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22 May 2019

The Data Holds the Answers

The opportunities provided by e-commerce are obvious. Online shopping habits vary between countries, but most statistics show that businesses are experiencing a steady year-on-year increase in the percentage of total revenue from a click on a screen or a tap on a phone.

The data culled from these transactions are essential for all online businesses to inform decisions about their product lines, regional expansion, and customers’ buying habits.

And the huge popularity of social media platforms has turned scrolling on a cell phone into a shopping experience, as Instagram, Facebook, and Pinterest grow their e-commerce activities.

Also growing, at an alarming rate, is the volume of online counterfeits.

A U.S. International Chamber of Commerce 2017 report—The Economic Impacts of Counterfeiting and Piracy—estimated the global economic value of counterfeiting and piracy will reach US $2.3 trillion by 2022.

The report predicts that by 2021, counterfeit trade could drain US $4.2 trillion from the global economy annually, and put 5.4 million legitimate jobs at risk.

In many ways, an Internet sale is a two-way street. While there are significant challenges associated with tracing online transactions, IP lawyers are increasingly able to use data to fight back against the counterfeiters.

The Law Firm

Aaron Newell, Partner in the Trade Marks & Designs Group at JA Kemp (United Kingdom), has been working in trademark law for 12 years.

Mr. Newell has developed a domain name dispute management system that receives alerts about new domain name registrations. Industries such as fashion, automotive, and software in particular suffer high volumes of illegitimate domain registrations.

Built in-house, the system is the culmination of experience that grew organically over his career, as he gradually became the “go-to” guy for online brand protection issues.

“The online brand protection platforms have real people—analysts—looking at the data. But the analysts aren’t lawyers. They can’t always tell the client the best thing to do with that data. That’s the gap we’re trying to fill.”

Big brands could see as many as 5 to 50 domains for counterfeit names being registered per day, so there is plenty of work available in this vein. The question is, do clients want it?

“There’s always a profitability issue. If you’re lucky enough to have a big brand as a client you’re going to get 20 [illegitimate] domains daily. That can eat up an hour or two of every day,” Mr. Newell explains.

Mr. Newell has even filed trademark applications and found domains using the same mark the very next day. “It just shows the people who do this are keeping an eye not only on what’s happening in business but also on the trademarks register,” he says.

The Brand

Some prefer a more homegrown system of data management.

Alastair Rippon, IP & Brand Protection Director, Union-Swiss (Pty) Ltd. (South Africa), relies on tried and tested methods to manage the skin care brand’s online protection.

“We are very diligent at recording relevant data that comes out of our various work streams. And then we ‘work’ the data as required,” explains Mr. Rippon.

He notes that “odd as it may sound,” the brand just uses relatively simple MS Excel databases to record data. “I’ve looked around for various systems, but they seem expensive, and we find that working with Excel we’re forced to understand the related processes,” Mr. Rippon says.“It’s about the flexibility you have to evolve and improve your system.”

He admits he might try an “off-the-shelf” service, but it would have to be customized to his brand’s situation.

“For us, the fun of working is looking for a better way … or the best way, for our specific needs,” he says.

The ‘Brand Intelligence’ Provider

One man who has been recording, shifting, and analyzing e-commerce data since the early days of web marketplaces is Dan Shapiro, Director, Global Strategic Partnerships, Red Points (USA).

Mr. Shaprio spent eight years at eBay Inc. (USA), where he created the auction site’s first-ever brand protection team. Now at Red Points, he represents one of the many service providers in the competitive “brand intelligence” industry.

“Data is the foundation of every investigation. You need others to do that, but you need data to start the process,” Mr. Shapiro says.

During the past decade or so, he has seen e-commerce take a bigger and bigger slice of brands’ overall revenue.

“It used to be that 25 percent of a brand’s business came from brick and mortars. Today we have brands signing up to Red Points that are 100 percent e-commerce and don’t have any brick and mortar stores,” he said. “We’re seeing new marketplaces pop up every week. They may be transactional, like Alibaba, or peer-to-peer like Craigslist, but this changes the face of e-commerce.”

The problem of counterfeiting has been exacerbated by the growth of social media platforms. Legitimate selling spaces have teams dedicated to removing illegitimate sellers. But it is the users, or those masquerading as users, that have turned social media counterfeiting into a trillion-dollar industry.

Says Mr. Shapiro: “I’m talking about selling within posts on Facebook, Instagram, Twitter, WeChat, Pinterest … all these places where a user claims to have an ‘authentic Manchester United jersey. Let me know if you’re interested.’”

It’s no wonder that companies like Red Points use data search software. With billions of items for sale, the old method of brand protection—people physically searching the web—is simply not scalable to meet the challenge.

“As a brand intelligence provider you need to use technology to solve a technological problem,” Mr. Shapiro emphasizes. But there is more to the data hunt than understanding what is being counterfeited and where.

Other tasks are more complex, like combatting the issue of “price compression.” In this scenario, which Mr. Shapiro has “seen 100 times,” a counterfeit product is sold at a reduced price for so long that customers get used to it—and then reject the original as being too expensive.

This results in a nasty surprise for brand owners, when an expected uptick in sales does not materialize.

The methods used to crunch data across the intellectual property industry vary alongside the various different approaches to brand protection. There is no one-size-fits-all approach. The only constant is the growing number of counterfeiters.

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