Stem Online Counterfeiting
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More Expert Advice

Stem Online Counterfeiting

September 2011

Fielding a complaint from a client who's found a cache of counterfeits of her product available for purchase online can be challenging. The call often comes after a high-level executive or product manager receives an embarrassing "FYI" e-mail from a customer, an industry contact, or even worse, a licensee who is trying to make a living selling the company's authentic products. Failure to police the world's marketplaces for counterfeit, unlicensed, or diverted products not only harms a company's bottom line; it also damages customer relationships and can weaken a company's intellectual property rights. However, with the rabbitlike proliferation of Web marketplaces, brand owners may shudder to type their brand names into a Google search for fear they'll find readily available counterfeit products.

Battling counterfeiters online may seem as futile as a game of whack-a-mole, but the alternative is not inaction. Rather, it involves getting to know the various places on the Web where counterfeiters sell their wares, and putting a system in place to do as much as possible within the available budget.

Easy Targets
It's important to realize up front that, for the most part, online marketplaces are not the enemy. Many websites - including eBay, Alibaba, and Etsy - offer help to rights holders, who can register and then file requests to remove clearly infringing or counterfeit material from those sites. Train your staff to use the tools these websites provide; they may be able to get results with a single communication. The ongoing pursuit of counterfeiters may be a burden, but it can have an impact. In some cases, a determined effort will diminish listings numbering in the thousands to a few hundred within a few months. After the initial takedowns have occurred, maintenance sweeps every few days may be all that is needed to keep repeat postings from popping up.

Of course, anyone filing a takedown notice should strive to ensure that the products in question are actually counterfeit; indeed, some sellers fight back when they believe they have been wrongly accused of selling counterfeit merchandise. The most publicized recent case was filed by a former Coach employee who said the handbag she offered on eBay was authentic. (See Kim v. Coach Inc., No. 11-CV-00214, W.D. Wash. complaint filed Feb. 8, 2011.) Conducting the necessary research and keeping lines of communication open will help smooth ruffled feathers if mistakes are made.

Escalating the Effort
Counterfeiters who operate their own websites or who ignore takedown requests from popular websites require stronger measures. But first do a cost-benefit analysis to determine how and where to best deploy a limited IP enforcement budget. Prioritizing targets and attacking the problem with a tiered approach can help keep a client from racking up legal bills by fighting multiple counterfeiters at once. While it is theoretically possible to pursue the actual manufacturers and distributors of bogus goods, if these actors are located in a distant country, such an effort will be slow, difficult, and very expensive. If available, consider using the Uniform Domain Name Dispute Resolution Policy (UDRP) enforced by ICANN [www.icann.org] or another similar processes. If the counterfeits pose a significant risk to public health or safety (think: food products, pharmaceuticals, or medical devices), then consulting attorneys who are experts in making criminal referrals to law enforcement in counterfeiting cases might be an effective way to shut down major infringers and obtain an award of statutory restitution in the process.

Stay Vigilant
If you gain control of counterfeit listings on one site, it usually means the infringers have moved on to another forum. Keeping up with this online activity can be dizzying, but constantly searching for new hotbeds of activity keeps the enforcement effort fresh and counterfeiters on the run. And while the efforts described above rarely drive a counterfeiter out of business, these enforcement strategies are nevertheless important; as the military would say, they disrupt the enemy's decision cycle by forcing counterfeiters to search for new venues, and they foreclose the option of selling in the most popular marketplaces.

In the end, efforts to protect a brand enhance the prospect that customers will find authentic products on the websites where they shop the most.

Kelly P. McCarthy is a partner at Sideman & Bancroft in San Francisco, where she specializes in intellectual property law, including brand protection, enforcement, and anti-counterfeiting.

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