Singles’ Day 2018: Combating counterfeiting

Singles’ Day, the largest ecommerce festival in the world, is on track to once again break records in 2018.

In our post last week, we investigated the history of Singles’ Day, along with Alibaba’s growing dominance and signs of increasing counterfeit activity in China and Southeast Asia.

Singles’ Day is held on Chinese ecommerce platforms, and counterfeiting is known to be prevalent in these marketplaces. This has dissuaded many Western brands from making their products available on these sites and fully capitalise on this ecommerce festival; the risk is deemed too high.

As such, last year Alibaba publicly committed to remove more infringing listings from its platforms and called on the Chinese government to increase penalties for individuals caught counterfeiting. This post delves into whether marketplaces and governments are keeping up with counterfeiting threats, and how brands themselves can better protect their IP online.

What is being done to combat counterfeiting?

Alibaba’s proactive approach

Alibaba is the most influential platform involved with Singles’ Day and they have recently made improvements to their brand protection scheme, stating that more infringing listings are being taken down as a result of their own investigations rather than after requests from rights holders. They claim that 97% of these takedowns occur before a single sale has been made. Alibaba introduced blockchain traceability earlier this year. It is designed to help consumers track the authenticity of products sold on the exclusive Tmall Luxury Pavilion marketplace using digital signatures and timestamps. However, this anti-counterfeiting measure is still in its early stages and has not yet been rolled out to the wider Tmall marketplace and may not make it to Taobao.

WeChat’s anti-counterfeiting measures

WeChat can be used by counterfeiters posing as Daigou vendors to discretely sell goods to consumers through in-app payments on private chats. With 1 billion active monthly users and a third of all time on mobile in China spent on the WeChat app, the scale of the threat posed to brands is unprecedented. Last year, action was taken against 72,000 WeChat users for selling counterfeit goods, but this is likely a fraction of the total infringing accounts as they are very difficult to track. Many illicit transactions go under the radar and users can simply switch between accounts when action is taken against them, meaning it is difficult for WeChat to keep up.

WeChat’s simplification of its online infringement complaint system, has however made it easier for rights holders to report infringements. Additionally, more than 180 brands have registered for WeChat’s Brand Protection Platform and this number will continue to grow as it is no longer invitation-only. Many more brands are still needed, however, to ensure comprehensive coverage of the intellectual property of goods sold on the platform.

Pinduoduo’s counterfeit crackdown

Pinduoduo recently cracked down on counterfeit goods on its platform. During one week in August, it took down 4.3 million infringing listings, removed 1,126 stores and blocked 450,000 suspected counterfeits from being listed. However, marketplaces need to take this action on a constant basis as counterfeiters will simply create new accounts and relist their illegitimate products. Pinduoduo heavily relies on cheap, discounted goods being available on its platform and counterfeiters will continue to exploit this unless brands take a proactive approach to protecting their intellectual property.

Chinese government intervention

The Chinese government has recently announced a new ‘ecommerce law’ that comes into effect January 2019 and aims to reduce the volume of counterfeit goods online by levying fines to non-compliant platforms. Whilst this is a step in the right direction, issues do remain, for instance Article 28 states that marketplaces need only remind venders to obtain business licences rather than require them to.

One key change proposed in the new ecommerce law is that vendors will be legally required to make ID data available online, thus aiding rights holders’ investigations into infringements on marketplaces. This is in stark contrast to the EU where GDPR has made it more difficult for brand owners to find identifying information about online infringers through WHOIS lookup.

What can brands do?

Whilst there is clear progress from social platforms, marketplaces and the Chinese government, brands still need to be proactive in their fight against IP infringement.

A truly comprehensive brand protection strategy that combines a rights holder’s own techniques, platforms’ anti-infringement tools and enforcement of local IP laws will ensure that infringements are removed in quick-time.

1. Register your intellectual property internationally
   It is crucial to register your IP to comply with the law in each territory where you believe your products will be in demand, regardless of whether you plan to sell there straightaway.
2. Engage with marketplaces
   Brands should be in direct contact with marketplaces, particularly in counterfeiting hotspots such as China. Many marketplaces such as Tmall and WeChat run brand protection schemes that allow rights owners to report infringing content.
3. Employ intelligence-led brand protection techniques
   Brands shouldn’t rely on marketplaces alone to detect and remove infringing listings. Instead, they should select a brand protection vendor that can identify entire networks of infringers rather than individual accounts or listings. With this strategic approach, they can discover large-scale illicit operations occurring under platforms’ watch. Brands can then send notices for all entities within a network, or they can pass on intelligence to their litigation teams.

At Corsearch we work with our clients to create effective online brand protection strategies, leveraging our industry expertise and insights. If you believe your brand is being infringed upon, or want to see the scale of threats to your brand, you can request a free brand health check.