Get expert insights on how to stop repeat offenders
In this webinar, you will learn:
What are the most common online threats?
Consequences of repeat infringers
The economic impact of counterfeiting and piracy
4 steps to an online brand protection strategy
How to fight repeat infringers
Combating repeat intellectual property infringers: Strategies for online and offline protection of IP
[Gene Quinn] 00:01
Hello, everyone, this is Gene Quinn here, and I’m pleased to have you joining us for this webinar on Combating Repeat Infringers: Strategies for Online and Offline Protection of IP. We are going to have a conversation on counterfeiting, what you can do to protect yourself and the magnitude of the problem, and we’re going to address it from everywhere, from how you can initially address the problem, how you can identify the problem in the first place, all the way to more aggressive tactics with those people who are maybe a bit recalcitrant and keep popping up and you are having a tough time dealing with them. I have a really good panel to join us today. First, I’d like to thank our sponsor for this webinar, which is Red Points. Red Points is sponsoring this event, and they have a technology solution that fights against online privacy and abuse. And joining us for this webinar is Maysa Razavi, who is the Head of Anti-Counterfeiting from INTA. We have Anthony Lo Cicero, who is an attorney for Amster Rothstein, who has been doing this particular type of litigation for 40 years. And then Joan Porta, who is their Brand Protection Director from Red Points.
And we have a number of things that we specifically want to address during this webinar with you here today. As you probably all are aware, the modern threats facing brand owners from a variety of different channels is only growing and is only going to get worse, and it’s more and more important to have a real solution and a regime to try and address this before it gets out of control, both in the online environment and the offline environment. So, we’re going to talk about key aspects of your protection regime, both in online and offline, case building techniques. And then also some of the jurisdictional issues, where you’re going to go in this global world that we trade in.
Now, before I get going here with this conversation, what I would like to do is turn to each of our panelists, and ask them to, in a couple minutes, set the table for what it is that they would like to talk about today, so that they can preview, so that we know where we’re going to go, and you can kind of prime the well. So, Maysa, let’s start with you. What is it that you would like listeners here today to have in mind as we approach this topic?
[Maysa Razavi] 02:36
So I’m just going to give a little bit of a background on the issue of online counterfeiting, and then I would like everyone to take away the fact that it’s a big problem, and we all have to work together to solve it.
[Gene Quinn] 02:52
Okay. Thanks. Tony, your initial thoughts? I know you’ve been doing this for a long time, you’ve probably seen an awful lot. When people are coming to this topic, what is it that you think they should keep in mind as we start this conversation?
[Anthony Lo Cicero] 03:09
Well, thank you, Gene. I think they should keep in mind that while the online efforts, for example, as promoted by brand protection companies, like Red Points, are invaluable in the present environment, nonetheless, there are going to be circumstances where certain repeat offenders simply will pop up again. And therefore they will need to resort to the offline world, which is my world, involving litigation, involving customs enforcement proceedings before the United States International Trade Commission and comparable bodies across the world, multi-jurisdictional litigations, and so on. When we’re dealing with major repeat recidivist infringers and counterfeiters, then sometimes the offline litigation is the only resort. And I want to talk about that and give people some ideas and best practices in dealing with that issue.
[Gene Quinn] 04:16
Okay. Great. And Joan, what is it that you would like folks to have in mind as we embark upon this discussion today?
[Joan Porta] 04:27
Well, I will focus also on online protection and online counterfeits, and I would like to emphasize, as Maysa mentioned, not only how this problem is growing in terms of volume, but also in terms of complexity. And also on the line of what Anthony mentioned, we’re going to get to some measures and actions that brands can take in order to fight this problem, both from an online and offline perspective. And we’re going to point out that this coordination between online and offline efforts is critical in order to be able to fight effectively against this problem.
[Gene Quinn] 05:09
Yeah, and I think, from my perspective, that’s one of the things I really think that we want to make sure we get across during this webinar, is that I think you need to think about this as a part of a cohesive whole. It’s not an online strategy and an offline strategy. It is, you have a strategy, and there is an online component, and there is a nice component, and there is an investigation component, and there’s monitoring and knowing what’s going on and who’s doing what and keeping yourself informed. And then there is the, at some point in time, all of that information and all of that trying to play nice and go through channels sometimes just isn’t enough. And all of that information that you’ve been gathering and gaining knowledge into the who, what, where, when, and why that you’ve been building will then sometimes be necessary to then translate into the offline world to know you have to ratchet it up and now you can’t play nice anymore. And it’s sort of a continuum. And that’s what I think we’re going to talk about today, is this continuum, and you got to start day one, so that when you’re at the end of this and you’re facing somebody who is a repeat infringer, you’ve got this stuff, the information that you really need to be providing the authority so that you can get the relief that you need. So, with that in mind, let’s see where the first slide is here. Joan, I think this slide is yours, correct?
[Joan Porta] 06:43
Yes, I can talk about this briefly, to put the focus on the topic of this webinar, which is we’re going to be addressing mainly the problem of online counterfeits. And by counterfeits here, we mean not only clear fake products that may be infringing a trademark, but we can also talk about products that are infringing a design patent or a utility patent or other intellectual property rights. And there are other incidents that brands can suffer especially on the online environment, such as impersonations, like fake websites or social media networks, cybersquatting, fake apps, and other brand abuse incidents, but we’ll keep the focus today on online and offline counterfeiters as a category of incidents.
[Gene Quinn] 07:31
Okay. So, then in the next slide, what we have here is just a basic, what we probably all know but wanting to put it into some kind of context. The consequences at issue here can be enormous. There’s not only the economic loss, but there’s the loss to the brand equity. And once that damage is done to the brand, it can be catastrophic, or it can be just very damaging, and it can be anywhere in between. And you spend a lot of time developing your brand. So, any damage to your brand that is caused by counterfeits is damage that is unnecessary, and it’s difficult to recover from. And then you have to think about your partners as well. And then there’s the safety risks too, and there’s a lot at play here that goes into this. So, the consequences couldn’t be any more real. And I don’t know that we’ll get there today, maybe we’ll come up, but one of the specialized topics that you can always address whenever you’re talking about counterfeits, it also comes in with respect to drugs and pharmaceuticals. And that’s where the safety risks become enormous, because if you’re dealing with drugs that are less than what they’re supposed to be, and people are taking them as prescribed and thinking they’re getting the drug that they’re supposed to be getting, those safety risks are enormous. I don’t know whether anybody on the panel has any specific thoughts on that before we move on, but that may be worthwhile to take a pause and just any thoughts on those risks specifically. Anyone?
[Joan Porta] 09:09
Sure. I would add maybe, Gene, because we always talk it through about drugs as counterfeits that pose special risks. But when I was talking about the increase in the complexity of the problem before, I was referring also to how we see how a wide range of products are being counterfeited, not only luxury bags and luxury products, which used to be the most counterfeited products, but we see toys for kids. We see pieces, we see parts for cars, we see all kinds of products that pose very serious risks for health and for security that are being counterfeited.
[Gene Quinn] 09:51
Yeah. Tony, go ahead.
[Anthony Lo Cicero] 09:54
That’s my experience as well. A few years ago, the case that got a good deal of notoriety was counterfeit baby formula. You can imagine safety concerns relative to that. Brake parts, baby formula, prescription drugs. When the counterfeiting business started a long time ago, people were concerned, as Joan suggested, with luxury handbags and T-shirts and so on. But now, as counterfeiters have gotten more sophisticated, the products that they’ve begun to counterfeit or they are counterfeiting are growing in scope, and some of them have these real safety and health risks.
[Gene Quinn] 10:34
Yeah. Maysa, I suspect you guys at INTA have your finger on the pulse of this specifically.
[Maysa Razavi] 10:41
Oh definitely. We hear a lot about all the different kinds of counterfeits across industries. And one that really surprises me is counterfeit food. So, the number one counterfeited food item is olive oil, and about 10% of the world’s olive oil is counterfeited, which always makes me nervous, that I think 1 out of 10 times I taste olive oil, like I get a little nervous that it might be a counterfeit. Another report that recently came out last year was on counterfeit iPhone adapters that UL put out. They said that 99% of iPhone adapters that are counterfeit are going to have some kind of failure rate. And that kind of scares me because it might just be that the charger wouldn’t work, but it could also mean that it could catch fire or kind of have that kind of safety risk as well. So, things that consumers don’t really think about when they’re buying these counterfeits.
[Anthony Lo Cicero] 11:41
One more example along the lines what was just discussed, very recently, counterfeit lithium batteries have become popular. And in the United States, there was a big controversy a couple of Christmases ago about hoverboards. And the hoverboards, when they were charged, would catch fire, and they caught fire because the batteries were unsafe, were packaged improperly, were sequenced improperly, and that’s because they were counterfeits.
[Gene Quinn] 12:11
Yeah. And these are really massive issues for the public, one. But for the brand owner, because if you have an issue with your product, it becomes difficult to rebound from that because the buying public does not always distinguish between your brand and the knockoff that looks like your brand, or that is mislabeled as your brand. And that is where it becomes enormously important for brand owners to stay on top of this issue because you’ll let these counterfeiters sync your brand and your good name along with them. And and I know for a fact that a lot of times what happens is people will buy these things not even knowing that they’re counterfeit. And then they’ll have a complaint, and they’ll reach out to the brand themselves, expecting some kind of relief, you know, and that is an unfortunate circumstance, but that is one way that sometimes the brands find out that there are counterfeits, to begin with.
Alright, let’s take a look here at the next slide. And Maysa, this is where your slide set starts. I know you have a few slides you’d like to go through and talk about. So, let’s go. Let’s take a look at this economic impact slide. What would you like to talk to us about this one?
[Maysa Razavi] 13:32
Sure. So, I just wanted to give a little bit of a background on why counterfeiting is such a big issue to brand owners and to the oblivious consumers. In 2007, the worldwide counterfeiting was valued at an estimated $250 billion and accounted for 1.8% of world trade. In 2016, the Organization for Economic Cooperation and Development, along with the EUIPO, released a report that estimated that these numbers rose to 461 billion and 2.5% of the world trade in 2013. In February of this year, we released a report along with the business action to stop counterfeiting and piracy. That was conducted by Frontier Economics, and it was entitled The Economic Impacts of Counterfeiting and Piracy, that showed the numbers here. So, our study found that in 2013 the estimated value of international and the domestic trade of counterfeit and pirated goods was a staggering 1.13 trillion. The wider economic and social costs were calculated at 898 billion, which includes fiscal losses, the cost of crime and the displacement of legitimate economic activity. A more frightening number is estimated job loss due to counterfeiting and piracy, which is at 2.6 million. And we have also projected what they would look like in 2022. So, in that year, we estimate the value of counterfeit and pirated goods, including digital piracy, would be projected about 1.9 to 2.81 trillion, and the number of jobs lost due to counterfeiting and piracy should be around 5.4 million.
So, the impact of counterfeiting is growing exponentially, and it’s mostly due to the proliferation of counterfeiting on the internet. And the reason why criminals prefer to sell counterfeits on the internet is, well there’s many reasons. One, they can hide behind the anonymity of the internet, with the dark web, and even hiding their IP addresses. The internet gives them the reach to sell to consumers globally, which is outside the national limits of law enforcement. Counterfeiters can display genuine goods on their site and ship counterfeit goods to the consumer. When one site is shut down, another one can be quickly opened, and anybody who has done online enforcement on behalf of brand owners can take this whack-a-mole approach to online counterfeiting, which is very frustrating. I’ve done it in my past jobs as well. And then criminal networks are involved with counterfeiting, which leads to hundreds of sites selling the same products on various servers, which makes it a very arduous task for brand owners to stop them without working with authorities to take down these counterfeit rings.
[Gene Quinn] 16:50
Okay. Let’s move on to the next slide. And this gives people the magnitude of what you were just talking about, the number of websites that are involved.
[Maysa Razavi] 17:01
Yes, exactly. And there’s a little link on the bottom, which is internet live stats. And anybody who’s done enforcement in this space can look at these numbers, and it just gives me anxiety just being on this website because it shows things like Google searches and tweets and all this kind of stuff. And when you’re doing enforcement, you look at all that, and it just it gives me personally anxiety. So, I just wanted to show that the internet is a really large place. The UN International Telecommunications Union released a report in 2015 with some interesting statistics. At that time, there were 3.5 billion people online, which is 46% of the global population. This number is up 30% from 2010, 95% of the world’s is now covered by some kind of cellular connection, and there are 7.1 billion cellular connections worldwide. So, there are currently 2.6 billion smartphone subscriptions globally. And by 2020, there should be about 6.1 billion smartphone users. And that’s about 70% of the world’s population being online in five years’ time. And the population of mobile users will have the internet at their fingertips. So, that’s something scary when you’re thinking about online enforcement. And in 2014, in September, there were 1 billion websites in existence. And this rise happened with the launch of the new gTLDs. Before 2013, there were only 22 gTLDs, and now, to date, there’s about 640. And today I looked on the website, and there are about 1.2 billion websites, and that doesn’t include things like ads online and goods available on ecommerce sites and auction sites. So, it’s just an overwhelming situation for a brand owner to police that kind of number.
[Gene Quinn] 19:17
Here’s the next slide on consignments.
[Maysa Razavi] 19:20
Okay, great, thank you. So, there are that many statistics specifically on online counterfeiting. MarkMonitor has done a couple of reports, and the most recent one I have is from 2011, and they reported that rogue websites are selling counterfeit luxury goods, and rogue websites selling counterfeit luxury goods receive about 36 million visits per year. Rogue websites selling counterfeit physical goods attract about 87 million visits per year, and the global sales of counterfeit via the Internet, it will reach about 135 billion. Also, in 2013, we were talking a little bit about pharmaceutical counterfeits before a report stated that 80% of so-called medicines over the internet are counterfeit. So, these numbers are kind of old when looking at the internet because a lot changes online. So, we know that the problem is increasing by looking at these small consignments at the border. Counterfeiters are selling goods online from anywhere in the world and sending it directly to the consumers. So, with the rise of online counterfeiting, there’s a direct correlation to the growth of the small packages seized at the border. And right now you’re looking at some statistics from the EU. They have a special administrative procedure in place to deal with small packages. And so, in 2014, the postal and courier traffic accounted for 81% of all the tensions, and medicines were the number one good seized in 2014. In 2015, postal and courier traffic accounted for about 77% of all the detentions, and electronic equipments were number one, with medicines coming in second. So, you can see that with these small packages, as well as the many internet sites out there, enforcement can be quite tedious for the brand owner.
[Gene Quinn] 21:31
Okay. And now we have four steps to an online brand protection strategy, and this is where I guess we’re all going to participate in this conversation. And Joan, I think you’re going to start us off here, correct?
[Joan Porta] 21:49
Sure, yes, I can start, but as you said, everyone will be providing their insights here. So, exactly. We define these four steps for an effective online brand protection strategy. The first step would be, first of all, as a starting point, defining the basis of your strategy. We’re going to be seeing how to define the scope of protection, set up your priorities and your goals and KPIs to measure your success. We will also be talking about monitoring, that means detection of counterfeit listings. And after that, we will be commencing the phase of what we call documentation, and by that, we mean registering and collecting all relevant data of those infringements, those incidents that we’re detecting online. And finally, we will be covering the enforcement phase and the enforcement actions and providing some best practices of what can be done to fight these online counterfeits.
So, to start with, as a starting point, the basis of our strategy is three elements that we believe are important to consider when we begin with an online brand protection strategy against counterfeits. First of all, we’ll talk about the scope of protection, and with that, we’re trying to answer the question of what are we going to be protecting exactly and what type of counterfeits. We mentioned before that not all counterfeits are the same. Sometimes they’re infringing upon a trademark, a design patent, utility patent, or other intellectual property rights. So, to answer this first question, what we recommend doing usually are two things. First of all, we can run an audit to see exactly what kind of counterfeits you’re facing. So, are these products infringing your trademarks, are they more about knockoffs, infringing your designs or your patents. We can also try to measure somehow the scale of the problem. Here, at Red Points, when we work with a brand, we usually qualify them according to three different categories based on the results of this first audit. So, we consider them being low when they have less than 500 listings out there of potential counterfeit listings. If they have less than 500, we believe they have a low problem. We would qualify them as medium when they have between 500 and 3,000 listings, and high for those brands that only on the first audit we see that they have more than 3,000 listings of potential counterfeit goods.
And then, and I’m sure that the rest of the panelists will have a lot to say on the second part, which is after running this audit, you want to look at your intellectual property rights portfolio. And you want to see do you have design or patent protection on your products, do you only have trademark registrations, are these trademarks protected in all relevant classes, do you have copyrighted materials, like images, videos product description that sellers of counterfeits may be using? And another important question that we will be coming back to that thing later on is where, meaning in which jurisdictions are these rights registered? And all this is important because if you have a trademark, but if you have only trademark protection, you don’t have designs or patents on your products, it’s probably going to be quite difficult to find knockoff that are not using your brand. Or if you do not have IP registrations in China, removing listings from some Chinese marketplaces like Taobao may be quite challenging. So, from our perspective, this first exercise is necessary and very useful and should give us a much better understanding of the type of incidents that we want to monitor and enforce, and it will also help us define the next step, which is product prioritization. But perhaps the other panelists want to add something regarding this phase of defining the scope of what’s an infringement and what not.
[Gene Quinn] 25:53
The one thing I would add, and then I would like to get the other panelists to weigh in on this specifically, but in the United States, one of the things that we frequently tell folks, as patent professionals at least, is design patents are weak, and you know, maybe you don’t want to get them and you’re probably going to be dissatisfied with the protection, the rights, and they historically have a bad reputation because some of the more new, I should say, scam providers have pushed them, when in fact, the utility patent probably was what the vendor really wanted or needed. But what we have seen over the last couple years is that design patents have become quite strong in certain areas, and particularly in this area when you’re battling knockoffs. And particularly with trade shows, and particularly in Las Vegas, where there are an awful lot of trade shows, the District of Nevada is not afraid to send out to federal marshals to confiscate knockoff products when there is a design patent infringement. And for the judge, it’s really easy. You take a picture of what they’re showing at the booth, and you show them your pictures and your design patent, and they will send out the federal marshals and confiscate everything that’s at the trade show. Now, this is a real world situation. It’s not always applicable and wouldn’t really implicate to be a factor in the online world so much. But I do always want to remind people to think about other forms of intellectual property, not just trademarks, when you’re trying to battle counterfeits and knockoffs. So, I’m really glad you did raise that point because I think sometimes in this conversation, the protection against knockoff, that part of the conversation gets lost sometimes.
Tony, I know you’ve seen a lot of this stuff. What can you tell us?
[Anthony Lo Cicero] 27:42
Right. I agree. I agree absolutely. And I’m glad you mentioned design patents. Sometimes people have historically downplayed the value of the protection is limited. On the other hand, when you’re dealing with a direct counterfeit, which by definition is indistinguishable from the original, then design patent protection is just fine. Remember, design patents have a statutory presumption of validity. So, that allows judge at least initially to be confident that he can take action against the knockoff.
Another kind of protection that is often overlooked, at least in the United States, is state trademark registrations. Back when the current Anti-Counterfeiting Act was passed in 1984, The Federal Act, which we at INTA and ICC and others were involved in, after that was passed in ’84, we next look to the several states. And to short circuit it, brand owners should be conscious of having state trademark registrations in addition to federal ones because often it is the state trademark registration that is the keystone to a criminal violation in a particular state. And if you want the New York District attorney and New York Police and then the Los Angeles Anti-Counterfeiting Task Force to get involved, then if you can show them a California State or New York State registration that’s being counterfeited, then that goes a long way to gain the assistance of local authorities and the local prosecutors because, remember, it’s not the function of a local prosecutor to enforce federal law, but rather to enforce state law. So, that’s, I think, a very significant thing to do. And then what everybody said is right. When you when you start to see a counterfeiting problem, the first step has to be to fortify your arsenal with trademark registrations in the right class of goods or services, trademark registrations in the right countries because very often you cannot succeed in getting the Chinese officials, for example, or the EU customs officials or the U.S. customs officials to go forward and help you without the proper registrations and recommendations in place. So, that’s absolutely the first step in a brand protection scheme.
[Gene Quinn] 30:12
Okay. Great. Great information. I must confess, I never really thought about the state trademark registrations in that manner. That has opened my eyes, and hopefully others as well. Maysa, any particular thoughts on this first step with surveying what you have in terms of the rights and on that initials?
[Maysa Razavi] 30:35
Well, just looking a little more globally, I know that a lot of the times privacy laws inhibit the platforms from sharing information with brand owners. So, I think you need to know a little bit about privacy laws in different countries. I know that in China some of the platforms say we can’t share information about the counterfeit, or because of the privacy laws. However, there’s some legislation moving forward from the National People’s Congress of China on the draft ecommerce law that should be moving forward this year. That may change that, and we gave some, for instance, INTA gave some recommendations, as well as a lot of other associations to try to get that information more readily available to the brand owners. Also, in the EU, there’s a lot of strict privacy laws. And in the EU, there’s now a movement to have a single digital market, which a lot of piracy and copyright issues are being included into that. So, we’re trying to advocate for the same kind of protection in trademark. So, kind of echoing back to what was said before, I do think you need to have a large portfolio of different rights because there’s all these different moving parts, but there are other laws involved with online enforcement that could inhibit your work in different jurisdictions.
[Gene Quinn] 32:03
Okay, great. Thank you. Now, before I turn it back to Joan, so we can talk about monitoring rather, I want to let folks know, we’ve been going for about half an hour or so. We’ve covered quite a bit of substance already in this discussion. If you have any questions, please feel free to shoot them to us. I’ll try and work them in in our remaining 30 minutes. And if I cannot do that, we will save some time at the end of this webinar to try and address as many questions of yours that we can get to.
So, Joan, if you can pick up with monitoring. I know the next topic up here is covering all the relevant channels, which includes those rogue websites and social media platforms, which are just so large in number and almost (32:49) how one would even attempt to do that.
[Joan Porta] 32:54
Great, perfect. So, yes, we’ll continue with this, and we’ll talk about the process of detecting potential counterfeits online, and we’ll have a quick overview on the main channels that that you should be covering and that you should be considering. Very briefly, we see here a list of categories of online channels. We talked about marketplaces to refer to platforms like eBay, Amazon, AliExpress, that have multiple sellers offering a wide range of products. And we have what we call B2B marketplaces that are usually dedicated to wholesale, and where we can often find manufacturers or very large distributors. We have B2C and C2C marketplaces, with business engaging directly to final consumers. Then as a second category, we have individual websites, what we would call rogue websites or individual websites. These are stand-alone sites operated by a company or an individual, which have been often created for the sole purpose of selling fake goods. These are sometimes the hardest channels to shut down, and very often these sites are focused on selling a specific category of products, like watches or footwear. And sometimes they’re even dedicated to selling products from only one specific brand, and often they will be impersonating that brand and trying to present as an efficient sales channel.
Then I want to point out a channel which is acquiring a lot of relevance for the past years. These are social media platforms, Twitter, Instagram, Facebook. They’re all used both to sell counterfeits directly and as a means to promote and advertise rogue websites and store on marketplaces. Also a more recent trend, which is the use of image hosting services and sites like Yupoo, Flickr, sometimes even Dropbox or Google Drive, where sellers of counterfeit goods, they’re posting catalogs with images of their fake products, and then they link those catalogs with their account on marketplaces. So, what you will find is a seller’s account on Alibaba, for example, which has only what we call a blind offer. So, for example, a white T-shirt with no logos at all. So, nothing that you can identify as an infringement. But then this offer, when you place an order on that listing, you can submit the code of the fake product that you got from the seller’s catalog linked to that account, and then you will be receiving the counterfeit or the knockoff. So, it has to do also with the trend that I mentioned in the beginning on how the methods that counterfeiters are using are becoming everytime more complex and more sophisticated and harder to find also.
Just to finish, e-shopping apps are also growing in popularity and are often littered with counterfeit goods, and classified ads portal are also a channel that should be kept in mind and monitored because it’s often used also to sell counterfeits in a smaller and more local scale. Finally, these are our basically selling points, but we should also consider other sites or channels that are used to promote counterfeits. So, pay-per-click ads, social media groups and pages, instant messenger apps, blogs, forums, etc. All these are channels that brands should monitor and keep in mind.
So, I want to quickly touch upon this point, automated versus manual search, and then hand it over to the other panelists, because we just saw all these different channels, we just heard Maysa with the statistics and the figures. She mentioned before about the number of active websites globally. And so, with all these different channels where counterfeits can pop up and which will actually result in thousands or millions of different websites, someone might wonder, how are we supposed to monitor all this manually? Well, from our perspective, well it’s possible, of course, to monitor a certain number of sites and marketplaces manually, but when you’re heavily affected by counterfeits, there are no practical means of doing this without technology. And so, you need a monitoring software that can assist you in the task. And actually, to be more precise, what we’ve learned from our years of experience in fighting online counterfeit is that the best solution is the one that combines both detection technology – so, that means crawlers that are constantly monitoring online sale channels. Also with human analysis, and by that we mean experts that are capable of detecting new trends and detecting new code words that are used by counterfeiters that are interacting in closed social media groups, in instant messaging apps, forums, where counterfeiters are operating and promoting their products. So, at the end, online counterfeits keep growing and infringers keep improving their methods, and the combination of both strong technology and human expertise, we believe, is the only way really to guarantee that the right level of protection is acquired.
[Gene Quinn] 38:06
Okay, great. And the next one here, so we have documentation and enforcement. But before we go there, we have a question for Maysa. We have someone who was interested in hearing more on what you were talking about with respect to the EU’s current special administrative procedure for interception of postal consignments?
[Maysa Razavi] 38:29
Yes. So, in 2013, with the implementation of the new customs regulation in the EU there, they put into place this special procedure for these small consignments. If you apply for an application for action, which is the EU-wide recordal application, you can just kind of check that off as part of your package for your application, and you can request for that across the board. I think about 40% of brand owners do that. It can be a little costly though, because if you check that box, you’re going to be on the hook if they do seize the goods for helping pay for like the destruction of the goods. So that’s one of the downsides of it, and that’s something we’re working with the EU about. I can send more information along if you want to share it with the attendees of the webcast here today. I’m happy to do that.
[Gene Quinn] 39:37
Yeah, that would be great. If you have any more information that you can give us afterwards, we can forward that along to everybody who’s in attendance. And we’re already hearing from the person who asked that question. He would love to get that information specifically. So, we will get that out to all of you. Thank you, Maysa.
And I have another question here. And I think we’ll get to this eventually, but maybe we should just take a moment to address this since it is definitely something that we said we were going to talk about. And Tony, I think this one is going to be right up your alley. It deals with issues/challenges posed by different jurisdictions in protecting businesses who sell products across the border via different commercial platforms, such as maybe Alibaba, for example. Do they have to register their trademark or patent first in their destination country? For instance, in China? Or is there no registration requirement of any kind?
[Anthony Lo Cicero] 40:37
Well, I think that’s a very important point. I mean, the answer is, yes. However, I think the question is whether or not do you have to register in the destination country? In the origin country? And you really do, because the Chinese authorities – and let me talk a little bit about China. Obviously, I think everyone will agree, and all those who have ever seen suggest that these days the vast majority of counterfeit products emanate from China. My understanding in talking to two Chinese council with whom we regularly work and others is that the Chinese government is well aware of that, and they’re well aware that China’s economic growth and standing in the world community will only improve to the extent that the rest of the world thinks that China is taking this problem seriously and is taking steps to counterfeit. And I think that’s an instruction that’s coming down from the very top of the Chinese government. So, you know, they’re not – remember, China, the Cultural Revolution was only 40 years ago. So, from zero to where they are today, it’s a tremendous, you know, they’ve gone very far, but obviously they’ve got a long way to go. So, I think you need to register your trademarks, but certainly in China, you need to develop relations with the administrative offices there, the local administrators, to the extent that it becomes an issue. But yes, you need registrations in the local country and in the destination country.
I’ll give you an example. A long time ago, Ralph Lauren, whom we represented at the time, had a real problem. There was a counterfeit who had obtained the registration in Indonesia for the trademark of Ralph Lauren and Polo by Ralph Lauren. And he was using that registration to convince Japanese customs officials that after all these were goods being imported from Indonesia by the so-called rightful trademark owner, namely the guy with the Indonesian registration, and therefore, they should be let into Japan. Well, this was a 10- or 15-year battle trying to stamp these people out in Indonesia, but it illustrates that, yes, you really do. You need to not have this issue, okay? The issue can’t be that you don’t have the rights. The issue has to be let’s figure out who’s infringing our rights and how we’re going to stop them, but you don’t ever want to have a discussion of who has the rights. So, get the registrations in China and the EU and the U.S. and Japan, and wherever you’re going to manufacture, where you think you’re going to be counterfeited or we’re you’re going to sell.
[Gene Quinn] 43:11
You know, and that’s great advice, and we give that advice all the time, right, Tony, is – you don’t want to be penny wise and pound foolish, because whenever you do that, you’ll always regret it later on. If you come to an attorney ahead of time, for a little bit of money, we can solve all kinds of problems in advance. Whereas, if you come to us later on, we can solve the problem. It’s just going to take a lot more money, and in this case, a decade or 15 years, to do it.
[Anthony Lo Cicero] 43:41
That’s exactly right. And, you know, the other thing about the money because they’re undoubtedly in-house people among the 60 or so people online, you can’t always measure how successful an anti-counterfeiting program is. You can measure in the sense that we see this many and we found these many sites and so on. But what you never know is how many people you have dissuaded from getting involved in counterfeiting your brand in the beginning. We always have done this. Yes, here’s the metrics because, you know, the accountants and CFOs need to see metrics, but you don’t know who you turned away from counterfeiting Ralph Lauren, who you turned away from counterfeiting Goodyear, who you turned away from counterfeiting Nestle by having strong brand protection activities. Remember, the people engaged in this are criminals. And just as criminals will break into the house on the block that has the least security and the car that has the least security, they’ll also counterfeit the brand that has the least security. So, don’t get too caught up in the metrics issues. It’s the brand that is important, you’ve got to take steps to enforce it.
[Gene Quinn] 44:56
Yeah, I like that analogy as well. You know, to some extent, you almost want no proof that your protection regime is working. And I know in the corporate world that that doesn’t always fly because it’s when you have some kind of proof that something has gone wrong, you know. When you have something that you can point to that, oh no, we delivered for you, well what did you deliver exactly? You delivered, winning a fight. The whole point of this is you want to be big and bad and ugly so that the others don’t want to fight you. And if you put some thought into this, you can really accomplish that. You know, we see that, and as you all know, I’m a patent guy. And on the patent side of the equation, there’s a whole lot of businesses that have made their reputation in the patent space, if you’re not getting anywhere near us, that’s fine. You bought a lawsuit. And so, what happens is people don’t get anywhere near them. I mean, it’s just as simple as that. And so, deterrence is a big part of this process. And deterrence obviously has to start with the rights. And just to bring that story full circle. So, Joan, I know we took you a little bit astray with those couple questions, but let’s jump back into the four steps, if we can, at documenting.
[Joan Porta] 46:12
Great. Yes or no. Well it was very interesting, and I couldn’t agree more on what you said. So yeah, let’s touch briefly upon these two other steps, documenting and enforcement, and then perhaps we can move forward to the last section, talking about repeat offenders. By documenting, I said before, we want to make sure that while we detect infringements, that we’re also collecting all relevant data around these infringers and about these counterfeit goods. And we ask here the question, when we think about which data that we want to gather and collect and store, we need to think for which purpose do we want that data? What are we going to use it for? And we divide it here, we usually divide, do we want that, you know, to brand validations? That means to allow us to take the decision whether a specific product is a counterfeit or not. That could be one purpose. Purpose number two would be for enforcement, what data do we need in order to do online enforcement and takedown. And finally, for reporting, internal reporting, or to understand better the results of our brand protection strategy. I’m not going to extend on this, but there’s a lot of data, a lot of information that can be collected when you’re monitoring online, not only images and screen captures, names of products and descriptions, selling price is also a critical information, names of sellers, countries where they’re shipping, stocks available, the reviews from customers, you can take the indicators on why the product is a counterfeit or not. So, there’s a lot of data out there. Sometimes it may not be accurate, sometimes it may be false information, but very often it’s real data, that if you collect it, and you know how to use it, and we’ll see this now when we talk about repeat offenders, it can really make the difference on your fight against online counterfeits.
And finally, regarding enforcement, and I’m talking here about online extra judicial enforcement, well you are talking about IP registrations and the importance of registering your trademark and your rights in different jurisdictions. And we couldn’t agree more. That’s why actually it’s on these checklists, it’s in the first place, securing your rights, registering your trademarks, especially in China, but also Indonesia, India, South America, all these other countries where having or not having your rights registered there will really make a difference. And regarding this, I wanted to add actually it’s not only about the countries where you’re manufacturing or the countries where counterfeits are produced, but we’re seeing, and related to the Ralph Lauren case that was mentioned, we’re seeing everyday brands with which we work that are startups and young companies that have grown very fast, and they have become very popular in a short period of time, and maybe they did not have the prevention to secure their trademarks and their intellectual property rights in these countries, the problem that they find now is that someone else, and as I’m saying, we’re seeing this every day. Someone else has registered their trademark in that jurisdiction, and the money, the time, and the resources that you need to spend on trying to file an opposition and recovering that trademark is really painful. So, registering your rights in as many jurisdictions as possible is first step. And then there are many things, I’m not going to enter in each of them. If someone from the audience wants more details on these, they can contact us. But from using takedown tools available or established by marketplaces and platforms, issuing takedown or sending legal notices both to website owners, hosting providers, website software builders, using ICANN, who has strong police information procedures, the indexing content from Google. There are really a lot of options that you have when you want to take down illegal content online and your expertise and being able also to automate part, not all, but part of these actions is also critical if you want to be successful.
[Gene Quinn] 50:23
Okay, Now, Maysa, before we move on here, I know you had said that a part of your life before you joined INTA dealt with this in particular, do you have any thoughts on this or anything you want to share with those folks on the call?
[Maysa Razavi] 50:39
Sure. Well, I know it’s really frustrating to do this because I did, in the previous life, take down all of the websites for one of the brands I used to work for, and it was very frustrating because it’d be like one day it would be fakecounterfeitgoods.com, and I would take that site down, it would be fakecounterfeit.com or it starts at fakecounterfeitsone.com that I take down, and it was really frustrating. So, we’ve had to work with a couple of the registries, I believe is the word, that we had to work directly with. And I think the one thing that I did learn is that you have to work directly with the intermediaries, and building that relationship is one of the most important thing in enforcement. So, you should know the counsels. If you’re doing this full time, you should know the counsels at the major search engines and marketplaces and payment providers because they can be really helpful when trying to do this work. They are usually IP counsels, so they know all of the issues, and they’re willing to work with you. I think a lot of the times brands point fingers at the platform, saying they don’t want to help. But if you don’t know the right person there, it’s kind of difficult to do. And the good thing about my role now is I actually know a lot of these counsels, and I do see how they work with the brands and how they work with each other to kind of improve the best practices across the board. So, that’s the one piece of advice I would give.
[Gene Quinn] 52:14
Okay. All right. So now I think we get to the final slide, which is fighting repeat infringers, which is, you know, now we get to the point where we’ve got all the information, we know all the tactics, and we know all the players, we’ve tried to get all the help that we can get, we’ve notified the people in the country about our trademarks, and we don’t seem to be getting anywhere, I suppose. So, what do we do?
[Anthony Lo Cicero] 52:44
You’re at the stage where you have to take action against people, and you’ve done all the monitoring and so on, as Gene has said. So, what kind of action is effective? Well, first of all, you have to find out first of all, where you’re going to sell, who you’re going to sell, what are you going to sell them for? I think you have to sue people in as many jurisdictions as it makes sense. So, for example, if you’re dealing with Chinese counterfeiters, then you really have to think seriously about enforcement activities in China. As I said, the Chinese government is more receptive to that than it used to be. So, let’s call that the source issue and then let’s talk about destination issue too. You should never minimize or discount the importance of local customs officials. My personal experience is that the U.S. Customs, for example, is composed of particularly dedicated people. They really care about their job. If you work with them, and you give them the information they need when they detain goods and need to know whether or not the goods are actually a counterfeit, if you follow up with them, if you recoil your registered trademarks with customs as necessary, they’re very effective.
Remember, all these goods that are sold online to these very sophisticated computerized techniques ultimately need to get shipped to the customer. And they get shipped, they have to pass through customs, and therefore, every counterfeit that’s coming into the United States passes through customs. Now, customs, the Customs and Border Protection people will tell you that they only get to inspect a small percentage of the goods that come in because uncounted countless amounts of goods come to the United States every day. So, you have to work with customs, give them information about where counterfeits are likely to come in, who’s likely to bring them in, and so on.
In terms of litigation, the International Trade Commission in the United States, the ITC, is very effective. There’s litigation now involving the Converse sneaker designs. And so, although it’s expensive, the end result of an ITC investigation can be a cease and desist order, and can be an exclusion order, preventing counterfeit goods from coming into the United States, and those are very effective. In addition, there’s ‘garden variety’ federal court litigation. When we sue people, you sue the entities involved in the counterfeiting, you sue the individuals to the extent you can find them, you sue to the extent that you haven’t gotten cooperation, the platform that has, you know, Amazon is the defendant in a lot of losses these days, the platform, the people who facilitate the payment, all this money that gets paid, there’s a funding provider, Mastercard, Visa, and so on. So, you have to try. And if you have to sue, you need to sue everybody so that the people will turn on each other. Mastercard has no interest in facilitating the sale of counterfeits. So, they’ll turn on to people, they’ll stop the people who you prove are counterfeiters. Amazon has no interest in allowing the sale of counterfeits. Alibaba has no interest in allowing the sale of counterfeits. And so, through the threat of and the actuality of actual litigation in the right jurisdictions, you have to get all the people involved to turn on the bad guy, and ultimately shut them down.
[Gene Quinn] 56:29
Where is the best margin to be spent in terms of trying to stop this problem? Is it with a customs program? Is it with online monitoring? Are there any countries or regions that you should focus on? Maybe we should get everybody to address this. Tony, what is your initial thought? What is the best bang for the buck?
[Anthony Lo Cicero] 56:51
I’ll give them in the order. First is online monitoring like Red Points because you have to know what’s happening. Second is customs enforcement because, as I just said, customs is really important. And third, I would say, is getting registrations in the important countries like China. One last comment and I’ll be quiet, a lot of people don’t understand that in most of the world, excluding countries like the United States that are based on a common law British system, other than those few countries, U.S., U.K., Canada, Australia, and so on, everywhere else, it’s the registration that matters. So, if you don’t have a registration in Indonesia, you don’t have any rights, no matter how many sales you’ve made there. The same is true in China, in the EU, in Japan, the registration counts. So first, do your online monitoring; second, deal with customs; and third, be sure you have your registration portfolio around the world.
External Relations Manager & Head of Anti-counterfeiting for INTA
Founder of ipwatchdog.com and patent attorney
VP of Strategy & Innovation at Red Points