Combating Counterfeiting On The Internet December 10, 2009 · 2019-04-17 · ©2009 Foley & Lardner LLP Counterfeiting Statistics • $25 billion counterfeit goods traded online each

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Combating Counterfeiting On The InternetDecember 10, 2009

©2009 Foley & Lardner LLP

Speakers

Laura CovingtonYahoo! Inc.Associate General Counsel, Global Brands and Trademarks/Global IP Policy

Brendan ReillyNokia CorporationIPR Manager, Global Anti-Counterfeiting Team

Robert WeisbeinFoley & Lardner LLPPartner, IP Litigation; Trademark, Copyright & Advertising


Overview

• Recent Statistics• Legal Landscape• Tiffany v. eBay & Parallel European Cases• Yahoo!’s Efforts To Stop Counterfeiting• Nokia’s Anti-Counterfeiting Strategies• Open Discussion – Counterfeiting on the Internet• Questions


Counterfeiting Statistics

• $25 billion counterfeit goods traded online each year (Moises Naim, Illicit, Anchor Books, 2005.)

• International Anti-Counterfeiting Coalition– $600 billion dollar a year problem– 10,000% increase in the past two decades– Effect on U.S. business: $200-$250 billion/year – Directly responsible for the loss of +750,000 U.S. jobs– Approximately 5%-7% of the world trade

• Organisation for Economic Cooperation and Development– Approximately 2% of global trade; rises to 5% when

domestic & digital piracy are included (2007 Study)


Counterfeiting Statistics (cont’d)

• U.S. Customs (Seizure Statistics, FY 2008)– Domestic value of goods seized for IPR

violations: $272.7 million (38.6% increase)– $221 million (81%) goods seized from China– Footwear was top commodity seized ($102.3

million; 38% of all seizures)– 9.7% increase in IPR seizures (13,657 to

14,992)


Legal Landscape

• Preliminary Requirements For Enforcing IP Rights Against Counterfeiters (U.S.)– U.S. Trademark Registration (15 U.S.C.

1116(d)(1)(B)(i))– Counterfeit mark is used on same goods or

services covered by registration (15 U.S.C. 1116(d)(1)(B)(i))

– Counterfeit mark is identical or substantially indistinguishable (15 U.S.C. 1116(d)(1)(B)(ii))


The First Step: Investigate

• Purchase sample goods• Gather intelligence on the source of the goods

– Identify relevant websites– Identify bad actors, cooperative infringers– Identify tangible assets (e.g. factories; bank accounts)

• Consider potential defendants– For example: website owners, online intermediaries

(eBay, Amazon), payment services, keyword sellers


Enforcement Strategies

• Send a Cease & Desist Letter– Provides actual notice to counterfeiter

• May support argument for willful infringement • May support increased statutory damages (15 U.S.C. 1117(c))• Counterfeiter may flee/destroy evidence• May prompt declaratory judgment action

• Consider UDRP Proceedings• Consider Take-Down Programs

– e.g. eBay’s VeRO program; IP complaint/notice procedures at Yahoo! Google, Bing


Litigation

• Consider time/expense, value of the case• Section 34 of Lanham Act (15 U.S.C. 1116)• TRO/Preliminary Injunction

– Use to maintain the status quo

• Seek expedited discovery • Criminal enforcement actions

– e.g. Patriot Act, Trademark Counterfeiting Act (18 U.S.C. 2320(a)), Counterfeit labeling (18 U.S.C. 2318)


Remedies

• Permanent Injunction• Actual Damages (subject to trebling)• Statutory Damages (15 U.S.C. 1117(c) rev.)

– $200,000 to $2 million per counterfeit mark– No attorney’s fees if statutory damages elected

• Seizure of counterfeit goods• Asset Freeze (including bank accounts)


Tiffany v. eBay

• Tiffany estimated that 30-75% of “Tiffany” goods on eBay are counterfeit

• Tiffany argued that eBay had general knowledge of counterfeit goods being sold on its site

• Tiffany argued that eBay should be liable for direct/contributory trademark infringement, unfair competition, false advertising, and direct/contributory dilution


Tiffany v. eBay (cont’d)

• S.D.N.Y held: (576 F. Supp.2d 463)– “[W]hile eBay clearly possessed general knowledge

as to counterfeiting on its website, such generalized knowledge is insufficient . . . to impose upon eBay an affirmative duty to remedy the problem.”

– “[W]hen eBay possessed the requisite knowledge, it took appropriate steps to remove listings and suspend service. Under these circumstances, the Court declines to impose liability for contributory trademark infringement.”


Tiffany v. eBay (cont’d)

• “Tiffany must ultimately bear the burden to police its marks.”

• The Court rejected Tiffany’s argument that eBay could “screen out potentially counterfeit Tiffany listings more cheaply, quickly, and effectively than Tiffany.”

• “[E]ven if it were true that eBay is best situated to staunch the tide of trademark infringement against Tiffany . . . that is not the law.”


European eBay Cases

• Hermes v. eBay (France) (2008)– eBay liable for “counterfeiting and imitation of

French brand names. . . . ($30,000 + Notice)

• Louis Vuitton v. eBay (France) (2008)– 90% goods counterfeit; Court finds that eBay

served as a “broker”– eBay pays $61 million + injunction issued– eBay fined $2.6 million for failure to comply

with injunction (November 30, 2009)


European eBay Cases (cont’d)

• L’Oreal v. eBay– Germany: Judgment for L’Oreal– Belgium: eBay does not have a “general

monitoring obligation”– France: eBay’s system to identify fake goods

sufficient to fulfill obligation– U.K.: eBay not jointly liable for counterfeit goods;

no legal duty to prevent infringement


Yahoo! – A Famous Brand

• As a famous brand owner, Yahoo!’s interests are aligned with brand owners combating infringement and counterfeiting

• Yahoo! Inc. is the owner of one of the most recognized brands in the world, valued at over $5 billion (2009 Business Week / Interbrand Annual Brand Report)

• Yahoo.com is the world’s largest network of online integrated services, with more than 500 million users worldwide (Yahoo! internal data)


Yahoo! – An Industry Leader

• As a famous brand owner, Yahoo!’s interests are aligned with brand owners combating infringement and counterfeiting.

• Yahoo! is actively involved in enforcement efforts, including dedicated resources – staffing and funding - to protect our own brands, online and offline.

• Yahoo! is taking active leadership roles in organizations combating abuses:– INTA (regular member and represented on Board of Directors)– ICANN (including President of Intellectual Property

Constituency) – Sponsor Member, Messaging Anti-Abuse Working Group

(MAAWG)– Steering Committee, Anti-Phishing Working Group (APWG)– DomainKeys Identified Mail (DKIM) approved by Internet

Engineering Task Force to combat spam and phishing


Yahoo! – A PartnerYahoo! Search Marketing

Trademark Guidelines• Yahoo!’s relevancy guidelines for advertisers allow an

advertiser to bid on a third party trademark ONLY IF– the advertiser’s website contains content relevant to the trademark

AND the trademark as used in the ad:• constitutes nominative fair use (either a reseller, or NON-

COMPETITIVE information site, such as product reviews, comparisons, commentary, or news information); or

• is in a generic or merely descriptive manner;

• The trademark must be included in the ad title/description in a way that makes clear the nature of the relevant content on the advertiser’s website and why the listing appeared in response to the query.



• Counterfeit complaint (DMCA-like notice/ counter notice process)

• False / Misleading content complaint (same; for ads which may appear to meet our trademark policy but include false and/or misleading content)

• Copyright (DMCA)



• Terms of Service– Prohibit infringing third party patent, trademark, trade

secret, copyright or other proprietary rights – Prohibit activities which intentionally or unintentionally

violate any applicable local, state, national or international law

• Content Guidelines– Prohibit sale of counterfeit or other illegal goods – Prohibit ads for counterfeit, fake, or bootleg products

• Prescription Drugs– Parties selling prescription drugs must first be verified

by an independent third party, PharmacyChecker


Yahoo! – A PartnerThe Yahoo! Network

• Terms of Service– Prohibit activity and/or material which infringes

third party rights•Section 6. Member conduct: prohibits

unlawful conduct and, specifically, conduct that infringes third party trademarks and other proprietary rights


Yahoo! – A PartnerThe Yahoo! Network

• Copyright / IP Policy– This DMCA-compliant system is not limited to

copyright complaints, but also may be used to submit complaints about counterfeiting activity if identified in services such as Shopping, Groups, Mail, Web Hosting, Small Business, etc.


Yahoo! Contact Information/Links

Yahoo! Copyright / IP Policy: • http://info.yahoo.com/copyright/us/details.html• [email protected]! Report Abuse:• http://help.yahoo.com/l/us/yahoo/abuse/Yahoo! Search Marketing Trademark Concerns:• http://searchmarketing.yahoo.com/legal/trademarks.php• [email protected]! Search Marketing Counterfeiting Concerns:• [email protected]! Search Marketing False / Misleading Content Concerns:• [email protected]! Search Marketing Copyright Concerns:• http://searchmarketing.yahoo.com/legal/copyright.php• [email protected]


Nokia at a glance

• Nokia is the World's number one manufacturer of mobile devices by market share

• Internet services that enable people to experience music, maps, media, messaging, and games

• Comprehensive digital map services through NAVTEQ

• Equipment, solutions, and services for communications

• Networks through Nokia Siemens Networks


Nokia Brand Protection

Nokia is consistently ranked as top 10 most valuable brands in the world

The full range of Nokia’s products are pirated, from mobile accessories, to mobile phones, to cracked software

Nokia has a Brand Protection Enforcement team– Multi-regional, interdisciplinary– Border protection– Internet enforcement– Civil/ criminal litigation– Lobbying– Not a corporate function


Internet Enforcement

Notice and Takedown and DMCA are generally first step: • Establish actual notice• Volume / Scalability• Reducing false positives• Language limitations• Educating newcomersEscalation and prioritization• Controlled purchases• Criminal prosecution• UDRPFactors to consider• Recidivism and breadth of infringement• Dangerous products/leaked products/new infringements• Consumer complaints/stakeholder complaints/product returns• Identity of infringer (Powerseller, legitimate player in the market)


The Need for Software Support for NTD

• The Internet facilitates counterfeit trades. Internet can be used against infringers by providing an intelligence network and facilitating removal of infringing listings from online markets

• Daily, over 250,000+ postings for Nokia products are on the Internet

• Access to every major online market for counterfeit product (incl. eBay, Alibaba, TradeKey, DHgate, Amazon, Craigslist, etc.)

• Absent a software solution, we can never analyze the full picture of the online counterfeit situation. It is not possible to review and record every outlet for counterfeit product by hand

―Frame of reference ---enabling us to identify and focus on the highest profile online infringers at any given moment

• Automatic creation of database of infringers.• Identity Tracker cross-references information regarding each infringer, so

we can identify syndicates even though they include collections of different seller names and user accounts


Summary of Online Enforcements H1 2009

Total Infringing Items Removed From the Internet

Total 2007 Total 2008 H1 2009

Other Nokia Closures

Vertu Closures


Summary of Online Enforcements


OmniDirect Investigation

• Investigation began Oct. 2008 • Pitched to Fed, State, and County Authorities• Suffolk County PD/DA accepted case• Arrested April 2nd, $200k bail• Plea agreement TM Counterfeiting (Class E

Felony) (2-6 yrs state prison)


Cellularworld Investigation

• Business generated lead by email to generic inbox– Immediate review of

www.cellularworldinc1.com– Brick and mortar? Location in

U.S.– Evidence of infringement: No

need to purchase– Small shop: young infringer

• Strategy: Nip in the bud by letter to infringer and parents

• We were lucky: 99% of cases are far more complicated


DISCUSSION

Laura CovingtonYahoo! Inc.Associate General Counsel, Global Brands and Trademarks/Global IP Policy

Brendan ReillyNokia CorporationIPR Manager, Global Anti-Counterfeiting Team

Robert WeisbeinFoley & Lardner LLPPartner, IP Litigation; Trademark, Copyright & Advertising


QUESTONS?

Documents

Combating Counterfeiting On The Internet December 10, 2009 · 2019-04-17 · ©2009 Foley & Lardner LLP Counterfeiting Statistics • $25 billion counterfeit goods traded online each