Online Piracy and Sales of Counterfeit/Knockoff Products FAQs :
Q: How likely is it that counterfeit knockoffs of my products are being advertised and sold on the Internet?
A: Almost certainly they are, especially if your brand has gained any following or notoriety.
Q: How can I tell the extent to which knockoffs of my products are being advertised and sold online? How much online piracy of my products is going on?
A: A no-cost threat assessment can be quickly done and a brief written report provided to you based on Internet search queries and known traits of websites offering knockoffs that will identify and quantify the level of online piracy of your products.
Q: I’ve heard it argued by counterfeiters that cheap knockoffs actually benefit the legitimate brand owner, because it “advertises” the brand. Is this true?
A: Not in the least. Here are only a few of the serious problems that accompany the unchecked online sale of counterfeit knockoffs of your products:
• Significant loss of sales through legitimate Internet channel partners.
• Negative impact on SEO (search engine optimization) as displayed links to pirate web pages in searches (Google, Bing, Yahoo, etc.) displace links to legitimate websites selling your products in search engine ranking priority.
• Time and resources you and your employees are required to devote to disgruntled customers who buy inferior knockoffs thinking they purchased your products.
• Potential liability for the consequences of consumers purchasing inferior or dangerous products purporting to be yours, where you are or should be aware of it and have done nothing to try to prevent it.
Q: I’ve heard that “online piracy is inevitable” and that nothing can effectively be done about it. Is that true?
A: It’s a fact that online piracy is a huge problem that continues to grow, depriving you of legitimate sales of your products and increasing the time you have to spend dealing with unhappy customers that think they bought a legitimate product – so in that sense, yes, it is inevitable. However, it is absolutely possible to do something about it – to minimize and manage it.
Q: How can the online piracy of my products be minimized and managed?
A: It’s a straightforward two-part process, done in parallel, based on infringement of your copyrights and trademarks.
(1) Copyright Infringement. The Digital Millennium Copyright Act (“DMCA”) requires search engines (Google, Bing, Yahoo, etc. that list links to infringing websites), ISPs (internet service providers that host the infringing websites), e-commerce/auction websites (eBay, etc. that facilitate sales of infringing products), forums (that can link to or advertise infringing websites), and the infringing websites themselves to “take-down” infringing website pages, URLs, and links from the Internet based on copyright violations (unauthorized display of your images, content, unique aesthetic design, etc.). These various parties must take-down links to infringing web pages or web pages they host containing infringing content upon receipt of a “Take Down” Notice (that can be done by email) compliant with the requirements of the DMCA. Sometimes the pirate websites themselves will not comply, especially if their owners and operations are outside the jurisdiction of US law (such as in China, the primary country where knockoffs are manufactured); however, third parties that are essential in the online advertising and sales of counterfeit knockoffs (search engines, ISPs, e-commerce/auction sites, and forums) are required to comply, and in most cases will comply, shutting off the online posting of links to the pirate websites. This is critical in denying customers easy access to websites advertising and selling knockoff products and improving the search engine optimization (SEO) of legitimate websites selling your products. (More on SEO below.)
(2) Trademark Infringement. In creating, advertising, and selling counterfeit knockoffs of your products, online pirates almost always infringe on your trademarks (name, logos, etc.). While there is not a US law comparable to the DMCA requiring systematic take-downs by third-parties (search engines, ISPs, e-commerce/auction sites) of websites, web pages, and links to web pages that infringe on your trademarks, recent case law in the US has established the principle of secondary or contributory liability for trademark infringement of these third-party facilitators if they have been put on actual notice that the underlying website or web page infringes on a valid trademark, and then fail to take-down the infringing website, web page, or link. You can think of this as being similar to the primary legal tool that has been used to close down the street-front stores in places like Canal Street in New York City that openly sell counterfeit knockoffs – they put the landlord of the store space on notice that its tenant is selling counterfeit knockoffs violating bona fide trademarks, and that if the landlord doesn’t evict the infringing tenant the landlord will be held liable for aiding and abetting trademark infringement. Again, while the pirate website owner may be located in a jurisdiction outside the US, in most cases the third-party facilitators (search engines, ISPs, e-commerce/auction sites) are subject to US law and will comply with a DMCA-type “take-down” notice putting them on actual notice that the pirate website to which they link, or that they host, or that is selling the products, is infringing on your trademarks. E-Bay has even created its own program called “VeRO” (Verified Rights Owner) under which it will “take-down” auctions upon receipt of a DMCA-type notice that the auction relates to products infringing on a verified rights owner. ISPs that host the pirate websites have been held secondarily liable for the trademark infringement of websites they host if they have been put on actual notice and fail to take-down the infringing website.
Additionally, every ISP has a contract with the owners of the websites it hosts that prohibits the website owner from conducting illegal activities (such as trademark infringement) on its website. If put on actual notice that a website it hosts is infringing on a trademark by advertising and selling counterfeit knockoffs, most ISPs will voluntarily comply with a take-down notice.
Q: What is SEO (search engine optimization), and how can this program of managing online piracy impact the SEO of my legitimate online sales channels?
A: SEO is the dynamic that ranks where legitimate links to your products appear on a given search on a search engine (Google, Bing, Yahoo, etc.) – whether the links to legitimate web pages (URLs) listed in the search results appear with more frequency on the first pages of the search results, or are pushed back to subsequent pages of search results. In simple terms – whether an interested potential customer sees a legitimate link to your products immediately at the top of the first page of search results, or whether the legitimate links are obscured and pushed down by links to unauthorized web pages offering counterfeit knockoffs. This is where “the rubber meets the road” in online marketing and sales. Studies demonstrate that if you can push the unauthorized links down and move the legitimate links up it makes a significant difference in whether a potential customer will purchase from a legitimate site or a pirate site. Merely increasing the time it takes a potential customer to find or come across a link to a pirate site will significantly impact whether that potential customer ends up buying from a legitimate site or a pirate site. While hardcore pirate-customers will persist in tracking down pirate links, that is not the majority of customers online. If you can push the illegitimate links down in the search results, you boost sales from links to legitimate links.
Through an applied and consistent approach to managing the online piracy of your products, the natural impact will be to move links to legitimate web pages up in SEO and push illegitimate web pages down in SEO. In the past SEO ranking has been purely a mathematic function of “hits” to web pages from a given search; however, Google recently made a major announcement that it will now look to DMCA take-down notices it receives to demote the SEO ranking of links to pirate web pages.
Q: I’ve heard that once an infringing website or web page is taken-down, the pirates just put up a different one and keep on selling counterfeit knockoffs online. So can anything really be effectively done to keep the online piracy of my products at bay?
A: Yes. This is where the concept of ongoing “management” of the problem comes in. Think of your legitimate online sales presence as a garden. Weeds grow in a garden and can choke out the flowers and fruits you’ve planted. You don’t weed a garden just once. The weeds will come back. You need to keep the garden weeded. By undertaking algorithmic Internet searches for pirates and processing take-down notices on an ongoing monthly basis you can effectively manage the weeds and keep them at a minimum.
Q: Wouldn’t such an online piracy management program be expensive?
A: No. Because of the dynamics of algorithmic search technology, the volume of infringing web pages (URLs) involved, and the highly automated process of processing take-down notices, you would be surprised at how cost-effective the management of this problem can be, especially in light of the return-on-investment it is capable of producing.
Q: How quickly can such a program of mitigation and management of online piracy of my products be put in place?
A: It only takes a few days to get it set up and operating. The main information needed is a listing of your authorized online sales channels and affiliates to create a “safe list” of websites and web pages that are not to be taken-down.
Q: There was a lot of negative press and vocal consumer pushback to the attempt to pass the Stop Online Piracy Act (SPOA) a few months ago, and as a result SOPA was largely abandoned by US lawmakers and wasn’t enacted into law. Doesn’t this really mean that current legislation, such as the DMCA, is ineffective to help curb online piracy, and efforts to curb online piracy are unpopular?
A: While adoption of SOPA would have provided additional sanctions against foreign owned and operated websites that refuse to comply with the DMCA, the fact SOPA wasn’t passed into law doesn’t minimize the effectiveness of the DMCA to require essential third-parties in the online advertising and sales process (search engines, ISPs, e-commerce/auction sites, forums, etc.) to take-down infringing websites, web pages (URLs), and online auctions of infringing products. The process works if effectively and consistently applied and managed. The problem is that most copyright/trademark owners don’t understand how to effectively and fairly utilize the process, and fail to consistently do so.
Q: The process you’ve explained addresses an online piracy mitigation and management strategy based on US law, is there anything that can be done in foreign jurisdictions short of legal action to address the problem of online piracy abroad?
A: Yes. First of all, it’s important to understand the importance of search engines, ISPs, and e-commerce/auction sites that are subject to US law, or whose businesses depend on remaining in compliance with US law to effectively operate. Being able to address the online piracy problem on Google, Bing, Yahoo, eBay, etc., will have a significant impact on online sales in foreign jurisdictions simply because of their predominance in a world online marketplace.
Beyond that, there are laws in some foreign jurisdictions that require the take-down of infringing websites and web pages upon receipt of actual notice, and foreign-based ISPs that host websites in many cases voluntarily comply with notification of trademark/copyright infringement of a hosted website based on the violation of the underlying contract between the ISP and the website owner.
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