By David Buirs, Brand Protection Director at Pointer Brand Protection
It’s a busy time for sports fans. Major championships in 2019 and 2020 for cricket, rugby, and soccer (not to mention the Olympics) mean that sales of both genuine and counterfeit merchandise will peak dramatically. One only needs to scroll through the listings for counterfeit soccer jerseys for popular Chinese clubs such as Beijing Guoan and Guangzhou Evergrande Taobao FC to realize that immense popularity inevitably leads to mass counterfeiting (even on online marketplaces sympathetic to the brands).
Yet, while the economic loss to established sports brands and teams is well known, one growing issue that has received little attention is the problem of eSports counterfeits and how gaming companies should protect themselves against fake merchandise.
One of the more thorough reports on the losses to sporting goods brands came in the 2015 OHIM report, which calculated damages in excess of EUR 500 million annually. If sports clothing and other non-equipment fakes are added to this figure then the projected cost rises even further. In recent years, however, the incredible growth of eSports and competitive gaming tournaments means that yet more brands, sales, and counterfeit products should also be considered along with traditional sporting goods fakes. To put some numbers to the rise of eSports, in 2019 the sector will generate more than $1.1 billion in revenue and be watched by more than 450 million viewers (over 100 million more than 2017) – a level of growth unrivalled by any other new sport. According to one industry report, the entire video games sector has generated more gross revenue than both the film and music industries combined every year since 2009.
Are eSports Sports?
Although eSports have not yet been recognized by the International Olympic Committee (IOC), the path towards legitimatization has already begun. Organizers of the Paris 2024 Olympics have committed to a series of eSports events that will run alongside the Games, potentially putting them in front of a global audience that tops 3.6 billion. eSports will also be a competitive event at the 2022 Asian Games, and they’ve been adopted by sporting teams and leagues across the world. The FIFA eWorld Cup, the UEFA eChampions League, and the Formula 1 eSports Series are just a few of the examples of the crossover between the biggest sporting brands and the world of competitive gaming.
While the traditional sporting world is making up its mind on whether to recognize eSports, the competitive gaming industry has pressed ahead and created its own wildly successful tournaments. With a total prize fund of $30 million, the Fortnite World Cup, which begins this week, is perhaps the biggest event of 2019. Fortnite is one of the sensations of the gaming world; its 250 million players mean that it has more subscribers than Netflix (139 million), and its global audience is larger than the population of all but four countries (China, India, US, Indonesia). It’s big business, and big business means a big draw for counterfeiters too.
“Video games have generated more gross revenue than both the film and music industries combined every year since 2009.”
Fortnite and Fakes
The level of popularity that Fortnite’s makers, Epic Games, has achieved since the game’s release in 2017 have made it a prime target for counterfeiters. Listings for potentially fake merchandise bearing the name, logos, and characters are prominent on all the online marketplaces renowned for selling counterfeit goods. Although we do not represent Epic Games or their licensees, it is still possible to make credible assumptions about the number of fake goods online based on our own expert awareness of counterfeit indicators, which include price differences with official merchandise, “unofficial” designations, and high levels of stock from manufacturers. Based on these parameters, even a simple survey of five of the online marketplaces known for counterfeit goods reveals the below information.
*average unit price $10 x 10 units
Methodology – These are conservative estimates based on the number of products on these websites, each listing bearing one or more indicator of being unofficial. Each website was searched using the single word, “Fortnite”. The total number of listings featuring this term is given on the first page. An assessment of the first search page was made and then, using the number of possibly counterfeit listings as a percentage of the results on the first page, this percentage was then applied to the total number of listings on the website. This total number of potentially counterfeit listings was then multiplied by an average unit price of $10, with an average unit number of 10 units per listing. These are conservative estimates as most listings on these websites are unlimited and prices fluctuate. No other trademarks were searched, so additional counterfeit listings may be present.
From just five marketplaces that’s a potential loss in excess of $2.9 million. And that’s just a snapshot of a single day. In addition to the economic damage incurred by potentially fake products there are also further issues around audience appropriateness and safety. As many eSports games have audiences under the age of 18, instances of unsafe toys or products such as branded cigarette lighters and alcohol flasks (all of which are available) raise further dangers. Although it may be a photoshopped image rather than a listed product, one Reddit user even went so far as to show a Fortnite-branded condom, which is perhaps not the kind of fake product that concerned parents want their children to see.
For eSports brands, taking tighter control of their reputations and their profits means being able to manage this level of brand abuse. There are indications that this is certainly happening on marketplaces such as Redbubble and Amazon, where the scale of the issue is not as wide-ranging, which suggests that the companies are already taking enforcement action. For many eSports brands, however, marketplaces such as the ones listed above still offer a vast array of products from the ridiculous to the potentially dangerous. Why are these listings so persistent and what can eSports businesses do about them?
The Limitations of IP Law for New Brands
As trademark registrations operate on geographic and classification-based rules, enforcing IP rights for young brands who experience rapid, global success can be challenging. A brand may register its rights once success begins, but, given that some registrations can take two years or more, this potentially leaves a gap in time where enforcement is much more difficult in countries such as China and Indonesia. Given how quickly brands like Fortnite have come to prominence, they may be eager to enforce their rights but unable to because the paperwork is incomplete, so the online marketplaces refuse to act.
There is also another way in which young brands can be penalized by their newness, and this happens when counterfeit products are external to the core business of the genuine company. For eSports teams and games whose main products are digital, physical merchandising may be a secondary consideration. The link to traditional sports and other brands, however, has meant that sellers of fake goods have simply applied eSports trademarks to products they were already producing. The appearance of Fortnite t-shirts co-branded with major sportswear manufacturers and streetwear brands, for example, demonstrates how counterfeiters have simply applied the same principles to a new area.
Triage Strategies for Non-Core Business Brand Protection
Despite the challenges that some new companies may experience with listings for products outside of their core business, there are still practical steps that eSports brands can take to remove online counterfeits.
- Assess – A necessary starting point is a threat assessment and landscape report. Although it’s possible to calculate approximate numbers and geographic variances, our specialized software, Revlect, gives an accurate measure of the harm being done to the profits and reputation of brands. A report into the type and number of counterfeit products on offer allows any company to see exactly who is using their IP and where they are.
- Prioritize – Cost-effective, efficient brand protection can only be done with accurate information and a clear set of priorities. Having a landscape report allows businesses to then prioritize their threats. Knowing exactly how much profit is being drained in specific territories, and on particular platforms, encourages the smart development of IP portfolios and a more well-organized investment in enforcement.
- Enforce – Even though enforcement options may be limited in some cases, there are still potential opportunities for action.
- Occasionally the use of copyrights can help to remove fakes, particularly when the products show copyright-protected works such as video game characters, elaborate logos, or images. Searching for the names of particular characters, for instance, might return copyright-infringing listings that do not contain the name of the videogame, but which can be enforced.
- Brands may also wish to consider how they can leverage relationships with existing partners. If you have a licensing agreement with a manufacturer of mobile phone accessories, for example, it may be possible to act in conjunction with them to enforce on design rights or trademarks they own.
- For counterfeit product listings to be searchable they need to feature keywords in the listing titles or descriptions. These listings also represent possible opportunities for removals based on wordmark infringements. In specific circumstances, some platforms can even be persuaded to block certain keywords entirely.
- Consumer education doesn’t require IP rights, but can still deliver excellent results. Having webpages dedicated to informing your customers of how they can assist your brand protection by not buying fakes can result in improved sales and even elicit the details of sellers who are infringing your rights. Video games often have very loyal followers, and if they are made aware that buying official merchandise supports the developers of their favorite games instead of supporting counterfeiters and organized crime, their buying behavior may change.
For more information on how you can protect your brand, please contact us and start taking action today.