Strategies for Combating Counterfeiting and Piracy (The EU Perspective)

On 22 January 2018, the European Commission (EC) launched a public consultation with the aim of establishing its first Counterfeit and Piracy Watch-List, containing marketplaces outside the EU. The TechieKat will review in this post the similarities between the Watch-List and the 2017 Out-of-Cycle Review Notorious Markets List (a.k.a. Notorious Markets List), published by the Office of the United States Trade Representative (USTR) on 12 January 2018. The review of the 2017 Notorious Markets List can be read here.

Background

Follow the money

On 29 November 2017, the European Commission, in accordance with the Digital Single Market and Single Market Strategy strategies, adopted the following “package of measures to further improve the application and enforcement of IPRs, and to step up the fight against counterfeit and piracy,” by depriving “commercial-scale IP infringers of the revenue flows that make their criminal activity lucrative”, the so-called ‘follow the money’ approach:

·      Communication Guidance on certain aspects of the Directive on the enforcement of intellectual property rights (IPRED), in which the EC provides insights regarding some IPRED’s “provisions which have caused interpretation problems.”

·      An evaluation report and study on the Directive on the enforcement of intellectual property rights (IPRED), which found that IPRED’s effectiveness is diminished by the different ways by which certain provisions (e.g. on injunctions, damages, and legal costs) are implemented across the various Member States.

·  Communication Setting out the EU approach to Standard Essential Patents (SEPs), which inter alia provides guidance on certain aspects of FRAND (fair, reasonable and non-discriminatory) licensing of SEPs.

·    Overview of the functioning of the Memorandum of Understanding on the sale of counterfeit goods via the internet. This voluntary agreement (MoU) was signed in 2016 by five Internet platforms (including Alibaba, Amazon, and eBay), eight IPRs owners and six associations, with the aim to “establish a code of practice in the fight against the sale of counterfeit goods over the internet” by collecting data within two monthly periods per year (the so-called “windows”), based on certain Key Performance Indicators (KPIs). The overview presents the results of the data collected within the “windows” between 21 June 2016 and 21 June 2017, as well as the feedback given by the signatories.

The MoU on the sale of counterfeit goods via the internet, as well as forthcoming MoUs (in preparation and expected to come on board in 2019) on advertising on IP infringing websites, providers of payment services and the transport and shipping industries, complement the Guidelines for online platforms to tackle illegal content published on 28 September 2017 by the EC.

As Kat readers might recall, the Guidelines include suggestions on how to detect, remove and prevent the re-appearance of illegal content (e.g. IPRs infringement) in a swift manner, such as the suspension of accounts of repeat infringers, "public" mechanisms that do not require that a person need have an account to report illegal content (as is already implemented by some Internet platforms), a certification scheme and audit of trusted flaggers, which are  entities with expertise in identifying illegal content (e.g. entities providing online brand protection services). This Kat is rubbing her paws to see whether such certification scheme will be applied (Commission Communications are not binding); if so, which requirements must be fulfilled to be considered as trusted flaggers; and whether the audit will be based on the assessment of the expected high-quality notice and takedown requests (NTD) submitted to the platforms.

·    Communication A balanced Intellectual Property enforcement system responding to today's societal challenges, which announced, inter alia,  the publication of the Counterfeit and Piracy Watch-List and an update of the biennial Report on the protection and enforcement of IPRs in third countries. The 2015 edition of such Report indicated “countries in which the state of IPR protection and enforcement gives rise to the greatest level of concern” due to “such deficiencies [that] are deemed to cause the largest injury to EU interest” (the so-called priority countries), and with the aim that EC’s activities and resources are primarily directed to such countries. In the year 2015, China was indicated as priority country number 1; Argentina, India, Russia and Turkey as priority countries number 2; and Brazil, Canada, Ecuador, Indonesia, Korea, Malaysia, Mexico, Philippines, Thailand, Ukraine, USA, and Vietnam, as priority countries number 3.

The Watch-List

I am watching you

The Counterfeit and Piracy Watch-List, as part of one of the measures adopted by the EU, has the aim of stepping up the fight against counterfeiting and piracy, by raising “consumer awareness concerning the environmental, product safety and other risks of purchasing” on the marketplaces identified on the Watch-List, and encouraging “their operators and owners to crack down on intellectual property abuse”.

The Watch-List will provide a description of each of the marketplaces listed and located outside the EU, which are engaged in facilitating substantial counterfeiting and piracy, “with special focus on online marketplaces”. To do so, contributions and comments from stakeholders should be submitted before 31 March 2018 here.

The collected data will be verified with the help of the European Observatory on Infringements of Intellectual Property Rights in order to select the marketplaces. The publication of the Watch-List is expected to take place during the second half of 2018.

Comments

The publication of the 2017 Notorious Markets List (see the TechieKat's review here), and the launch of the public consultation for the Counterfeit and Piracy Watch-List, constitute clear strategies implemented by the USTR and the EC for stepping up the fight against counterfeiting and piracy. In doing so, the Lists present the following similarities:

1. Both pursue encouraging operators, owners, services providers, local authorities, and governments to take necessary actions and measures to reduce the availability of counterfeiting and piracy.
2. Both aim to raise awareness regarding the significant risks to consumer health and safety that result from counterfeiting and piracy.
3. Both focus on online marketplaces. The 2017 Notorious Markets List focused on illicit streaming devices (ISD), which are understood as the “combination of media boxes, set-top boxes, or other devices with piracy applications (apps) that allow users to stream, download, or otherwise access unauthorized content from the Internet”.
4. The online and physical marketplaces contained on the Lists are reportedly engaged in facilitating or benefiting from substantial counterfeiting and piracy.
5. The marketplaces are located outside their “territories”: the EU on the Watch-List and the USA on the Notorious Markets List.
6. Neither List constitutes a finding of legal violations “in the country or countries concerned”.

This Kat is not surprised that both Lists contain similarities, considering that they both aspire to achieve the same goal: the reduction of counterfeiting and piracy, which according to according to the EUIPO and OECD stats, constitute approximately 5% of all imports in the EU (€85 billion a year) and around €338 billion worldwide.

It is true both Lists contain almost identical wording in some parts (e.g. counterfeiting and piracy “undermine critical [EU/USA] comparative advantages in innovation and creativity to the detriment of [EU/USA] citizens/workers”; please see the relevant wording of the Watch-List here). No matter, having a Watch List that might include USA platforms can benefit the fight against counterfeiting and piracy, especially in light of the fact that some improvements were achieved after the publication of the 2016 Notorious Markets List (see the TechieKat's review here) and which might constitute a similar scenario for further publications of the Counterfeit and Piracy Watch-List.

This Kat thinks that some marketplaces are expected to be included on the Counterfeit and Piracy Watch-List, such as Alibaba platforms, despite their efforts in combating counterfeiting and piracy. However, this Kat eagerly awaits whether the USA and Latin American online marketplaces will be listed, considering that platforms, such as Amazon (see Eleonora’s report here), iOffer (here) and Mercado Libre (here), have been involved in disputes in the past dealing with counterfeit goods.