Sale of counterfeit goods on the Internet: Measures supported by the industry

Sale of counterfeit goods on the Internet: Measures supported by the industry

On April 28, 2021, two new stakeholders signed up to the Memorandum of understanding on the sale of counterfeit goods on the internet, which now has 30 signatories..

The online market for counterfeit products has incessantly expanded over the last two decades, endangering the interests of several stakeholders:

1) The economic interests and safety of consumers, who receive a non-original and potentially dangerous product;

2) The economic interests of Rights Owners (revenue loss and Brand devaluation);

3) The interests of online platforms, who aim at being considered as trustworthy marketplaces.

First signed in 2011, and subsequently revised in 2016, the Memorandum establishes a code of practice directed at enhancing collaboration among Rights Owners (RO), Online Platforms and Business Associations to fight the sale of counterfeit goods on the Internet. Although not legally binding, the rules agreed upon by the Parties are directed at facilitating the application of effective measures to identify and remove offers of goods in breach of Intellectual Property Rights (IPR).

In particular, throughout the Memorandum, the Parties outline their respective commitments with regards to Notice and Take Down procedures, proactive monitoring and counter-measures.

NOTICE AND TAKEDOWN

According to Art.14 of Directive 2000/31/EC (eCommerce Directive), online platforms are not liable for the information they store at the request of a service recipient. In order to benefit from this liability exemption, online platforms must:

Have no actual knowledge of the illegal content or activity. In this regards, the Court of Justice clarified that the service provider must not play an “active role of such a kind as to give it knowledge of, or control over, the data stored” (Court of Justice of the European Union, 2010, par.120);

Act expeditiously to take down the information as soon as they have become aware of its illegal character.

Notice and takedown (NTD) procedures are therefore the main instrument used by Rights Owners to ensure the removal of IPRs-infringing goods from the Internet. Once an offer related to a counterfeit item is identified, the Rights Owner sends a notice to the online platform on which the offer has been made, requiring the take down of the content. Online platforms are obliged to comply, if they wish to benefit from the liability exception provided for by Art.14 of the e-Commerce Directive.

While the Directive does not specifically regulate Notice and Takedown procedures, the MoU outlines mutual commitments bwtween Rights Owners and Online platforms, directed at making these measures more rapid and effective. In particular:

Rights Owners commit:

• to use reasonable care and appropriate means to identify and notify with precision offers of counterfeit good. Failing in doing so might result in the RO being denied access to the NTD, or required to compensate the economic value of the listing removed following incorrect notifications.

Internet platforms, on their side, commit:

• to make available on their websites appropriate instruments that allow digital notifications to be submitted in an easy and efficient way. Such notifications should lead to the swift removal of the infringing offer, avoiding any unreasonable delay. At the same time, affected sellers should be immediately informed, and the reasons underlining the take down of the content shared with them, together with the contact details of the notifying party, so to allow a dialogue between the RO and the Seller.

Additional requirements with regards to Notice and Take Down procedure have also been proposed by the EU Commission in its Communication and Recommendation on measures to tackle illegal content online.

ADDITIONAL PRO-ACTIVE MEASURES

Within the Memorandum, the Parities agree on additional proactive measures and practices to be followed to both identify and prevent offers of counterfeit products.

Rights Owners commit:

• to actively monitor the Offers available on websites seeking for illegal contents to be notified, and;

• to communicate to the Online platform information to more easily identify this type of offers (such as keywords used by sellers of counterfeit goods or products that are to be automatically considered as counterfeit, e.g. models not existing in their brand) and the users considered to be repeated infringers.

Online sellers, instead, commit:

•    to take appropriate measures to identify sellers at the moment of their registration, facilitating their prosecution in case of illegal conducts, and to take measure to exclude or restrict access to repeated infringers;

•    to act proactively to prevent and/or single out offers of counterfeit products. This general commitment, however, should not be intended as posing on Online Platforms any obligation to actively monitor the content made available by users. As a matter of fact, such an obligation would be extremely burdensome for Online Platforms featuring hundreds of thousands of new listings every day, to the point that it is explicitly excluded by Art.15 of the e-Commerce directive.

Finally, both Rights Owners and Internet Platforms pledge to make available to consumers suitable means for reporting infringing offers.

CONCLUSION

The Memorandum has proven to be an effective instrument in facilitating the cooperation among stakeholders. Nonetheless, it is possible that, in the near future, the Agreement will be reviewed to expand its scope, with regards to both the Parties involved and the kind of infringements to be fought. In particular, in the last years, counterfeiters have been increasingly targeting electronics, cosmetics and, following the Covid-19 crisis, even Pharmaceuticals and Personal Protective Equipment products. As this trend exposes consumers to greater health and safety hazards, it is possible that the Memorandum will be soon amended to specifically address these infringements. (European Commission, 2020).


Tommaso Poles

Regulatory Affairs Department

21.06.2021


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