Combating Online Counterfeiting: An Essential Brand-Protection Goal

The scale of the problem

A recent study by the Organisation for Economic Cooperation and Development (OECD) and the European Union’s Intellectual Property Office found that trade in counterfeit goods now accounts for around 3.3% of global trade, and is worth over $500 billion^[1]. The research found that footwear, clothing, leather goods, and electrical equipment were the most widely affected product types, with the most highly targeted brands based in the United States, France, Italy, Switzerland, and Germany.

More and more of this trade takes place online. The U.S. Government Accountability Office found that two out of every five branded products purchased online are counterfeits^[2]. Many of these fake items originate from China and the Far East, where a significant amount of legitimate manufacturing also takes place. Europol has noted that online marketplaces have become key distribution channels for counterfeit goods^[3]. In a joint global operation between law enforcement authorities, anti-counterfeiting associations and brand-owner representatives in 2016, over 4,500 domain names were seized as part of a shutdown of web shops and marketplace listings offering the sale of counterfeit merchandise^[4].

How should brand owners respond?

These striking statistics highlight how important it is for brand owners to monitor the internet for brand-related eCommerce activity, and to take enforcement action against infringements they find. This is because the implications of counterfeiting for brand owners are not just financial. Fake items are typically manufactured to lower standards, leading to safety and quality issues that can adversely affect a brand’s reputation.

A monitoring and enforcement plan should be holistic, because counterfeit goods are typically distributed using a range of channels, including online marketplaces, mobile apps, and websites returned by search engines and promoted via sponsored advertisements.

And in addition to classic brand monitoring, there are other steps brand owners can take to mitigate the effects of counterfeiting. Customer education is key, including the use of product features that help customers identify legitimate goods, and encouraging them to use approved e-commerce partners and suppliers. Many brands take this approach even further, turning their customers into proactive advocates who watch out for non-genuine products and report the associated sellers to the organisation via an abuse mailbox.

It may also be advisable for brands to incorporate into their products specific features (such as holograms or packaging characteristics) that are difficult or costly to replicate. Many brands are already doing this, driving growth in the global market for anti-counterfeit packaging across pharmaceuticals^[5], automobile parts^[6], and clothing and accessories^[7] to a forecast value of $200 billion by 2024^[8].

There are also services to allow brand owners to certify their own products as legitimate, often providing information (such as a security code to be displayed in an e-commerce product image) for buyers to check against a database.

Online brand monitoring and enforcement

Some elements of online brand protection can be carried out in-house by brand owners. However, we strongly advise companies to partner with a dedicated provider who can help them protect their revenues - and their customers - on the internet. Some providers place automation at the forefront of their service offerings. But without expert help to manually review the data, this approach can often result in a data dump.

CSC’s Discovery Engine technology combines internet metasearching with direct monitoring of data sources of interest to identify suspect e-commerce activity across the full range of online channels. This automated analysis uses contextual matching to identify the most relevant content, exclude false positives, and extracts relevant information such as seller name, price and quantity information, making it possible to easily aggregate findings and allow our analysts to identify high-impact targets for prioritised action.

For the most significant infringers, it may also be appropriate for brand owners to use of a number of value-add services. An online open-source investigation can build a more complete picture of an entity of interest, including contact details and links to other associated websites or businesses. It can also identify the scale of their online presence and - in some cases - information on the sources of the counterfeit product. This information can form the basis of an on-the-ground investigation, physical raid, or legal action.

Test purchases may also be necessary for making a final determination of the counterfeit nature of a product. Monitoring is able to identify characteristics that are suggestive of a suspicious listing, but only a physical purchase can finally confirm that the merchandise is fake.

Having identified that an e-commerce seller is acting illegally, a number of options are available to have the infringing content removed and drive customers back to the legitimate sources for products. These can range from working with a marketplace or social media site operator to have items delisted, to deactivating a website that has been used for the creation of a lookalike web shop.

Raw data extracted from enforced websites (such as traffic data) or marketplace listings (e.g. price and quantity) can also form the basis of a return-on-investment calculation, helping the brand owner assess the financial value of a successful program.

References

[1] https://www.oecd.org/newsroom/trade-in-fake-goods-is-now-33-of-world-trade-and-rising.htm
[2] http://www.gao.gov/products/GAO-18-216
[3] http://www.europol.europa.eu/newsroom/news/europol-%E2%80%93-euipo-2017-situation-report-counterfeiting-and-piracy-in-eu
[4] http://www.europol.europa.eu/newsroom/news/over-4500-illicit-domain-names-seized-for-selling-counterfeit-products
[5] http://www.sbwire.com/press-releases/anti-counterfeit-pharmaceutical-packaging-market-global-trends-analysis-and-forecast-2016-2026-1218578.htm
[6] http://www.sbwire.com/press-releases/anti-counterfeit-automobile/release-1203030.htm
[7] http://www.alliedmarketresearch.com/anti-counterfeit-clothing-and-accessories-packaging-market
[8] http://www.prnewswire.com/news-releases/the-global-anti-counterfeit-packaging-market-size-is-expected-to-reach-199-6-billion-by-2024–rising-at-a-market-growth-of-12-2-cagr-during-the-forecast-period-300849265.html

This article was first published on 19 September 2019 at:
https://www.cscdigitalbrand.services/blog/combating-online-counterfeiting/