Online shopping has been a lifesaver for many retailers and consumers since Covid-19 shutdowns began. But while online purchases can deliver both necessities and joys, they also come with a risk to consumers and to brands—the risk of counterfeit goods.
Some consumers seek out counterfeits on e-commerce sites. Other consumers may be duped into purchasing counterfeits, falling prey to tricks or the feeling of accomplishment from achieving a good bargain.
With high demand, online counterfeit purchases have increased exponentially. Loss Prevention Magazine reported that eBay saw a 155% increase in high-risk listings for watches and jewelry, and Amazon reported a 121% increase in high risk listings for certain luxury goods.
Harms From Counterfeit Goods
Counterfeit goods cause both direct and indirect harms. Profits from sale of counterfeit goods have been traced to criminal activity such as money laundering, fraud, drug production, trafficking, and terrorism.
Qualitative studies have revealed carcinogenic and allergenic ingredients in counterfeit products, wrong doses in medications, or poor materials for face masks. Sites selling counterfeits may infect consumers’ computers with malware or steal their credit card or bank account numbers or other personal data. Brands also suffer harms, including loss of revenue and tarnishment of their brands.
Brands need an effective intellectual property strategy to combat the risks associated with counterfeit goods. Having a written IP strategy helps brands in many ways: Policing counterfeits allows brands to maintain their trademarks and the strength of their marks, affords increased revenue from genuine sales rather than counterfeits, and increases goodwill from distribution of genuine, high quality goods rather than an influx of poor quality counterfeits.
There is also increased goodwill from socially responsible policy to fight online fraud, criminal activity and potentially dangerous substances.
How to Deter Counterfeiting
There are five immediate actions brands can take to combat counterfeiting.
1. Know Your Marks. Conduct an audit of your trademarks, including principal marks of corporate identification, product marks and all logos that you use with any of your marks.
2. Register Your Marks. Register your principal and product marks, including logos. Registration at the U.S. Patent and Trademark Office is a prerequisite to enforcement mechanisms, such as U.S. Customs and Border Protection (CBP) seizures of counterfeit goods, and desirable statutory damages (without having to prove actual damages) in counterfeiting actions in federal district court.
In addition, having a registration can assist brands in reporting abuse to e-commerce sites directly, as forms often require brands to identify infringing marks and registrations. Finally, consider foreign registrations for jurisdictions where you market and sell abroad, and for protection in foreign countries, particularly in those from which counterfeit goods often emanate, such as China, Hong Kong, Turkey, Singapore, and India.
3. Record Your Marks With and Educate CBP. Recording registered marks with CBP allows CBP to detain suspected counterfeit goods at U.S. ports, investigate the goods, and seize them. CBP provides information to brand owners when goods are seized including the infringed mark, the country of origin of the counterfeit goods, the name and address of the manufacturer, the exporter and the importer and the number of seized goods.
This information may assist brands in enforcement investigations and potential future lawsuits against suppliers of counterfeit goods. CBP recently announced a partnership with Amazon that will further assist CBP in seizing counterfeits. The impact of this partnership on protecting your brand depends fully on whether you have affirmatively recorded your marks with CBP.
Brands that educate CBP are more likely to see seizures. Those with recorded marks may submit written materials to CBP’s Intellectual Property Rights Center and conduct webinar or (when safe to do so) live training sessions to educate officers on how to spot counterfeits of their marks. Having a good rapport with CBP makes you a partner in preventing counterfeits from entering the U.S.
4. Educate Consumers and Let Consumers Educate You. Identify genuine retailers for your goods, post prices/MSRP on your website, and warn consumers to beware of offers that appear too good to be true, blurred trademarks, and references to products as copies, imitations, lookalikes or similar descriptions.
Pay attention to comments consumers post about your brand and respond to complaints that you suspect involve counterfeits. Consumers who report counterfeits can provide source information, cost, and copies of sales receipts.
5. Embrace Technology. Employees/vendors should search online for goods bearing counterfeits of your marks to report them to e-commerce sites for removal or to your lawyer for action. Also enroll in programs like Amazon Brand Registry that do investigatory and take-down work of potential counterfeits for you.
Counterfeiters will do their best to keep the demand for counterfeits high. With these steps, brands can reduce the economic impact of counterfeiting as well as demonstrate to consumers a commitment to their health and safety and financial well being.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
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Rachel M. Hofstatter is a partner in the new Washington, D.C., office of Honigman LLP in the firm’s Intellectual Property practice group. She helps clients acquire, protect, and enforce trademark and copyright rights.