Countering Counterfeiting:  Current problems and solutions for e-commerce piracy

Article written by: Paul JohnsThomas HuthwaiteSusan Hur    |    Wednesday 11th April 2018

The e-commerce market offers huge opportunities for New Zealand and Australian businesses given it’s a faster, more efficient way of accessing global markets and consumers. However, online shopping has also introduced a new wave of intellectual property piracy as thousands of counterfeit goods are listed every day.  It is vital to proactively protect intellectual property against counterfeiters by actively monitoring and enforcing your IP rights, and establishing border protection measures.


Twenty years ago, the internet provided businesses with a revolutionary opportunity in the form of e‑commerce.  In an already globalised world, e-commerce platforms combined with the prevalence of mobile phones and tablets further enlarged the scope of many business markets, increasing access to consumers.

Amazon, established in 1994 as an e-commerce platform, is now the largest internet retailer in the world, with annual revenue in the region of NZ$240 billion. eBay, the world’s largest online auction website, has over 170 million active users, while New Zealand’s equivalent Trade Me has over 4.3 million active users – almost equal to New Zealand’s population.

However, e-commerce also became a major enabler for counterfeiters. An OECD and European Union IPO report on “Trade in Counterfeit and Pirated Goods[1] warned of the booming e-commerce markets, having found an 80% increase in counterfeiting between 2008 and 2013. The counterfeit market now reaches further than ever before, and the nature of e-commerce means that counterfeiters can more easily hide or move between different territories to avoid capture.

As a result, all serious e-commerce platforms, including Amazon, eBay and Trade Me, employ strict anti-counterfeiting policies and takedown procedures. However, despite these measures, counterfeit goods are still listed on a daily basis.

According to the OECD report, counterfeits accounted for as much as US$461 billion, or 2.5% of the total world trade, as of 2013. The goods and markets most commonly affected are clothing, footwear, apparel, and jewellery. More surprising and dangerous are the inclusion of perfumery and cosmetics, tobacco, and tools among the most commonly counterfeited goods.

The same trend plays out in Australasia, where New Zealand Customs and the Australian Border Force operate at the forefront of protection. The most commonly seized counterfeit goods in New Zealand and Australia are high-end fashion brands of clothing, footwear and apparel, followed by electronics, tobacco, food and beverages. It appears that practically no industry is immune to counterfeiting.   

In the 2016-2017 financial year, New Zealand Customs recorded 44,520 individual counterfeit items intercepted at the border.[2]  The potential harm avoided by Customs’ interception in 2016/2017 was estimated to be NZ$1.135 million.[3]  Over the same period, Australian Border Force made 962,536 seizures of counterfeit goods, with an estimated market value of AU$19.3 million.

A 2016 report by the International Chamber of Commerce (ICC)/BASCAP[4] estimates that the overall value of pirated and counterfeited goods will reach between US$524 - $959 billion by 2022. 

A Markmonitor report[5] published in the same year found that 71% of the consumers who unwittingly bought a counterfeit online viewed the genuine brand in a negative light with 12% saying that they would not buy from that brand again.

It is imperative for any business to proactively protect its intellectual property against counterfeiters by actively monitoring and enforcing its IP rights, including by establishing border protection measures.

Filing Intellectual Property Rights (“IPR”) Notices with Customs authorities can prove an effective and inexpensive way to enforce your IP rights.  IPR Notices can be filed on the basis of a registered trade mark, or copyright work.  Although IPR Notices require some maintenance, they can protect you without any further action, with suspected counterfeit goods seized at the border often being forfeit without the need for Court action rather than entering the market.Further, Customs and Border Force, as well as most major e-commerce platforms, are open to receiving further information to assist the detection of counterfeit goods. 

If you want to safeguard your brand in preparation for e-commerce trading contact a member of our team today. Baldwins has a longstanding presence in Australasia with strong ties to Customs and Border Force, as well as all major retailing platforms. In addition our dedicated China Desk specialists are experts in navigating China’s booming e-commerce market. Our team can effectively assist you with identification and enforcement, training of relevant personnel, and setting up IPR Notices and enforcement programs that will work for your business.   


[1] OECD/EUIPO (2016), Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264252653-en

[2] https://www.customs.govt.nz/about-us/annual-report-2017/the-year-at-a-glance/

[3] https://www.customs.govt.nz/about-us/annual-report-2017/progress-against-our-strategic-intentions/intelligence-led/measuring-progress-against-our-intentions/

[4] https://cms.iccwbo.org/content/uploads/sites/3/2017/02/ICC-BASCAP-Frontier-report-2016-Executive-Summary.pdf

[5] https://www.markmonitor.com/brand-protection-domain-management-resources/press-releases/release/consumers-still-being-caught-out-as-almost-a-quarter-of-online-shoppers-are-duped-by-counterfeiters


 
This article is intended to summarise potentially complicated legal issues, and is not intended to be a substitute for individual legal advice. If you would like further information, please contact a Baldwins representative.

 

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