Overview of the functioning of the Memorandum of Understanding on the sale of counterfeit goods via the internet

While online marketplaces are strong drivers of innovation and growth as they offer new business opportunities, they are also increasingly used as a distribution channel for counterfeit and pirated goods. To prevent the sale of counterfeit goods online, the Commission invited internet platforms, rights owners and associations to sign a Memorandum of Understanding on the Sale of Counterfeit Goods via the internet (‘MoU’).

The intellectual property rights covered by the scope of the MoU are registered trade marks, registered design rights and copyright set out in applicable Member State or EU law. It was subsequently agreed that a set of key performance indicators (‘KPIs’) would be used as an objective, reliable and transparent way of measuring the MoU’s effectiveness. As a result, a set of KPIs was added to the text and an updated version of the MoU was signed in June 2016. So far, this renewed version has been signed by five Internet Platforms, eight Rights Owners and six associations (‘Signatories’).

The MoU includes a number of commitments on Notice and Take-Down procedures (‘NTD’). However, in the view of the Signatories, since their impact is by nature limited (they are applied only after the Offer is already available online), they should be complemented by strong preventive measures. Most Signatories reported that all notifications concerning the Offer of Counterfeit Goods are being submitted through the established NTD procedures.

However, some Rights Owners said that they do not always use the reporting tools created by Internet Platforms, because, in the Rights Owners’ view, these are not adapted to report higher numbers of notifications. For this reason, some Rights Owners prefer to send a list of infringing URLs by email, or to use other automated solutions.

The Signatories recognised that NTD procedures by nature can only have a limited impact. Even if enforcement is immediate, it is still too late since it does not prevent those purchases made by consumers in the time between the publication of the item and the removal of the listing. Furthermore, sometimes the listing has already expired by the time the NTD report is filed. All this causes harm to a brand’s reputation and uniqueness.

All Rights Owners mentioned the additional expenditure of time and resources associated with following the different NTD procedures required by each Internet Platform, especially in terms of different notification tools, language settings and reasoning obligations. Due to the amount of work required, some Rights Owners hire an external service provider to monitor and take down counterfeit listings from Internet Platforms. Some Internet Platforms explained that standardising NTD procedures is not possible due to the fact that each platform is built based on different technical solutions. Rights Owners suggested that takedown periods should ideally be reduced further, to a few hours.

While some Internet Platforms said that nearly all Rights Owners’ notifications they receive contain sufficiently clear information on the infringement, the Offer and the notifying party, others have reported that Rights Owners often do not back up their claims of counterfeit products with test purchases. Furthermore, Internet Platforms reported that they often have to ask for additional information to process the notification, for example in cases of ‘grey zone’ products where Rights Owners’ knowledge is necessary to determine whether the products are really counterfeit.

According to the Internet Platforms, some of the most common issues encountered when dealing with a NTD request are (i) a mismatch between the listing notified and the intellectual property documents filed, (ii) insufficient evidence to demonstrate infringement, and (iii) lack of response from the brand’s representatives when additional information is required.

Lack of evidence to prove the infringement is a particular issue for the Internet Platforms as some have contacted certain sellers based on a Rights Owner’s notification and the Offers turned out to be genuine. Internet Platforms stressed that such unfounded notices have a negative impact on their reputation as some merchants get upset when their integrity is in doubt. Internet Platforms also suggested that a better way for Rights Owners to back up their claims would be the introduction of tracking systems for genuine products, with electronic tags that would make it possible to identify fake items with more certainty.

Some Rights Owners have shared their monitoring methodology and information with the Internet Platforms. This includes: lists of keywords commonly used by sellers of counterfeit products; lists of monitored platforms and current trends on those platforms; commercial-scale sellers identified based on the number of items advertised; repeat infringers; and URL listings. Rights Owners have repeatedly highlighted the fact that it is sometimes very difficult even for them to identify original products sold online with certainty, as sellers often post only a few pictures of the product, post low-quality pictures or hide the authentication part of the product.