Counterfeits in electronic commerce

The European Union Intellectual Property Office (EUIPO) and the Organization for Economic Cooperation and Development (OECD) have jointly published the study Misuse of electronic commerce for trade in counterfeit products.

This study presents a quantitative review of the misuse of electronic commerce to facilitate trade in counterfeit products. Electronic commerce has experienced a rapid expansion as consumer confidence in the purchase of products and services online is increasing, to which is added that the COVID-19 pandemic has led to said increase, to the extent in which consumers resorted to online ordering during lockdowns.

The number of companies participating in B2C (business to consumer) e-commerce is steadily increasing. Between 2018 and 2020, online retail sales increased 41% in major economies, while traditional commerce retail sales increased less than 1% in the same period.

Counterfeiters are also keeping up with the times and the sale of counterfeits on the electronic market is increasing apace.

A case study from the European Union (EU), collecting information on counterfeit retentions linked to e-commerce, provides additional information on the situation:

• Number of counterfeits: 91% of counterfeit retentions related to electronic commerce involved the use of the postal service. In contrast, of the non-e-commerce counterfeit holds, only 45% involved that service.
• Value of counterfeits: 81.8% of withholdings related to electronic commerce involved the postal service, compared to only 8.9% in the case of other counterfeits.
• Origin of counterfeits: the origin of these products is similar both those related to electronic commerce and those that do not. Although the percentage of China within the total was higher in the case of counterfeits linked to electronic commerce (75.9% compared to 45.9% of the total number of withholdings).

Retentions in the EU for counterfeits traded through electronic commerce cover a wide range of products:

• Footwear (33.7% of total withholdings)
• Clothing (17.3%)
• Perfumes and cosmetics (9.6%)
• Leather goods (8.7%)
• Machinery and electrical equipment (6.5%)
• Toys (5.5%)
• Watches (5.2%)

Furthermore, despite e-markets' efforts to tackle this problem, counterfeiters continue to find entry ways to infiltrate trusted platforms with their counterfeit products. Law enforcement agencies are actively involved in identifying and shutting down fraudulent sites, while collaborating with major platform operators and brand owners to target counterfeit sales. Despite this, the problem persists and is only increasing.

Administrations seek to combat online sales of counterfeit items, such as establishing agreements with stakeholders, designed to strengthen cooperation, and increasing efforts to detect and render inoperative websites that sell counterfeit items.

Thus, the European Commission has supported the development and implementation of a memorandum of understanding between platforms, trademark owners and other interested parties, in order to promote good practices in the fight against the sale of counterfeit products over the internet.

The major platform operators have developed multi-faceted approaches to combat the sales of counterfeit products on their platforms. Its efforts include measures and mechanisms in which sellers participate through third parties, consumers, brand owners and law enforcement bodies and forces, as well as the development and deployment of strategies to proactively detect and combat counterfeiting. However, the ability of platforms to adequately monitor third-party sellers has been a considerable challenge, and efforts are constantly being made to improve identification and sanction mechanisms for parties selling counterfeit items.

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