “dark web”, which could be used to exchange information which is then used to facilitate offline trade in counterfeit goods. The role of rogue registrars and registries also deserves attention.

With respect to platform liability, increased attention to the criteria that could be established for platforms to achieve “safe harbour” status would be beneficial and timely as it is a matter being deliberated in several jurisdictions. The consequences or penalties that might apply when a platform is implicated in a counterfeit activity needs to be examined. An approach that allows penalties to be flexible, depending on the specific circumstances might be worth considering. Who should ultimately be responsible for addressing issues concerning defective products sold by third parties on platforms was also discussed, with some arguing that the onus should fall on manufacturers, as is generally the case with traditional retail stores.

Verification of the credentials of third-party sellers on platforms is important for platform operators as it is key to building the trust of stakeholders, including consumers and brands. Determining what information should be collected from sellers, the reasonableness of data collection requirements from the perspective of platform operators, and how these requirements compare with those in place for brick-and-mortar establishments deserve attention.

The ability of platforms to authenticate sellers from different jurisdictions may, however, be difficult considering the variability of the “official” documentation that might be supplied by the sellers. The use of fraudulent documentation that counterfeiters would undoubtedly try to use further complicates the matter. A third-party system under which an independent or governmental agency would issue a merchant ID that would be widely accepted could be considered; the impact that this could have on small sellers is, however, a potential concern. Whether such a system would be voluntary, or mandatory was discussed; if voluntary it was felt that there would be pressure over time to make it mandatory. Additionally, such a system would have a negative effect on parallel imports, which under many legislations are legally admissible despite objections highlighted by some rights holders.

Platforms are finding ways to ways to exchange information on bad actors, taking into account raising privacy concerns. The results are very promising and need to be continued and, where possible, enhanced. Particular attention needs to be paid to protecting the privacy of parties involved in C2C transactions.

The limiting of some anti-counterfeiting initiatives to products that endanger health and safety raises several questions, not the least of which is the definition of this class of products. Some argued that a broad definition of health and safety could include well-being, environmental aspects or such fundamental issues as national economic security or human rights (TRACIT, 2019[1]).

Platform operators generally provide a great deal of information on the products being sold on their sites and the sellers, distinguishing, where applicable, between products sold by the operator and those sold by third parties. Some have expressed interest in requiring product listings to include a country-of-origin designation. Implementation may, however, be problematic for the platform operators, particularly when it involves the listings by small volume third party sellers, who may not be in good position to accurately designate the country of origin.


[1] TRACIT (2019), Mapping the Impact of Illicit Trade on the Sustainable Development Goals, Transnational Alliance to Combat Illicit Trade, https://unctad.org/system/files/non-official-document/DITC2019_TRACIT_IllicitTradeandSDGs_fullreport_en.

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