New laws to tackle illegal online trade planned

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Due to booming e-commerce, the trade in counterfeits is also undergoing a change. Now, new laws in both the EU and the USA could make important online marketplaces more accountable in the fight against counterfeiting.

With new laws, the European Union and the USA could create new opportunities for brand owners to take action against counterfeiting trade on the Internet. The initiatives also come against the backdrop of significant changes in the trade with counterfeits, driven by the rapidly growing online trade. This is currently reported by the trade magazine TFL, based among others on assessments by the international consulting firm Novagraaf.

According to that, there is a shift in counterfeiting trade in the Web and increasingly, consumers are unknowingly buying counterfeit products offered as alleged originals. In line with this, the European Union Intellectual Property Office (EUIPO) e.g. reports currently that one in ten consumers in Europe had unknowingly bought a counterfeit product in the last twelve months; and that as many as one in three had doubts as to whether a supposed original was actually an illegal imitation. Such an uncertainty is particularly relevant in online trade: Here, counterfeiters can effectively disguise their fakes as allegedly authentic products, for example by using photos and descriptions of the original manufacturers without permission, according to Novagraaf.

Particularly problematic: Illegal sellers can often stay unidentified on the Web. “Counterfeiters have the ability to remain anonymous when posting items for sale, as virtually every aspect of the sales process can be performed using false or incomplete names,” Novagraaf says. And by operating a large number of seemingly unrelated online stores, counterfeiting networks could also effectively hide their true size and protect themselves from countermeasures: “If one store is removed, there is very little real financial impact for the counterfeiters.”

An important step against counterfeiting trade on the Web is therefore to determine the identity of sellers, as also suggested in a recent report by the trade association INTA (International Trademark Association). This is where a new draft law in the USA comes in, that might among other things oblige online marketplaces to verify third-party merchants on their platform in future and also to disclose this information to consumers. The proposal, called INFORM Consumers Act (Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act), provides that platforms have to verify the identity of merchants that have turned over 200 or more transactions in the last twelve months. To verify, merchants would have to provide a photo identification, their tax identification number, and their bank and contact information on an annual basis.

Meanwhile, a new EU directive could also place more responsibility on online marketplaces (we reported). The planned, comprehensive Digital Services Act (DSA) offers new opportunities, but also new risks for brand protection on the Internet, according to Novagraaf: Unsubstantiated takedowns of allegedly trademark-infringing offers could then entail in compensation payments for the online marketplace. Online platforms might therefore no longer act upon inadequately substantiated reports of IP rights infringements.

Sources: EUIPO, INTA, Novagraaf, The Fashion Law (TFL)

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