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16 May 2017Trademarks

Social media: a global platform for criminals

Social media sites such as Twitter, Instagram, Snapchat and Facebook are paving the way for new and innovative technology.

Analysis on social media usage by digital marketing advice company Smartinsights ranked Facebook number one with 1,871 million active users, as of January this year. WhatsApp and Facebook Messenger were second, with 1 million active users.

“Facebook was not originally created to be a company. It was built to accomplish a social mission—to make the world more open and connected,” said Mark Zuckerberg, Facebook chairman, CEO and co-founder, in the company’s S-1 form to the US Securities and Exchange Commission in 2012.

“'The online market of counterfeit and fake luxury goods is clearly on the rise. Unstoppable as it seems, this trend is having a negative impact on our societies at large,' according to the report."

While this may be a laudable aim, and Facebook strives to protect IP by removing infringements, this openness inevitably brings risks for IP owners as it also provides opportunities to counterfeiters.

Counterfeiters are causing concerns for selling goods on social media sites, including Instagram, which Facebook bought in 2012 for approximately $1 billion in a combination of cash and shares.

In May last year, a study led by researcher Andrea Stropper and published in The Washington Post, examined how criminal organisations used Instagram to sell counterfeit luxury goods.

The study, called “Social media and luxury goods counterfeit: a growing concern for government, industry and consumers worldwide”, showed the effects of counterfeits on social media.

Stropper and her team discovered that the internet, mobile devices and social media have pushed counterfeiting online, to the detriment of legitimate businesses and consumers.

The report found that governments and high-tech companies “still lack in-depth awareness” of the whole issue.

The report mentioned a 2015 study, also conducted by Stropper, called “Instagram spambots and social media popularity”.

Stropper and her team discovered that popular social networks are “infested” with millions of spambots and fake accounts.

“As a result of this general trend, bots, algorithms and artificial intelligence software are also being deployed to advance counterfeit trade among social media users. Indeed, our own research revealed that an army of bots is busy promoting fake items online,” the report explained.

The researchers developed an algorithm to help identify several active botnets, and a look at the user nicknames found that the bots are part of a wider botnet.

Some of these accounts were generated by software and managed by people, while others were software-generated but rarely overseen by a person, the study found.

The rise and rise of copies

Stropper’s report analysed 20,000 images uploaded by Instagram accounts that were identified as sellers of fake items.

The top targeted brands were Chanel, Prada, Louis Vuitton and Fendi.

Of fake luxury watches sold on Instagram, the report found that Rolex (37%) and Cartier (28%) were the most sought-after brands.

“The online market of counterfeit and fake luxury goods is clearly on the rise. Unstoppable as it seems, this trend is having a negative impact on our societies at large,” according to the report.

The study’s research found that there is a “big shift” taking place in the world of online counterfeiting.

“One fifth (20%) of our 750,000 posts about top fashion brands feature counterfeit and/or illicit products,” Stropper’s report said.

These counterfeiters now operate “in the open” and are posting a wide range of adverts and images on social media and openly selling their goods worldwide.

The report said that “we must set up a coordinated, global strategy including all various stakeholders”.

Amy Wood, associate at law firm Marks & Clerk, says: “Counterfeiting on social media is a problem for brand owners, consumers and law enforcement officials alike. Social media play a central role in the daily lives of many people, and criminals are now exploiting this.

“Consumers can easily be deceived by adverts they see on social media platforms, and this can often result in unknowing purchases of counterfeit goods, especially as there is often little information as to where the goods are coming from and the actual product offered,” says Wood.

“It also taps into the market for copies of high-value goods where the consumer is actively looking for counterfeits. Fake products are not only damaging to brand owners but can also be harmful to consumers, particularly in the case of cosmetics or electronics.

“Identifying who to take action against can prove difficult as there will typically be limited seller information available,” she adds.

Take it down

Simon Baggs, head of IP at law firm Wiggin, says: “As new online platforms emerge, counterfeiters can tap into new markets a lot more easily than if they were to rely on offline, physical stores alone. In reality, their opportunity is no different from that of legitimate retailers—the internet has allowed counterfeiters to reach a global audience, not just a local one.”

Wood says that in these instances, takedown methods provided by the platforms are the most effective in having the listings removed.

“In this regard, it is important to note that social media sites, such as Facebook and Instagram, do have very effective and efficient takedown mechanisms in place to help combat counterfeiting,” she explains.

In March 2015, the BBC reported that Facebook had “revamped” its takedown guidelines.

The social media company hoped that the new guidelines would “provide clarity” and avoid confusion for its users.

Facebook currently has an “About IP” section on its site where it stipulates a commitment to helping organisations protect their IP rights.

The company also has a webpage dedicated to reporting these violations. The protection covers trademark and copyright violations, as well as imposter and hacked accounts.

Similarly, Instagram has a dedicated IP page for reporting violations.

The social media companies may be trying to make their takedown procedures known, but counterfeits are still an issue for IP owners.

“One of the problems with law enforcement action against the sale or promotion of counterfeit goods on social media is the fact that there are so many promotions across multiple platforms,” says Baggs.

“It is better for law enforcement to collate evidence and data from social media that identify commercial-scale operators connected to websites and even to source factories. Action against these source operations is then more effective.”

Fighting back

Enforcement against online counterfeits has become increasingly sophisticated.

The City of London’s Police Intellectual Property Crime Unit, for example, has announced a number of arrests and sentences over the past year.

In the US, the Louis Vuitton Malletier v Akanoc Solutions case was heard at the US Court of Appeals for the Ninth Circuit in 2011.

Louis Vuitton had sued Akanoc Solutions and Managed Solutions Group for contributory copyright and trademark infringement.

The fashion company argued that the defendants were liable for their role in hosting websites that infringed Louis Vuitton’s trademarks and copyright.

A jury awarded Louis Vuitton $32 million in a judgment against the web hosting companies because they had received multiple notices from the trademark owners about counterfeit products on the sites.

The defendants had failed to take action.

According to the American Bar Association, if a social networking website receives multiple notices about counterfeit products or infringing uses of its marks, a court may rule on the side of the trademark owner and hold the social networking site liable. However, it is the brand owner’s responsibility to monitor such use.

While counterfeiting on social media has become another consideration for IP owners to contend with, there are steps that they can take to prevent such infringements happening.

Wood says the key for brand owners is being proactive and having a clearly defined anti-counterfeiting strategy in place. Trademark registrations for core marks, packaging, etc, will help law enforcement officials to take action against counterfeiters.

“In addition, I would advise that brand owners regularly monitor (either themselves or using specialist companies) websites such as Amazon, eBay, Alibaba and Aliexpress for counterfeit listings, have these removed and—where appropriate and possible—take enforcement action against the counterfeiter,” she says.

She adds that publicising takedown requests that have been successful can “help to get the message out there that your brand is not simply a sitting target”.

Baggs says that “taking a targeted approach has a huge impact for brands”.

“For one client we’ve been able to remove six million counterfeit products in two months by targeting Chinese business-to-business (B2B) sellers.

“We identified large clusters of sellers with as many as 17 actively selling websites. Our aggressive targeting of this cluster has meant a 66% reduction in infringing products on Chinese B2B marketplaces in two months for this brand.”

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