The flood of trademark infringements and counterfeits constantly battering beleaguered brands must already seem relentless, and yet it may be getting worse.
Heather Stutz, corporate counsel of intellectual property at Starbucks in Seattle, says her company has seen an increase of fake versions of its products online as e-commerce has grown, particularly since COVID.
“Counterfeits are on the increase and definitely of concern to the company,” she says.
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Brands often don’t have the bandwidth to manage takedowns of these infringements by themselves, so they turn to external assistance. Stutz says her company partners with an online vendor and local counsel to battle infringements and fakes.
But sources say these partnerships can be tricky to manage. Brands inevitably give up some control over takedown when they outsource it to online vendors. To make up for that loss, they regularly review vendor activity.
And as part of that review, brands look to ensure their vendors are only targeting infringing listings and not genuine sellers. This is important because if brands file takedown notices on legitimate products, e-commerce platforms may be more likely to scrutinise their notices in the future, and sellers will get annoyed.
In-house counsel tell Managing IP that they have developed always-never rules to help vendors understand which listings to remove. The exact rules vary by brand, but generally set out that vendors should always remove listings with certain characteristics or never remove posts from authorised sellers.
A shoe company that didn’t make high heels, for example, could instruct vendors to always remove listings of high heels that used its trademark.
Brands can also get online platforms to implement these rules but may find it tricky.
Companies still need robust takedown policies beyond always-never rules, however, because these bright-line instructions won’t capture all instances of online infringement.
Rulemaking rules
Brands should be aware of a few pitfalls when constructing always-never rules.
They should be careful when instructing vendors to never issue takedown notices against certain sellers, for example, even though such a rule could help prevent the removal of legitimate listings, say sources.
Kevin McPherson, senior director of brand protection at mobile case maker OtterBox, argues that if companies such as his don’t monitor authorised sellers, they might not find out if said sellers are comingling counterfeit and legitimate goods.
He notes that his company has never been in this situation, despite the fact that it instructs vendors never to remove listings from certain sellers, because the business vets its authorised resellers and has got to know them well.
Businesses should also take care when instructing vendors to always take down listings for products with certain characteristics.
Stutz at Starbucks says some global organisations – though not necessarily her company – may struggle to keep track of all relevant information on their products, which could raise problems.
If a business makes a product in one jurisdiction, but not in another, a rule setting out that all products with certain characteristics should be taken down may prove counterproductive.
“You don’t want to get into a situation where you’re claiming something is counterfeit, and it’s not,” she says.
Kristina Montanaro Schrader, partner at Adams and Reese in Nashville, adds that there is a risk that always-never rules could become outdated if companies’ strategies change.
If the shoe company that doesn’t make high heels starts to manufacture them, counsel needs to make sure their vendors are aware of the change and stop automatically taking down all instances of high heel listings with the company’s branding, she says.
Sources add that there are certain always-never-rules they don’t use.
Brands might be tempted to ask vendors to always take down listings below certain prices on the basis that these must be counterfeit products. But this is not a reliable strategy.
McPherson points out that legitimate products could be sold for significantly less than normal for various reasons.
If a phone case is discontinued because it fits a phone that’s no longer sold, an authorised reseller might continue to sell these products for very little. Under a price-based always-never rule, however, these items could be identified as fakes.
Working with platforms
Firms can get organisations other than vendors to adopt their always-never rules, of course, but they might have a harder time doing so.
Sources point out that different online platforms have different policies.
McPherson says some of the larger online marketplaces in China have agreed to proactively prohibit certain sellers from using his company’s trademarks in listings.
Other e-commerce sites are a little fussier. Schrader at Adams and Reese adds that Amazon will also automatically take down content based on always-never rules, but only after a lot of negotiation.
She points out that certain industries have successfully negotiated for more proactive takedown policies. Sunglasses sellers must now provide authorisation from brand owners to sell their products on Amazon.
Some counsel say they wish online platforms would implement always-never rules more often.
Guido Baumgartner, vice president of global brand protection at Coty in Germany, says counterfeiters market fake versions of his company’s products in sizes it doesn’t sell.
E-commerce platforms should use filters to automatically take down products that are in those sizes, rather than require his brand to send in notices, he says. “Internet service providers have to take their share of the responsibility.”
He notes, however, that these websites are more actively involved in taking down counterfeits than they once were.
Other takedown strategies
Even with this involvement, brands still have to do a lot of the work themselves. They often have to manually evaluate notices from vendors about potential infringing products.
Baumgartner at Coty notes that this process can be difficult because his company has a limited budget.
Stutz at Starbucks points out that counterfeiters have become increasingly sophisticated and often make products that resemble real brands as well.
There are some steps counsel can take, however, to address this issue, such as looking at the serial numbers of the items on the website. They can also make test purchases to verify the legitimacy of the goods.
Even though these test purchases can be cumbersome, they are important to ensure that brands are targeting the right products.
These strategies, combined with always-never rules, do not change the fact that countless online infringements are serious problems for brands.
But they at least allow counsel to make a serious dent in the problem.
