Current online marketplace landscape

Since the internet first came to life and businesses realised its potential there has been a steady rise in e-commerce, a rise that has escalated dramatically within the last decade.

In this period new business models have emerged, there is a constant focus on digital without the need for physical stores, businesses previously held back by financial and geographical constraints have flourished and new previously undiscovered revenue streams have opened up.

Whilst this has brought many benefits to society it has also created issues. The internet has been left unregulated too long and as such has led to a sharp rise in IP Infringement and counterfeited goods. At the forefront of this are technological giants that have emerged out of the digital era and are used as online marketplaces. They are a hotspot for counterfeiting activity and, for a variety of reasons, this issue has come heavily into the public spotlight within the last few years.

Throughout the coming weeks Incopro is going to provide six pieces around the behaviour of platforms and their current attitude to protecting businesses and consumers, this will include:

  • The current landscape of online marketplaces
  • Bad behaviours exhibited by platforms
  • Best practice that marketplaces should be following
  • Initiatives being put in place by marketplaces
  • Social media platforms being used as marketplaces
  • A look at the issues within different sectors

The landscape so far

Firstly, the current landscape of online marketplaces. Traditionally (pre-internet) Brand Protection has been considered an offline and legal issue, dealt with by detecting and actioning offline activities through litigation[1]. Whilst this is still effective and remains a key component in many brand protection strategies; the growth of e-commerce has evolved counterfeiting behaviours. There is now access to far greater visibility, which means larger markets to sell their goods in and the opportunity for larger revenue returns. In response, there’s been a shift for the inclusion of online enforcement within brand protection strategies.

nline marketplaces have created many opportunities, but as negative outcomes and consequences have become more widespread the onus of liability to police infringements has shifted. Responsibility can now fall on marketplace platforms[2], as they are being likened to physical market stalls. Whilst liability now evidently includes platforms and their behaviours, the boundaries of how a platform must behave have not yet been established.

Brand reputation – the common ground for marketplaces and rights holders

Why would a platform want to help police these infringements? What are their motivations to go above and beyond what is required of them? The obvious answer is to avoid potential legal action and liability. However, if the amount a marketplace profits from the sale of counterfeit goods is larger than the incurred litigation and damages costs, then it’s easier to let the sale of counterfeit goods continue – a brand owners nightmare.

An easy strategy is for them to sit back and satisfy the minimum requirements they are obligated to fulfil, however, there can be a backlash for platforms who avoid policing their platforms, mainly in the form of consumer feedback and reputational damage. No marketplace wants to be known as the ‘one with the counterfeits’. In a highly competitive industry reputation can mean everything, an objective shared with rights holders, giving them common ground as both aspire to maintain and protect consumer’s confidence in their brands.

A proactive outlook

This shift in interest moves away from the traditional litigation fuelled approach and incentivises a collaborative approach between the two parties. Whilst a majority of platforms provide dedicated resource to addressing these issues, new platforms are moving to a more proactive approach, keeping brand protection at the forefront. Amazon through their Brand Registry tool uses text- and image-based search engines, coupled with machine learning to anticipate and intercept infringements before they even reach the marketplace page[3].

Generally, a compliant platform should look to act expeditiously, efficiently, and effectively on notices; have dedicated contacts for queries and escalations; and have a consistent approach for the deterrence of repeat infringers. Conversely, bad practices by platforms would not show the above behaviours as well as having an inconsistent approach to their notice sending procedure.

A platform’s behaviour is not only limited to their response and consideration of notices, many platforms also engage in Anti-Counterfeiting groups or Intellectual Property protection initiatives. This engagement with brand owners also provides insight to help initiate a dialogue between the two parties to discuss how best to achieve their common goal.

Concluding remarks

The current landscape is promising, many platforms show indications of good practices. This trend is not limited to just online marketplaces. But as the range of e-commerce grows into areas like social media and mobile applications, so does the behaviours of counterfeiters[4]. The relationship between brand owners and platforms must evolve concurrently to help tackle this. Recent changes to the online environment, such as the General Data Protection Regulation (GDPR), provide a few obstacles to online brand protection.[5].

To overcome these obstacles this might require extended collaboration between more internal teams from a platform to be involved in the discussion aside from just Legal, Compliance, and/or Brand Protection Teams. In response to the WHOis blackout caused by GDPR, the IACC outlined an approach on how to apply GDPR, its challenges, and how rights holders can overcome these challenges[6]. One solution is outlining how a right holder can communicate with these intermediaries to obtain WHOis details, while remaining GDPR friendly.

A step forward by ICANN and Registrars would now be to ensure WHOis details for Registrants are accurate and verified, so as to enable the next stage of enforcement. Evidently, these issues and their solutions are ever-evolving and clearly more than just legal queries, so the question needs to be posed about whether it should still be dealt with primarily by legal professionals?

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[1] Grammich, C. and Wilson, J. (2018). The 2017 A-CAPP Center Brand Protection Strategy Summit: Issues and Best Practices in Partnerships, Return on Investment, and E-Commerce. [online] A-capp.msu.edu. Available at: http://a-capp.msu.edu/wp-content/uploads/2018/05/PAPER-SERIES-2017-A-CAPP-Center-Brand-Protection-Strategy-Summit_Partnerships-ROI-E-Commerce.pdf [Accessed 23 Aug. 2018].

[2] Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society.

[3] Amazon Brand Registry Progress Report https://brandservices.amazon.co.uk/progressreport

[4] Saunders, H. and Ilnitskaya, S. (2018). Mobile mayhem: brand protection in a changing environment – World Trademark Review. [online] Worldtrademarkreview.com. Available at: http://www.worldtrademarkreview.com/Intelligence/Online-Brand-Enforcement/2018/Chapters/Mobile-mayhem [Accessed 23 Aug. 2018].

[5] Comlaude.com. (2018). ICANN Publishes Proposed Interim WHOIS Model for GDPR Compliance | Com Laude. [online] Available at: https://comlaude.com/news/icann-publishes-proposed-interim-whois-model-gdpr-compliance [Accessed 23 Aug. 2018].

[6] International Anti-Counterfeiting Coalition, Upcoming Challenges to Online Enforcement
https://www.iacc.org/2018%20Spring%20Conference%20Presentations/IACC%20GDPR%205-16-18%20v2.pptx

For more information about how Incopro can help, contact us to speak with an expert.