Online counterfeits - the Alibaba, Police and Brand perspective
Updated: Nov 20, 2021
Some luxury brands still choose to not operate an online presence. Whether this is sustainable in the long term is unclear. Regardless of company strategy, you need to protect your brand online irrespective of whether you choose to operate online.
The Luxury Law Summit included a fascinating panel discussion between Luna Bianchi (IP Counsel at Ermenegildo Zegna), Peter Ratcliffe (Manager of PIPCU, part of City of London police which investigates online crime in England and Wales) and Graham Clemence (Senior Director Global IP Enforcement at Alibaba). Their panel was moderated by Rebecca O'Kelly (Partner at Bird & Bird).
Each member approaches brand protection from a different perspective. The key theme was the importance of co-ordinated delivery and brand relations and SME outreach and identification of counterfeit sources.
PIPCU helps with criminal enforcement in the UK. One of their successful recent operations is Operation Achiko. In this operation, PIPCU has been working with Nominet (who manage the .uk registry). They encourage victims to report infringing websites. They then write to Nominet and within 24-48 hours, Nominet will disable the website. So far Operation Achiko has taken down 110,000 of the most harmful websites. PIPCU works very hard to promote its works to the IP community in order to get as much engagement as possible.
At the start of the pandemic
Luna explained that being flexible in the pandemic was very important to Zegna Group. She noted that the Group was particularly proactive at the start of the pandemic which helped them to stay on top of the issues. For example, in March 2020 China was reopening but Italy was locking down. Consequently, Zegna froze European and Turkish anti-counterfeiting planned operations which needed to be reassessed at that time. This meant that they were able to reallocate resources to the Chinese side. This included supporting enforcement in China and collaborating with strategic countries which border China to bolster Customs awareness and activities.
Graham explained that initially Alibaba's focus was on ensuring that PPE etc was not counterfeit due to the significant public health implications of fake kit. Alibaba partnered with the US authorities to prevent COVID related fraud. Peter agreed that one of the biggest worries has been the safety element. This expanded around investigating, raiding and interviewing people. They had to do a lot of work around risk assessment. They focused on people based on where they lived rather than necessarily where they were located. Another issue concerned hotels so that they had to go across the UK and back in the same day.
Like Graham PIPCU did a lot more COVID related investigations once the pandemic took hold. E.g. at the start of the lockdown, they worked with the US and MHRA to take action against Ludlow to stop him selling fake COVID testing kits. They were able to arrest him as he walked into the Post Office! This was important to add a deterrent as well as warning others that these fake kits were in circulation. It shows the sorts of work that can be done when working in co-operation with PIPCU. Peter explained that PIPCU has been operating normally since June but there’s been a slight time delay with prosecutions and trials due to COVID.
How are you changing and adapting?
Luna – flexibility is key
Good relations with all partners are very important. They can support you – they know your business, company mindset and goals. They can customise your advice for you.
In April were running a short project to track down online counterfeiting levels and identified that the numbers were 50% higher than in the same period in 2019. Many brands were in a similar place.
One of the key issues was fake masks. Branded masks bearing the trade marks and logo. Not everyone’s portfolio was comprehensive enough to cover this. So they had to work on an emergency filing programme to identify an effective trade mark registration to counteract this trend. This shows the importance of continuing alignment with all partners and reviewing problems holistically in order to resolve all matters.
Counterfeiting existed long before the internet but post COVID the numbers have substantially increased.
Collaboration and outreach is essential to help stem this time. Alibaba partners with 550 brands globally. This partnership grew during the pandemic. They have been able to support them and expanded their efforts over the pandemic.
Peter noted that one of the challenges in stopping counterfeits was the limited availability of developing and maintaining relationships - networking is hard in these times. However, the focus has been on improving existing operations and partnerships. Having existing good relationships with many brands has meant that they haven’t been as badly impacted as they might otherwise have been but if things don't change, it will become more challenging as time goes by.
The key to PIPCU being able to help comes from early references from brands and lots of information. In addition, PIPCU has excellent partnerships around the world with law enforcement and brands e.g. they work closely with Brazilian law enforcement and are helping them to set up a similar programme. A lot of what Brazil does is later mirrored throughout Latin America – so this is a very important development.
Luna explained that working alongside Alibaba has been very helpful. They have knowledge of the latest anti counterfeiting trends and working with them means that Zegna Group is able to draft effective brand protection policies and process. This collaboration is beneficial for everyone.
Can we really “follow the money”?
There’s a misconception that it’s easy to seize criminal assets. They’re keen on this but it’s a long process. they work with payment providers etc and utilising them to identify accounts and freeze assets. They’re well aware that monies in bank accounts are being used to finance other serious organised crime but it’s not an easy task.
The Proceeds of Crime Act 2002 (POCA) means that if the money that is seized isn’t attributed to a victim, the money can be seized and reallocated to law enforcement, government and the courts. It was been very helpful. However, following the money is not the simple solution it may appear and it takes an extremely long time.
Alibaba also has a unique offline enforcement platform. Once you highlight the issue to Alibaba they can feed it into their database and identify whether they are a worthwhile target for further investigation. Go to law enforcement and identify if it’s a worthwhile complaint and then work with law enforcement. By way of example, they work with the Chinese authorities to make arrests and raid manufacturing hubs.
To find out more contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - firstname.lastname@example.org