The State of Counterfeiting and Intellectual Property Theft
In the latest Footwear Insight Extra podcast, a trio of attorneys from Knobbe Martens — Susan Natland, Jonathan Hyman and Robb Roby — discussed counterfeiting and intellectual property theft issues related to footwear and soft goods. Here are a few takeaways from the conversation.
Tell us about the current state of counterfeiting and the IP theft market.
Susan Natland: We are seeing elevated levels of counterfeiting activity during this pandemic. A lot of consumers are shopping online. And online platforms and websites are an easy way for the ‘bad guys’ to sell counterfeit products. Counterfeit detection services have registered a 38 percent increase in counterfeits during the pandemic. Unfortunately, we’re seeing a bigger problem than we already had.
Robb Roby: Part of the uptick is being caused by squeezes on budgets as a result of the pandemic. Sometimes, those squeezes on budgets impact enforcement or policing efforts overseas. And as those policing efforts are decreased, some of the ‘bad guys’ may step up their counterfeiting efforts because they feel there is less likelihood of ramifications.
Jonathan Hyman: Also, there might have been decisions during the pandemic to pull back or restrain the number of filings, whether it be trademark or design patents because of budget reasons and that could have ramifications down the road.
Has the rising use of ecommerce and Direct-To-Consumer channels impacted counterfeiting?
Natland: I think it’s getting worse, honestly, everywhere. Whether it’s specific platforms or online in general. We even see counterfeiting creating dupe sites that completely mirror a manufacturer’s website. These counterfeiters are very creative. Some of it is through platforms. Some of it isn’t. Some of it is stealing the company’s trademark and putting in a domain name to divert traffic.
Hyman: Social media is another place where we are seeing a lot of these pop-ups. There is a lot more infringement on Instagram. It used to be that you could walk down certain streets in Los Angeles and New York City and know you are going after a bunch of people for selling fake wallets, purses and clothing. But now, you’re dealing with social media. There could be private groups that you are not seeing and are hard to track down through Instagram and other social media platforms…The barriers to entry to getting a counterfeit product out there are definitely dropping through the use of social media and other platforms to reach consumers. It’s definitely cheaper for manufacturing. Some of these [fake] products could be done through 3-D printing. Counterfeiters are looking for, like any company wants, a high Return on Investment. So, if a product has a high resale value and counterfeiters can make it for real cheap, it’s going to be a target.
Counterfeit detection services have registered a 38 percent increase in counterfeits during the pandemic.
What about legislation on the horizon that may help in the fight against counterfeiting and IP theft?
Natland: Trademarks and counterfeiting are and have been a ‘hot’ issue on the Hill for a few years. We’re seeing a lot more proposed legislation going through the pipeline. There are a lot of things to keep an eye on. One of them is the ‘Shop Safe’ Act. It stands for ‘Stopping Harmful Offers on Platforms by Screening Against Fakes and Ecommerce Act.’ It improves obligations for ecommerce platforms that they have to comply with in order to shield themselves from potential liability for having counterfeit products sold on their platform…Another bill making its way through Congress is the ‘Inform Consumer Act.’ It essentially requires online marketplaces to verify and disclose certain information on high-volume, third party sellers of consumer products. It really has to do with verification of the seller information. The point of this Act is to have more transparency in who is selling these products in the event a brand owner needs to enforce its trademarks.