E-commerce experts predict that online sales will account for more than $4 trillion of all retail transactions by the year 2020. This represents close to 15 percent of all projected retail sales for that year. As the industry anticipates this explosive growth, online retailers must build up their defenses against unauthorized third-party sellers who undermine the market by disseminating low-quality items disguised as legitimate products.
The struggle between genuine online retailers and counterfeiters is ongoing, and the possibility of abolishing counterfeit sales altogether is slim, given the strength and growth of this illicit industry. However, through monitoring online marketplaces, building a strong trademark portfolio and reacting appropriately to brand infringements, legitimate online retailers can minimize threats from unauthorized third-party sellers and protect their integrity of their brand across all online platforms.
The effects of counterfeit sales on the global marketplace
Selling counterfeit products is a trillion-dollar business, accounting for around 5-7% of world trade. According to an article in the World Trademark Review, one in every four online purchases involves pirated goods. U.S. companies take the brunt of attacks by counterfeiters: one in five “knock off” products are replicas of items manufactured by American companies. Close to 70 percent of all counterfeit goods come from China, but other people from other countries participate in this burgeoning industry as well.
A study by the Organization for Economic Co-Operation and Development (OECD) found that counterfeiters aren’t picky about the products they choose to imitate–everything from luxury products to common household items are fair game for these illicit distributors. Generally, counterfeiters seek out items with high per-unit profits, items that require simple production and distribution systems and items that are easy to replicate. Intangible products, like software or digital forms of intellectual property, are also targets for unauthorized third-party sellers, as are pharmaceuticals, foods and tobacco products.
This illicit commerce is costing legitimate businesses hundreds of billions of dollars annually. While businesses cannot stop criminals from trying to hijacking their brands, they can thwart their attempts and reduce their impact. Combating the sale and promotion of pirated goods is an investment in both time and money. But in many situations, the actual amount will pale in comparison to the financial harm done to brand equity if a business chooses not to act.
How to identify counterfeit sales online
Awareness is the first step toward making significant strides against counterfeiting. In most cases, a bit of training is all that is needed to distinguish a legitimate product from a false one. Identifying unauthorized third-party sellers may take more practice, but normally their online profiles will raise a few red flags. To successfully identify counterfeit sales online, you need to monitor online marketplaces, websites, social media platforms, app stores and Darknet. These points will help you know whether or not you are seeing legitimate products and sellers:
Depending on the site, removal of offending listings can take anywhere between an hour and five days. The vast majority of online marketplaces are happy to help brand owners who request removals.
Effectively Combatting Counterfeit Sales within Online Marketplaces
Counterfeiting is a threat to all businesses, not only entities that sell through online marketplaces. Businesses can approach the issue of counterfeiting from multiple angles, especially if their resources allow for a coordinated and extensive defense system. Counterfeiters target large players as well as small ones, so it is imperative to take the following steps for brand protection:
Register for Intellectual Property Rights (IPR)
Businesses need to register their Intellectual Property Rights (IPR), including patents, trademarks, designs and more, in key markets. The registration process legitimizes claims on these rights and allows businesses to strongly respond to brand threats. It’s easier to remove illicit product listings from a variety of sales channels or take legal action against suspected offenders if a business can prove that a piece of intellectual property is rightfully theirs.
This process varies from place to place, but in the United States, businesses can apply in writing with the U.S. Customs and Border Protection department to record a trademark. Patents are also administered and issued by the government.
Establish a distinctive online presence
Businesses must make it difficult for others to profit from their reputation and online presence. Having a distinctive online profile is part of this process. If customers know where to find an original, high-quality product, it is unlikely that will seek out copies.
A business can establish its online presence with a well-structured domain name portfolio. Going about this properly will mark it harder for a counterfeiter to create a fake website with an original brand name in its domain. The same principle applies to a company’s presence on social media platforms and in app stores. Being clear, consistent and obvious with branding may deter counterfeiters who would rather target poorly-established brands and products.
In the physical world, there are various protective measures that a company can take to brand its products. For example, integrating certain design-specific details into products makes them harder to duplicate. Security labels, such as holograms, are also useful.
On the administrative level, a great deal can be achieved by securing the supply chain and working closely with customs and law enforcement in countries of particular concern.
Recognize online brand abuse
Brand abuse is a trademark infringement that does not amount to outright counterfeiting. Offenders abuse brands to achieve “traffic diversion”. In other words, offenders enhance the profile of their own products in an attempt to draw traffic away from other platforms. The problem is especially serious in large online marketplaces, where similar products compete for visibility and sales, but it occurs in all channels.
Examples of brand abuse include the unauthorized use of logos, images and other marketing materials, the unauthorized use of a company’s name or product in metadata, the use of a company’s name on the website of a competitor and domain name abuse. Again, spotting brand abuse requires consistent monitoring across multiple platforms.
Set up a brand protection team
A business’s brand protection team may consist of one person, 10 people or 100 people. The size isn’t as important as the scope–the brand protection team exists to monitor significant brand threats, to respond to threats that need to be addressed and to beef up a company’s brand security efforts. Brand protection teams can also play a role in ensuring that a company’s supply chain is secure. These teams should coordinate closely with senior management and provide briefings on critical brand concerns.
Preventing criminals from hijacking a brand is certainly an investment in time and money. Businesses must be aware of the fact that counterfeit sales impact revenues, but more importantly they undermine trust, the foundation of any successful brand. Some businesses can address the problem with existing resources, but multi-national businesses with diverse distribution channels and multiple kinds of products may benefit from hiring a firm that specializes in brand protection.
Be proactive about brand protection in China
With 70% of all counterfeit goods originating in China, this huge market represents both a serious challenge and potentially a glittering prize. Intellectual property is a relatively new concept in China–the first patent law came into effect as recently as 1985. In August 2017, U.S. government officials estimated that the theft of intellectual property could be as high as $600 billion.
A business cannot protect its brand in China without a strong intellectual property portfolio. There are processes in the country for filing patents, copyrights and trademarks, and it is highly recommended that brands register their English name, Chinese character name and Pinyin name at the China Trademark Office. In regards to patent registration, businesses can register for multiple kinds of patents–utility model, design and invention–with the State Intellectual Property Office.
It is important to note that local distinctions exist, and and these require separate registrations. Companies can benefit from consulting with a trusted individual or business that knows the ins and outs of intellectual property in China.
Again, monitoring your brand online is crucial. If possible, try to obtain a list of accredited distributors and retailers to simplify this process. The right monitoring tools can generate a great deal of interesting data and provide the basis for an appropriate response to any brand infringements. In regards to China, proper monitoring requires language skills and an understanding of the culture. A person on your brand protection team who is well-versed in the language and customs of China can be an invaluable asset.
Lastly, businesses need to be flexible and creative when it comes to fighting illicit sales in China. Counterfeiters will look for new ways to reach the market, new ways to prevent detection and new ways to avoid enforcement. Businesses have to be abreast of the latest methods in order to fully protect themselves in this quick-paced environment.
Protect your brand on social media platforms
For many businesses, social media is a critical conduit for sales and brand visibility. Although online marketplaces still have the highest sales volumes, illicit sales on social media platforms are growing rapidly, especially with the introduction of marketplace features on Facebook and other sites. A company’s brand protection team should monitor social media platforms consistently to watch for illicit listings and knockoff products.
While each platform will have rules regarding the enforcement of intellectual property rights, brand owners need to have a strong trademark portfolio in order to encourage sites to remove illicit material. With the right documentation, businesses can have success in closing offending accounts on most social media sites.
Reporting Brand Infringements and Counterfeit Listings on Major Online Sales Platforms
All mainstream online sales platforms have some avenue of recourse for reporting fraudulent listings. Below, you’ll find basic guidelines for reporting brand infringements on each major website.
How to report infringements on Amazon
As one of the largest online sales platforms in the world, Amazon has streamlined its infringement reporting process so that intellectual property rights owners and their agents can submit complaints through an online form. Each form can include up to 50 products for the same specific concern. If you have different concerns to report, a separate form is required for each one.
To ensure that the complaint is processed correctly, the complainant needs to provide their website with a statement and their contact details. The URL of the advertisements that include the offending items is also required. Lastly, the complainant needs to categorize the infringement that has taken place by designating it as counterfeiting, trademark abuse, design abuse or copyright infringement.
The link for submitting an infringement report is as follows: https://www.amazon.com/gp/help/reports/infringement
How to report infringements on eBay
Ebay’s reporting process is similarly straightforward. Alleged infringements can be reported to eBay by submitting a Notice of Claimed Infringement (NOCI) to eBay’s Verified Rights Owner program. The VeRO Program allows intellectual property rights owners to ask eBay to remove certain listings that offer items or contain materials that infringe on their intellectual property rights. Be aware that on eBay, anyone can report a seller, whether they are a trademark owner or not. Every listing contains a ‘report’ button.
If multiple listings need to be reported, registering your brand with the VeRO system is the most efficient route. Complainants will need to provide eBay with documents that prove their claims on intellectual rights, such as trademark registrations. Then, they are asked to provide links to the offending listings, a description of the infringement and a classification for the offense (counterfeiting, trademark abuse, design abuse or copyright infringement).
Sellers have an additional avenue for protecting themselves on eBay. The site allows brands to create their own page which communicates key information to buyers and sellers about a brand and identifies the rightful intellectual property owners.
To report a brand infringement on eBay, visit http://pages.ebay.com/vero/aboutme/index.html
Reporting brand infringements on Alibaba, Aliexpress and 1688.com
These platforms have their own effective brand protection system called AliProtect. AliProtect allows brand owners to monitor and handle take-downs of IP infringing products on Alibaba.com, AliExpress and 1688.com.
Initially, brand owners need to register for a free AliProtect account and provide basic information like a company name, email, name, address and telephone number.
From there the brand owner needs to register and upload the IP rights it wishes to protect. Examples include trademarks, invention patents, utility model patents, design patents or copyright information. At this stage a brand owner must also give proof of identity in the form of a business incorporation certificate or certificate of incorporation.
AliProtect takes around three business days to process the application, and brand owners receive an email that indicates whether or not the verification was successful. After approval, brand owners can submit IP infringement complaints immediately under the IPR Complaint section. AliProtect offers two options for reporting a complaint:
Option 1: A complainant can search for and report products directly within AliProtect or
Option 2: A complainant can paste links from the three included websites to listings that contain infringements. During the submission process, a complainant needs to specify the infringement that has taken place.
After the report has been submitted, it takes AliProtect between 3-7 business days to process it. If Alibaba, Aliexpress or 1688.com accepts the report, this result will be stated in the ‘History’ menu option. If rejects the report, they will send an email explaining why. During this process, the seller is always contacted. If the seller knows that they have made an infringement, they will probably accept the take-down. However, the seller can provide a counter-notification to prove they are not infringing on IP rights. Based on this information, Alibaba, Aliexpress or 1688.com makes a decision regarding each listing.
How to report infringements on Taobao and Tmall
TaoProtect is the reporting system for Tmall and Taobao, where the brand owner can monitor and handle takedowns. TaoProtect became available in English in July 2015.
First a brand owner must create an account on TaoProtect, which includes providing information like company name, email, name, address, telephone number, etc. Unlike Alibaba.com, the brand owner has to upload proof of identity in Step 1, in the form of a business license or certificate of incorporation.
After this initial step, the brand owner registers and uploads the rights it wishes to protect, like a trademark, invention patent, utility model patent, design patent or copyright.
TaoProtect takes two business days to validate proof of IPR. After the application is approved, TaoProtect allows brand owners to report infringements under the ‘File Complaint’ section. Brand owners should include links to offending listings and specify the IP rights they are using as protection. After the report is submitted, TaoProtect takes 7-10 working days to respond. If Taobao accepts the report, this result is listed under the ‘Complaint Filing’ history. If the report is rejected, Taobao will send an email. As with AliProtect, the seller is always contacted and may file a counter notification to deny IP infringement. This is then shared with the rights owner, to respond again before a decision is made about taking down the relevant link(s).
The next steps for victims of counterfeiting
If you discover counterfeit sales of your products or learn that your brand is being abused in other ways, we recommend a proven three-step process – regardless of the sales channel – to address the problem: track, analyze and enforce.
Why Businesses Must Act Now
As counterfeit sales continue to grow worldwide, businesses can’t afford to be passive about brand and product protection efforts. Counterfeiters thrive on secrecy–they quietly target businesses that haven’t established strong defenses, strike quickly and then furtively suck away the market share and profits of the legitimate businesses that they copy. The OECD points out that virtually no economy is completely free of counterfeiting, and the consumption of fake products is just as widespread. As counterfeiters become more sophisticated, pirated products are making their way onto the shelves of legitimate stores, and occupying spaces in online marketplaces.
Businesses that act early, swiftly and forcefully are in a better position to respond to brand threats and to minimize the impact of brand infringement. Being informed and taking simple protective measures is critical for businesses of every size.