Counterfeiting procedures, legislation & trends

1 Advancement in counterfeiting methods

Question: What new or improved methods are counterfeiters utilizing in your jurisdiction? What can be done to combat the method?

Counterfeiters are constantly improving and evolving. In some cases, they can be highly sophisticated and well-organized operations. With the pandemic, their business grew even faster and more widespread than ever before.

Counterfeiters have become harder to find as they operate through larger webs. For example, a single organization might operate through dozens of different online sellers, located in various countries. Also, they use other methods to disguise the size of the operation and diversify risks, such as for example small consignments. So even if some of these are located or seized, the impact to the organization is minimal and brands are not too keen on taking action in all cases due to the high costs of the actions and the little gain obtained.  

The way to address these new strategies is to spend a good amount on the budget destined to fight piracy in proactive investigations and intelligence development. With information at hand, better decisions can be made and the limited resources available used in effective ways. A well-crafted, balanced and holistic approach is necessary, as usually one-off punches or uncoordinated action lead nowhere. Also, entire sectors coming together and funding actions jointly against the common enemy is being used more and more by companies, with great results.

2 Marketing

Question:  Have you noticed a shift between online marketplaces, social networking websites or brick and mortar counterfeit activity in your jurisdiction? Increase in one over the other?

In general terms, online activity is constantly growing while brick and mortar sales are becoming less relevant compared to online. Within the online realm, the main shift has been the increase of the sale of counterfeits through social networking sites. And we expect this trend to continue to grow in the coming years. An important part of the focus on the part of brands should be put on this kind of outlets.

Question: Has there been an increase in live shopping and products being are promoted and sold through live video streams? Have rights holders found it difficult to track and enforce IP rights on types of platforms?

Yes, live shopping has also become a problem for brands trying to fight counterfeits. No technological tools have yet been developed to target this problem effectively and offenders are taking advantage of that fact.

Question:  Has “Dupe Culture” and “Knockoff culture” contributed to the rise in counterfeit goods being sold online and/or in physical retail locations?

Yes. The dupe culture is a by-product of the counterfeit industry in that it was born with the same goal of taking unfair advantage of the investment of original brands in developing quality products, but with the added difficulty for brands that they are much harder to target. Dupes do not infringe on obvious trademarks. They do not pretend to be the real thing. They simply take pride on offering an imitation of a trendy product for a fraction of the price. Further, the spread the idea throughout the society that brands are ripping-off consumers and therefore it is ok to pay back and buy fakes. This makes it hard for brands to implement their enforcement strategies as a large portion of their success lies in educating consumers and making them aware of all the problems associated with buying illegal goods.

Question: Has any new legislation been proposed or implemented to shift the responsibility to marketplaces (online) to ensure they are more vigilant in vetting sellers and removing counterfeit and infringing items?

Yes. On 12 March, the European Parliament approved the new Directive on liability for defective products (Product Liability Directive). Entering into force 20 days after its publication, the Member States have 24 months to transpose the Directive into national law. The Product Liability Directive is intended to replace the previous Product Liability Directive 85/374/EEC from 1985. This Directive leads to a substantial tightening of product liability for companies compared to the previous one.

The Product Liability Directive also extends the scope of possible liable parties and adjusts the provisions to global supply chains. In this context, the Product Liability Directive provides a gradual system of possible liable parties, which has a direct impact on the fight against counterfeits.  

Firstly, manufacturers and “quasi”-manufactures (e.g. by putting one’s name or trademark on the product) will remain liable for a product defect. In addition, manufacturers of a defective component (where that component has been integrated into, or inter-connected with the product) are also liable. Any natural person or legal entity that significantly modifies a product that has already been placed on the market or put into service are now also considered to be manufacturers too.

If the manufacturer is based outside the European Union, not only – as at present – the importer of the defective product or component, but also the authorised representative of the manufacturer can be held liable. If neither the importer nor the authorised representative of the manufacturer is established in the EU, a fulfilment service provider (warehousing, packaging, addressing and dispatching services) may also be held liable on a subsidiary basis.

Finally, if the manufacturer, importer, authorised representative of the manufacturer and fulfilment service provider cannot be identified in the European Union, under certain conditions, distributors of the defective product and online platform providers may also be liable.

All these provisions seek to make the fight against counterfeits easier for companies and consumers and, conversely, harder for infringers and intermediaries to avoid responsibility.

3 Social media

Question:  Has social media continued to be a critical tool for bad actors in your jurisdiction?

Yes, this trend has existed for years now, and it only continued to grow exponentially as new social media sites emerge and the role of said sites keeps expanding, in particular in relation to e-commerce and trend-setting (which are of course very closely connected).

4 Progress for rights holders

Question:  Have there been any changes or progress made for rights holders who want to take a more financially focused approach against counterfeit sellers and networks (domestic)?

Not really. The tools continue to be the same as in previous years. A special focus would need to be placed on the online arena, which can be handled quite efficiently with the tools currently available for brands. However, brick and mortar should not be ignored by companies as counterfeiters know that nowadays companies destine their budgets mostly to the online fight and have realized that selling through brick-and-mortar stores might be a good way to staying under the radar.  

5 Problematic platforms

Please list all problematic websites in your jurisdiction that you include in client’s brand protection landscape and strategy. Are there any new or emerging platforms that have proven to be problematic in the last 12-18 months?

There are of course global sites like Amazon, Ebay, or Etsy, which are active in Spain and are a must when considering the design of a comprehensive anti-counterfeiting strategy in the country. However, there are a few other country specific sites that are very sizeable and relevant in Spain and are also critical when considering such comprehensive approach. Those are mainly Wallapop (www.wallapop.com) and Milanuncios (www.milanuncios.com). In these 2 marketplaces, millions of counterfeit products are sold, and their take-down methodologies are not as sophisticated and up to date as in their global counterparts.

6. Domains

Question: Are you noticing an increase in counterfeit/fraudulent websites?

We have noticed an increase in the number of fraudulent websites, yes. Part of the problem is that they are incredibly easy to set up and once one is taken down, new ones pop-us immediately.

Question:  Examples of trends/patterns (i.e. domains incorporating country codes/certain terms)

We have not detected a specific pattern, but in certain cases we have seen that infringers recreate the essence of an original webpage on a country-specific domain, thus making it look genuine. In other cases, in order to attract potential victims, we have also seen that infringers add terms such as “outlet” or “cheap”, indicating to potential customers that there are offers on the products and discouraging them from assessing the originality of the products.

Question:  Are new TLDs adding to the problem – creating more opportunities for fraudulent networks to create fake websites/web shops?

It is possible that the extension of the list of TLDs have created and will continue to create more opportunities for the development of fake websites and online stores. The reality is that companies cannot be expected to own thousands of possible combinations under different TLDs and CC domains as their budgets cannot allow it. So those are the gaps infringers use to create sites that mimic the originals and from which successful businesses selling fakes are ran.