Dealing with Counterfeits on E-Commerce Websites

BlogIntellectual Property Rights    July 21, 2021
Dealing with Counterfeits on E-Commerce Websites Posted On

It is estimated that there are about 20 million e-commerce stores selling products on the internet globally today and generating more than one trillion USD in revenue. The world’s largest markets for e-commerce are the United States of America, China, the United Kingdom, etc., with electronics, fashion, books, and tickets being the top categories for e-commerce. The key advantages of e-commerce circle around the fact that it removes the limitations of time and distance. In the process, e-commerce usually streamlines operations and helps to achieve lower costs. Consumers are shifting their preferences from physical to the online mode today, and to meet this demand, several brands have started working towards optimizing their online presence, protecting their brand equity, and driving profitable e-commerce sales growth. Examples of some online marketplaces include, Alibaba, eBay, and Etsy.

In recent years, there has been tremendous growth in e-marketplaces. However, with the rise of these e-commerce websites, the menace of counterfeit products has also increased manifold. The size of the problem posed by the counterfeiters is astounding. According to the estimates of FBI, Interpol, World Customs Organization, and the International Chamber of Commerce, approximately 7 to 8% of the world trade every year is in counterfeit goods. The problem of counterfeiting not only puts brands at risk of their trademarks, brand value, and goodwill getting damaged but also puts consumers at the risk of receiving sub-standard quality products, which may ultimately affect their health and wellbeing.

Counterfeit Products Online

Counterfeit goods can include fake designer clothes, bags, watches, accessories, perfumes, pirated DVDs, CDs, smartphones, computer games, and many more. They can also include medicines and components of automobiles and aircraft.

Counterfeiters have also taken note of the growth of the online ecosystem and have adapted their approach accordingly. The growth of e-marketplaces has also helped the counterfeiters sell their counterfeit goods using these platforms. In an e-marketplace, product or service information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. Consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers. In general, since e-marketplaces aggregate products from a wide range of suppliers, the selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.

Apart from e-commerce websites, counterfeiters have also started creating fake websites that mimic the look and feel of the genuine brand’s website. Some fake websites can be used by scammers to trick consumers into paying for goods that will never arrive and also to steal the consumer’s credit card and bank details. These fake websites can look very convincing, and it may be difficult to tell them apart from the actual website.

How to Spot Counterfeits Online?

Looking for counterfeit products on e-commerce websites requires a specific strategy to be involved. First, the geographical region where the counterfeits are most likely being sold needs to be identified. Thereafter, the most popular e-commerce websites in that region have to be identified. For instance, Amazon is the most popular in the United States and Taobao in South East Asia.

While searching for names that are identical or similar to a company’s brand or product name, or when searching for counterfeit products on these e-commerce sites, one should type in the following keywords that could allow quick identification of counterfeit products:

  1. Brand name/Product name + ‘Grade AAA’
  2. Brand name/Product name + ‘Replica’
  3. Brand name/Product name + ‘Inspired’

*The search for a brand or product name should also be done in local languages.

Some useful indicators that counterfeit or unlicensed products are being offered for sale are as follows:

  1. The products are sold at a price much cheaper below their market value;
  2. The seller is not part of the official distribution or authorized channel;
  3. The seller has a large number of listings and many units for sale; and
  4. The product is listed several times, with a wide variation between prices for each listing.

A more recent way of spotting counterfeit products gaining popularity is through Artificial Intelligence (AI) powered image analytics. The AI relies on an algorithm to compare images and read text information. An example of this technology is IBM’s Crypto Anchor Verifier, which has combined blockchain technology with AI to verify authentic products. It relies on neural networks and video analytics to detect counterfeits. It analyses the properties of products to identify whether they are authentic or fake. The solution can also run on smartphones, making it easy to use and cost-effective.

Dealing with the Challenge

Most often, several e-commerce websites are willing to work with brand owners to take down counterfeit products that are being sold on their sites. Some of them also take product authenticity very seriously and have even launched their guidelines to inform the users and sellers that the sale of counterfeit products on their platforms, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited.

E-commerce sites also provide general terms and conditions in their agreements with sellers, including ad hoc policies concerning the liability for selling of counterfeits, thereby promoting the responsibility of the sellers concerning the goods sold.

Another approach is requesting an immediate take-down notice to the e-commerce website whenever a brand thinks that its Intellectual Property Rights (IPRs) have been infringed. It is a more proactive approach and is extremely useful in countries where Intellectual Property (IP) enforcement is challenging or online infringement is too widespread and requires prompt action on the part of the proprietor. Usually, the documents that e-commerce sites would need to be submitted along with the take-down notice are as follows:

  1. Proof of Identity – Business incorporation certificate for companies, identification document such as a passport for individuals.
  2. Proof of IP Ownership – IP Registration Certificate or Copyright Recordal Certificate is necessary.
  3. Webpage Links – The exact links to the web pages of the infringing listings and details of the listings that you require to be removed.

The e-commerce site will then handle the complaint according to its policy and terms to remove the counterfeits. Usually, the alleged infringer will then receive a notification concerning the IPR complaint from the e-commerce website. The alleged infringer can submit a counter-notification showing that he or she is an authorized party or can confirm the case. In case of a counter-notification, the IPR owner can either accept the counter-notification or submit the dispute case. According to the policy of the e-commerce sites, the company may have created specific programs where IPR holders can register as a member to provide in advance IP ownership by filling in a standard form notice. The dispute will be handled through this program, and they will decide whether the listings will be deleted or not. (For example, eBay follows this system under its VeRO Program).

Best Practices: Integrating E-Commerce Counterfeiting in IP Strategy

The battle against counterfeit products online can only be won with an effective IP enforcement strategy that makes room for an action plan against counterfeiting. The strategy has to be a blend of not only protecting your IP beforehand but also monitoring the marketplace for counterfeiters actively.

  • Online marketplaces, search engine results, and social media should be monitored regularly, and infringements acted on quickly.
  • Trademarks should be registered in the jurisdictions where the brand sells, manufactures, or even transports its products.
  • Domain names need to be registered that cover the trademark plus associated products to reduce the chances of cyber-squatting.
  • IP should be registered with the customs authorities of each country where the brand trades since they are the ones who can prevent counterfeits from entering the market at the very first point of contact, i.e., the borders of the country. Most countries today have in place a system of recording one’s IP with the customs.
  • Takedown notices, cease and desist notices, etc., should be utilized as and when needed to prevent counterfeiting at the first instance.
  • When counterfeiting happens in a country that is unknown to the company, the help of local IP experts should be sought. They are usually familiar with infringement cases and have close relations with enforcement bodies such as customs, investigators, and the police. It is worth noting that many counterfeits are advertised in local languages or posted on local websites.
  • Educating the consumers is imperative. Consumers are a significant ally in minimizing the sales of counterfeit goods. They need to be made aware of the risks of buying from unauthorized sources.

Online counterfeiting can heavily impact any company, affecting revenues, trade channels, relationships, customer experience, marketing effectiveness, legal liability, and more. Ignoring it is not an option since both the brand’s reputation and goodwill are at stake. Fortunately, taking action can be fairly straightforward. Implementing best practices can work efficiently for any brand. To effectively stop counterfeit sales, the strategy must focus on both distribution and promotional channels for counterfeit goods, i.e., the e-commerce websites as well as the physical channels of trade. ✅ For more visit:

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