Online counterfeiting: How best to be effective countering it?

Speakers: Zebrowska Natalia, Roche-Laguna Irene, Wright Charles, Peresson Sophie, Hinojosa Ana, Sarfati-Sobreira Delphine
Moderator: Crofts Lewis

On the 15th October, PubAffairs Bruxelles hosted a debate regarding the most effective measures to tackle online counterfeiting with Ms Natalia Zebrowska-Mamais, Legal and Policy Officer, Intellectual Property and the Fight Against Counterfeiting, European Commission, DG GROW, Ms Irene Roche-Laguna, Team Leader, E-commerce and Platforms, European Commission, DG CONNECT, Mr Charles Wright, Associate General Counsel, Amazon, Ms Ana Hinojosa, Director of Compliance and Facilitation, World Customs Organisation (WCO) and Ms Delphine Sarfati-Sobreira, General Manager, UNIFAB – Union des Fabricants.

The debate was moderated by  Lewis Crofts, Editor in Chief, MLex.

After introducing the speakers, Lewis Croft turned to the panellists to ask their opinions concerning the sufficiency of existing structures addressing online counterfeiting and other illegal activities related to e-commerce.

Ms Irene Roche-Laguna started the debate by providing an overview of the initiatives introduced by the Commission to tackle illegal content, in particular online counterfeiting, including the Directive on electronic commerce (2000/31/EC). She commented that existing measures have been effective to date and have provided a firm legal basis for the development of the use of the internet and online services in Europe. However, problems have arisen concerning attempts to formulate sectoral responses to particular types of illegal content, including infringements of copyright, hate speech or online counterfeiting. As such, the Commission has attempted to tailor the solution to the specific kind of targeted problem and the particular providers according to the services they provide – an approach she believed to be better adapted to the specificities of individual sectors than a ‘one-size-fits-all’ method. Ms Roche-Laguna also drew attention to the various voluntary and ‘soft’ measures adopted by the Commission across a range of industry sectors.

Ms Roche-Laguna further commented that an approach focusing on enforcement to tackle illegal content online has to be carefully designed to avoid the over-removal of legal content, which may prove highly damaging for users’ fundamental rights, and to avoid excessively burdensome obligations, in particular for small-to-medium enterprises (SMEs). Given this framework, she considered that a combination of legal initiatives with voluntary measures, such as initiatives promoting the exchange of best practices and the implementation of technological tools according to actors’ capabilities, represent the most suitable response.

Ms Roche-Laguna also said that safeguards are required to protect users and their fundamental rights, such as the possibility for sellers to counter the decision to remove content, the enacting of due diligence processes and the continued involvement of human revision alongside automated technological measures, as already recommended by the Commission.

Ms Natalia Zebrowska-Mamais began by expressing her agreement with the position of Ms Roche-Laguna concerning the suitability of the implementation of voluntary and ‘soft’ measures in the fight against online counterfeiting and IP infringements. She referred notably to the EU’s 2011 Memorandum of Understanding (MOU) on the sale of counterfeit goods via the internet prompting sectoral dialogue and the sharing of data and best practices among online marketplaces, rights holders and associations to tackle the sale of counterfeit goods online. Moreover, she drew attention to the revision of this MOU in 2016 to include an evaluation mechanism to measure the success of the initiative. The revised MoU has been signed by 24 parties to date and sets out commitments concerning proactive and preventive measures, a notice and takedown procedure enabling rights holders to contact online marketplaces with information regarding potential illegal activities, and efforts to improve the transparency of e-commerce.

Ms Zebrowska-Mamais described the measures taken by the Commission as a ‘bottom-up’ approach drawing on the knowledge of businesses and online marketplaces regarding their own platforms to design effective countermeasures well-suited to individual industry sectors. She noted that while such dialogues were initially opened primarily to traditional e-commerce service providers, such as Amazon, there is also significant scope for actors in digital sectors which have only emerged relatively recently, for instance, social media, to make valuable contributions to minimising online counterfeiting.

Ms Sarfati-Sobreira initially commented on the role of associations, such as the “Union des Fabricants” (UNIFAB), in preventing online counterfeiting and the violation of IP rights. She explained that such actors have a great deal of experience gained from their engagement with online sellers and marketplaces, as well as from research pre-dating the EU’s first MOU. She remarked that these activities have yielded promising results to date. Regarding the role of legislation in combating the illegal activities under discussion, she suggested that the quality, rather than the quantity of such measures to a large extent determined their effectiveness.

Concerning potential areas for improvement, Ms Sarfati-Sobreira called upon internet actors to play their part in tackling online counterfeiting and IP infringements by refusing the sale of fake products and by setting up both preventive and proactive measures. She shared some practical best practices already identified, such as monitoring insufficient, misleading or suspicious sales listings (characterised, for example, by low prices, high sales quantities, etc.).

The speaker added that many positive steps have been taken to address online counterfeiting and IP infringements. For example, she regarded the EU MOU as effective and having initiated dialogue between relevant market actors, but commented that alone it appears insufficient to effectively tackle the issues at hand. Current legislation has evolved at a slower pace than the modern digital environment and actors, resulting in the lack of a robust legal framework to tackle e-commerce-related crime. As such, it needs revision to render it more effective, she commented. She concluded that all actors would benefit from better legislation setting up a shared responsibility system.

Mr Charles Wright began by outlining his support for the remark of Ms Sarfati-Sobreira concerning the essential role of online marketplaces, sellers and companies in combatting online counterfeiting and IP infringements. He stated that market actors need to be proactive in this regard and that while reactive measures remain important, these actions alone will prove insufficient. Indeed, in a competitive digital market, pre-emptive measures are essential to maintain the trust of consumers, emphasised Mr Wright. Accordingly, he explained that Amazon is investing heavily in preventative technological means to tackle online counterfeiting, for instance, machine learning and automated image searching.

However, he added that in seeking to propagate healthy, thriving digital marketplaces it is crucial for enforcement measures tackling e-commerce-related crimes, such as online counterfeiting, to be steered by the principle of proportionality. He explained that the principle of proportionality refers to the importance of avoiding the excessive removal of suspected counterfeit goods or suspicious sales accounts online and is one of two guidelines steering Amazon’s approach to tackling online counterfeiting. Such errors indeed have the potential to severely damage the commercial operations of a large number of SMEs operating on online platforms, such as Amazon, in doing so detrimentally affecting livelihoods, the speaker explained.

The second principle guiding Amazon’s fight against online counterfeiting is that of collaboration, including with sellers, other online marketplaces and the European Commission. In this regard, he reminded the audience that criminals conducting such activities themselves cooperate to circumvent efforts seeking to minimise online counterfeiting and, thus, so must market actors. He concluded by underscoring Amazon’s 99.7% proactive take-down rate, results provided by the EU’s 2011 MOU, of which Amazon was one of the first signatories.

Ms Ana Hinojosa began by providing an overview of the work of the World Customs Organization (WCO), which collaborates with 182 members worldwide, as well as a number of international organisations and private sector actors to develop international standards and guidelines in the fight against online counterfeiting. She went on to provide insights into the varying priorities, organisational structures, resources and technical capabilities of different customs administrations impacting their respective approaches and abilities related to the enforcement of IP rights and anti-counterfeiting measures.

Ms Hinojosa added that while customs authorities actors have, over time, developed strong capacities regarding the detection of counterfeit products imported through traditional channels (overland, air and sea freight; as well as postal services), the overwhelming quantity of packages – in addition to the delivery methods used in the e-commerce industry – present new challenges to enforcement bodies.In particular, the nature of e-commerce has resulted in the window of opportunity available to detect and remove counterfeit goods from circulation being dramatically reduced. As such,

Ms Hinojosa underlined the utility of advanced technological tools, such as data mining and link analysis, in the fight against online counterfeiting. Ms Hinojosa reinforced this statement by alluding to the importance of information gathering to better understand the issues discussed and to strengthen joint capacities in effectively tackling them. She concluded by commenting that brand owners have a responsibility to contribute to efforts addressing online counterfeiting; for example, by sharing information with other private and public sector actors.

Having heard their respective points of view, Lewis Croft inquired about any further improvements the panellists consider necessary to enhance cooperation in the sphere of anti-counterfeiting policy.

Mr Wright responded by reaffirming the importance of voluntary measures encouraging cooperation between a variety of actors, including those in the private sector. However, he remarked that information sharing between public authorities and private sector actors often seems lacking, especially concerning customs seizures. Mr Wright commented that large delays between seizures by customs and the notification of online marketplaces may hamper the effectiveness of the common fight against online counterfeiting, in particular by internet actors, such as Amazon, who are well-placed to contribute proactively.

He suggested implementing measures, such as creating an open database, to make the information needed available to relevant actors and, thereby, improve the industry’s knowledge of the problem. As a result of this process, the speaker explained, online marketplaces may be enabled to better address issues of online counterfeiting.

Ms Hinojosa commented in response to the remarks of Mr Wright that issues of privacy and trade secrets must be taken into consideration when sharing such information, for example regarding customs seizures. In fact, there is a due process that needs to be followed and certain actors, for instance, rights holders, may have privileges to particular information, she reminded the audience. Moreover, Ms Hinojosa clarified that the WCO already collects data from the customs enforcement agencies with which it collaborates, however, due to the voluntary nature of such initiatives, information sharing may not occur with sufficient regularity.

The speaker added that diverging organisational structures and data collecting procedures among customs enforcement bodies also limit the ability of the WCO and similar organisations to provide statistics on online counterfeiting and the infringement of IP rights.

Ms Zebrowska-Mamais replied to the question by referring to the work of DG GROW together with DG TAXUD and the European Observatory on infringements of IPR at the EU IP Office (EUIPO) in establishing a platform through which customs enforcement and policing authorities in Member States may exchange information, for example, concerning customs seizures. According to Ms Zebrowska-Mamais, voluntary measures and legislation are complementary in the fight against online counterfeiting. Alone, neither approach will prove sufficient to effectively tackle the problems discussed, the speaker added. Praising the efforts made by the participants of both MOUs, she commented that the removal of illegal online content [ “take down” ] does not necessarily equate to permanent removal of infringing offers or sellers placing such offers [ “stay down”] and encouraged the platforms involved in the MoU to work towards improvements in this regard.

Ms Zebrowska-Mamais stated that it is necessary to ensure the diffusion of best practices related to countering counterfeiting as identified by  the signatories of the current MOU also to other companies. In addition, she highlighted the potential of applying new technologies, such as blockchain and artificial intelligence (AI), to enhance tracking, tracing and identification measures. The speaker concluded by underscoring the value of involving all relevant actors in the process, the vital requirement for datasets to become more interoperable and the role of the Commission in achieving the latter. This set of actions would further enable right holders and customs authorities to act more effectively, while tackling online infringement of IP rights, and in particular dissemination of counterfeit goods.

The Q&A session covered the following topics: the difficulties related to the identification of counterfeit goods, the scale of the problem of online counterfeiting, the scope for the future development of the EU MOU in the next Commission mandate; abuses of IP laws by rights holders attempting to enforce product distribution systems and the question of reviewing existing EU anti-counterfeiting and IPR legislation: the rationale behind the prohibition of general monitoring obligations.

Want to know more about the issues discussed in this debate? Then, take a look at the selected sources provided below!

Directive on electronic commerce 2000/31/EC

Directive on the enforcement of intellectual property rights, 2004/48/EC

European Commission’s website dedicated to IPR enforcement 

European Observatory on Infringements of Intellectual Property Rights

European Commission’s website dedicated to Memorandum of Understanding on the sale of counterfeit goods via the internet, European Commission

Text of the Memorandum of Understanding on the online sale of counterfeit goods, as revised in 2016

2017 report on the functioning of the Memorandum of Understanding on the sale of counterfeit goods via the internet, SWD (2017) 430, European Commission

2013 report on the functioning of the Memorandum of Understanding on the sale of counterfeit goods via the internet, COM(2013)0209 European Commission

Commission Recommendation on measures to effectively tackle illegal content online, European Commission

Communication on Tackling Illegal Content Online – Towards an enhanced responsibility of online platforms, European Commission

Counterfeit, piracy and other IPR violations, European Commission

A Europe that protects: Commission reinforces EU response to illegal content online, European Commission

Public consultation on measures to further improve the effectiveness of the fight against illegal content online, European Commission
2017 Situation Report on Counterfeiting and Piracy in the European Union, EUROPOL and European Union Intellectual Property Office (EUIPO)

Study on voluntary collaboration practices in addressing online infringements of trade mark rights, design rights, copyright and rights related to copyright, European Union Intellectual Property Office (EUIPO)

Study on Legislative Measures Related to Online IPR Infringements, European Union Intellectual Property Office (EUIPO)

Awareness Campaign On Online Counterfeiting: Public awareness and prevention, EUROPOL
The counterfeit and pirated products industry, European Economic and Social Committee (EESC)

Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, Organisation for Economic Co-operation and Development (OECD)

Mapping the Real Routes of Trade in Fake Goods, Organisation for Economic Co-operation and Development (OECD)

Digital Traceability in the Fight against Illicit Trade: Improving rules and practices, Centre for European Policy Studies (CEPS)

EU loses €60 billion annually to counterfeits, Euractiv