Counsel: ‘notorious’ IP markets reports state the obvious

Counsel across industries say that much-trumpeted reports aimed at raising awareness of intellectual property infringements are useful, but most still rely on their own internal processes to tackle fakes.

Sources in the technology, cosmetics and fashion industries were reacting to the publication of two reports in the US and EU aimed at highlighting the risk counterfeiters pose, and markets and jurisdictions that IP owners should monitor.

While such reports are interesting, most counsel already work with brand protection agencies and conduct their own reviews on which markets pose a specific threat, they say.

The senior IP counsel at a cosmetics company says they do not tend to follow reports too closely.

“I rely on our customs watch agent to monitor problematic platforms and jurisdictions and advise which markets we should register watches against,” she says.

The US Trade Representative (USTR) released the findings of its 2022 Review of Notorious Markets for Counterfeiting and Piracy (notorious markets list) last week. The list highlights online and physical markets that reportedly engage in or facilitate counterfeiting or piracy.

Separately, in a report published on January 31, the EUIPO published an analysis of the economic impact of the illicit trade of counterfeits. The report showed that China, Hong Kong SAR, and the United Arab Emirates were the main source of counterfeits.

Meanwhile, in the UK, the UKIPO published the third part of its Counterfeit Goods Research, a large-scale consumer survey looking at purchasing behaviour. The report found that 29% of respondents (up 2 percentage points from the last report in December 2021) admitted to knowingly buying a counterfeit at some point in their lives.

Separately, the US 301 Report, in which the USTR collates a list of countries it believes do not offer adequate IP protection, is due to be published in April.

Despite the proliferation of reports – and the extensive publicity campaigns around them – sources say they mainly highlight what they already know.

Charlotte Falck, head of group trademarks at heavy machinery manufacturer Sandvik in Stockholm, says the company already works with online brand protection teams.

“We have continuous discussions with our service providers about trends, the magnitude of the problems, shifts in marketplaces, countries and patterns.”

She adds that while the reports are useful from a general-interest standpoint, the company already has a good picture of the situation on the ground.

Unsurprisingly, perhaps, the same can be said for the agencies themselves.

Chrissie Florczyk, director of brand protection company IP Breach in the UK and a former counsel at footwear company Timberland, says: “It's not something I pay much attention to. I tend to leave those battles to my clients to deal with directly and focus on the enforcement on the ground.”

Jan de Visser, head of brand protection at Philips in the Netherlands, adds: “We have a very mature IP operation and know quite well where we can expect trouble, or what local enforcement circumstances are.

“For our day-to-day business, this is useful background information, but not more than that.”

De Visser adds, however, that the kind of general information included in the reports is always useful to have in case the business teams up with other brand owners or when advocacy groups to try to lobby for and encourage changes.

And some sources do take more than just a passing interest in the reports.

Yann Romé, director at brand protection company Pellervo Digital in the Netherlands and who was previously an anti-counterfeiting counsel at Chanel and Nike, say the lists are useful as a negotiating tool for IP owners to use against platforms that are included in them.

He notes that Shopee, a Singapore-based e-commerce platform and one of the sites included in the USTR’s notorious markets report, is keen to expand in Europe.

“Being on the notorious list is not good for investors; right owners would also leverage this during negotiations for it to provide better proactive measures,” he says.

Pablo Vanel, senior legal counsel for trademarks and brand protection at Western Digital (WD) in the UK, says the company contributes to the USTR’s notorious markets list each year and pays attention when the report is released.

“We contribute via the International AntiCounterfeiting Coalition. They send us a questionnaire and the responses are then sent back to the USTR to help inform its findings.”

Most of the difficult platforms that WD reported are included in the final list, though Amazon was the most notable absentee even though there are some good reasons for its exclusion, he adds.

“We understand why the US did not include Amazon. It is making a lot of efforts against counterfeiting and also doing a lot of publicity.”

Although Amazon is not necessarily the platform with the most counterfeits, WD reports a very large volume of infringement in general and struggles with how the company manages those reports, Vanel says.

One of the potential problems counsel highlight is that the reports may be focusing on the wrong questions.

If the reports and the research underpinning them were to expand their remit to include newer threats such as social media, as well as taking a hard line against major platforms like Amazon, then counsel’s interest could be ignited.

Vanel notes that in the last two questionnaires his company has received, the IACC has specifically asked questions about online marketplaces but never about social media platforms, which are more prominent and harder to enforce on than e-commerce platforms.

Romé at Pellervo Digital suggests that another explanation could be that the notorious markets list is driven by the US government, which traditionally does not want to mention US companies.

He adds that the decision to omit social media companies could be because monitoring these platforms is far more complex than it is on marketplaces and that brand owners don’t really know what happens there.

The rules surrounding takedowns on social media platforms are far less developed and there is no efficient method for retrieving detailers of sellers. Further issues, such as hidden links, add another layer of complexity.

“It is a missed opportunity,” says Vanel. “The IACC and the USTR should broaden the scope of this review.”

If they do take on this advice, and perhaps stop telling IP owners what they already know, then the reports may have more impact in the coming years.