By Jan-Maarten Laurijssen, Co-Founder & Chief Operating Officer at Pointer Brand Protection
The end of the year is an opportune moment to look back at some of the biggest events and news stories which have shaped brand protection, anti-counterfeiting and intellectual property in 2019. We’re living in a period of great flux and new technologies are changing how people utilize branded products and services daily. Changes in ecommerce regularly redefine how we shop, while emergent economies in Asia have also shifted the conversation about how and where we can enforce intellectual property rights. There are also huge new trends in social media and financial instruments that will continue to alter the landscape far into the future.
Such a lot of change gives brands, and those protecting them, a great deal to think about when they come to maximize their efforts against counterfeiters and IP criminals. But it’s crucial to remain on top of all the latest developments in the field. So, what were some of the biggest brand protection and intellectual property stories in 2019?
If you’ve got more to add or you’d like to discuss how any of these issues may be affecting your business, we’d love to hear from you.
Amazon and Project Zero
It’s no secret that Amazon has a problem with counterfeits. The world’s largest etailer sells around half of its total products through third-party sellers; distinct businesses who offer their own inventory through the site’s platform and distribution network. For legitimate brands, one of the problems with this model is that many of these traders are selling counterfeit goods, which serve to confuse consumers and lower price expectations. Even though the third-party sellers are not linked to Amazon’s own sales, they do still carry the air of legitimacy caused by operating under the company’s masthead.
Although Amazon has had IP protection services in place, they have also been continually pressed to take more action, resulting in 2019’s Project Zero. This is a development of their anti-counterfeiting abilities through a program that has thus far been extended to a small number of brands, with the US, Europe and India being so far covered. Amazon see the early results of Project Zero as “promising,” and suggest that the combination of AI, brand self-reporting, and physical checks, will eventually get the number of fakes down to, you guessed it, zero. Time will tell, but any efforts by such a large player should be welcomed and encouraged.
The EU Copyright Directive
In a highly divisive decision taken back in April, the European Council passed a directive which will enshrine new legislation concerning how copyrighted material can be shared online. The European Union Directive on Copyright in the Digital Single Market (especially the controversial Article 13) has been supported by many business and creatives but opposed by some tech companies and internet freedom campaigners.
The EU say Article 13 will create a fairer system for content creators such as musicians and writers, ensuring that their creative works cannot be shared online without their consent, and thus without their receiving fair payment for their work. It would do this by making online platforms such as YouTube and Facebook legally responsible for the material that’s uploaded to their sites. The argument in favor of the directive, made by many creatives and business (record companies and movie studios, for example), is that tech giants such as Google and YouTube make huge amounts of money by sharing and promoting content without it benefiting the creators. To combat this, Article 13 would put in place a licensing system for platforms who want to host the content of others. If they don’t have such a license, they will be responsible for removing content or not allowing it to be posted.
Critics see this as problematic because it does not address the technical reality of how content is shared, and it also creates room for unintended consequences that are censorious. Stopping the upload of content would have to happen through content filters, which may not understand the many exemptions which apply to copyrighted material and thus result in the blocking of fair use works. For smaller websites too, the concern is that they would not have the money or resources to pay for licenses or to adequately conform, resulting in their disappearance. The legislation was passed at the EU level but now needs to be approved and altered by individual nations. It’s a story which will continue to be central for brands, creators, and online companies for years to come.
IP and the China-US Trade War
Although the ongoing dispute between China and the United States is nominally a trade negotiation concerned with tariffs, intellectual property is also at the heart of the talks. The US has long campaigned for the Chinese government to impose stricter controls on companies and citizens who do not respect the legal sanctity of IP rights. This reached a head back in May 2019 when the US administration effectively barred China’s sixth most valuable company, Huawei, from trading with the West. Through the declaration of a “national emergency,” the US government allowed for the intervention against any commercial transaction between American companies and foreign agents threatening American security. What this showed was that by using legislation at least partially aimed at companies who infringed patents and commercial secrets, and who thus compromised security, commercial decisions could be enacted.
China’s reputation for counterfeits and IP infringement is undoubtedly deserved, with reports suggesting that around three quarters of all counterfeits seized by EU Customs authorities originated there. So, the question for IP analysts is how will the trade talks with the US affect China’s attitude to enforcing IP rights?
The good news is that there are positive signs about Chinese intentions. As of November 2019, China said that it will raise penalties against IP violations and potentially lower the threshold for those who can be prosecuted – hypothetically leading to more prosecutions with stiffer penalties. Additionally, there are signs that China’s commitment to, and respect for, IP is changing. Trademark and patent registrations are up, and there’s an increasing focus on the idea of “Made in China” as a creator of new companies and ideas indigenous to the country rather than being copied from external models.
Talks are ongoing.
The Emergence of Vaping and Legalized Cannabis
Although this may appear to be a smaller story, few industries generated more anti-counterfeiting column inches in 2019 than that of e-cigarettes and legalized cannabis. While tobacco smoking has been in decline for years, the use of e-cigarettes appears to be on the increase. Some projections see the market growing by 8% over the next five years, with many brands such as Juul and Vuse already dominating the market with their innovations and brand-led products. Predictably, where brands emerge, so do counterfeits.
Back in August 2019, it was reported that Juul was facing something of a counterfeiting crisis. The company had withdrawn the fruity flavors of its nicotine pods following pressure from US authorities, but then counterfeiters filled stores (both physical and online) with lookalikes. In addition to counterfeit branded goods though, in a mirror of what has happened in the traditional tobacco industry, adulterated products purporting to be e-cig liquids have also been found. As these fake e-liquids may contain impurities and incorrectly labelled concentrations, there is concern that they pose a major health risk. For those who watch brand protection and consumer safety matters, this is an industry that needs attention.
Although the markets are not necessarily linked via the same companies, there does seem to be substantial crossover between vaping and the growth of the legalized marijuana industry, along with various associated products such as CBD oil. In the US, more than 30 states have some combination of legalized medical or recreational use policy, with more likely to be added. Whether the rest of the world will follow suit is unsure, but if it does then it’s also a certainty that big marijuana brands will develop and create a significant market for counterfeits also.
Launch of Counter-Attack
Ok, so forgive us a little self-congratulation here, but in 2019, Pointer and Back Four Brand Protection launched the first designated brand protection program for the sports industry as a whole, Counter-Attack.
We’ll let the website speak for itself, but safe to say that if you have an interest in sports brand protection then this is going to be one enterprise to watch:
“Established by industry experts in the sports brand protection world. Counter-Attack is a complete solution to the problems faced by leagues, organizations, teams, brands, and fans. Counter-Attack puts aside Saturday afternoon rivalries and brings together sport-wide allies against our real adversaries, counterfeiters. Counter-Attack provides a unique program of online and real-world action and advice for sports organizations who want to protect themselves.”