IP: Protecting your brands against online counterfeit sellers

Brand owners should use a multi-pronged strategy to combat knock-off goods

Although counterfeiting is often perceived as a victimless crime, it has significant economic and reputational costs for brand owners. In 2012, U.S. Customs and Border Protection seized counterfeit goods worth $1.26 billion and shut down 697 websites involved in trafficking counterfeit goods. Counterfeit goods are not merely knockoff designer purses purchased from a street-vendor, but also include pharmaceuticals, toys, cosmetics and automobile parts such as airbags and brake pads, many of which are sold online.

A knockoff designer purse or toy may look relatively harmless, but it may have been made with toxic dyes. Substandard automobile airbags, untested brake pads or drugs, and cosmetics containing unregulated chemicals may cause serious injuries to consumers and severely damage a brand owner’s reputation. This article offers some practice tips to help brand owners protect their intellectual property  rights and combat online counterfeiting through monitoring, enforcement and preventive measures.

The avenues for selling counterfeit goods have grown significantly along with technological advances. In the past, counterfeit goods were often shipped from large cargo containers into the U.S. and passed through layers of middle men before reaching consumers on the street. Now, counterfeit sellers set up online presences at auction or marketplace sites and ship counterfeit products directly to consumers. They also use Internet and social media tools to generate web traffic and to divert consumers to rogue e-commerce websites to sell their goods. These rogue sites often have the same look and feel as the brand owner’s site. The counterfeit seller may create pseudo product reviews, blog entries and rogue social media profiles to bolster its legitimacy. Susceptible consumers may fall prey to this fake content. 

Given the seemingly boundless scope of the Internet, brand owners confront anonymous online counterfeit sellers every day. The following are some practice tips to help brand owners face that challenge:

1. Register your intellectual property

  • Register trademarks and copyrights with the applicable trademark and copyright offices to obtain legal protection and potential remedies against infringers.
  • Review IP portfolios periodically, identify gaps and submit the appropriate applications for federal registration.

With this said, the lack of formal registration is not fatal to enforcing one’s rights. In many jurisdictions, trademark rights vest upon use of the mark, and copyrights are secured upon creation of the work. Thus, although trademark and copyright registration more strongly support enforcement efforts, as they allow for a federal copyright cause of action and international enforcement actions, such registration is not mandatory to enforce a brand owner’s rights.

 2. Monitor your brand online

  • Actively monitor auctions, websites and torrent activities, online advertisements, sponsored links and online content that reference the brand name.
  • Run keyword searches using your brand names or variations thereof to generate a good list of rogue websites, social media sites and sponsored links for review. 

Companies of all budgets can engage in monitoring efforts, from self-monitoring to engaging an outside vendor to run and review searches. The scope and frequency of the review varies depending on the brand. Companies can set up Google Alerts to email keyword search results on a daily or weekly basis.

3. Proactively enforce your brand

  • Send demand letters to online infringers regardless of whether the trademarks and/or copyrights are federally registered. 

 Brand owners should demand that the infringer discontinue use of trademarks and/or copyrighted work, provide an accounting of the profits and reveal the source of the counterfeit goods.

  • Contact the Internet service provider (ISP) to remove rogue sites. 

An ISP’s terms and conditions usually include language stating that domain owners agree to refrain from posting information that infringes on third parties’ IP rights. In the letter to the ISP, brand owners may point to such terms and conditions to request removal of infringing contents. 

  • Ask social media sites to remove rogue accounts.

Social media sites often have terms and conditions or acceptable use policies similar to those of ISPs. They honor brand owners’ requests to remove infringing contents if such contents violate IP rights. Often the terms and conditions allow for termination of an infringer’s account for repeated violations.

  • Cut off payment means to rogue sites.

Online payment processors such as PayPal have terms of service that prohibit users from engaging in “sales of products or services identified by government agencies to have a high likelihood of being fraudulent.” Disabling a counterfeit seller’s payment processing means cutting off its revenue source. 

4. Record registrations with customs agencies

  • Record trademark and/or copyright registrations with customs agencies in different countries.

Brand owners should check the availability of customs protection in specific countries of interest and see whether they can obtain registrations recognized in those countries.

  • Be responsive and willing to cooperate with customs officers in reviewing seizure notices and seized samples of goods. 

Brand owners can work with customs officials by educating them about the brand owner’s goods, providing them with information about authorized manufacturers and distributors, and identifying particular ports where suspected counterfeit goods enter the country. 

5. Undertake other preventive measures

  • Secure the supply chain.

By carefully screening vendors, brand owners reduce the risk that vendors will sell and distribute goods outside the distribution chain and personally profit from those sales. 

  • Change product design periodically and incorporate anti-copying mechanisms.

These mechanisms allow the brand owner to track counterfeit products more easily, and may prevent counterfeiters from accessing and easily replicating authentic goods.

In conclusion, the measures set out in this article are not exhaustive. Brand owners should consider educating consumers about the effects of purchasing counterfeit products, and work hand in hand with ISPs, social media sites, search engines and law enforcement agencies to combat counterfeit sellers.

Contributing Author

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Camille M. Miller

Camille M. Miller is a Member of Cozen O'Connor and Chair of the firm's Intellectual Property Practice Group. Camille concentrates her practice in all aspects...

Additional Contributors: Elizabeth Featherman, Richard T. Ruzich

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