Incentivizing proactive responses is vital to reducing counterfeiting

d. Online Marketplaces: Disrupting Counterfeiting Opportunity

Revisiting the opportunity structure for trademark counterfeiting in brick-and-mortar marketplaces and how it applies to e-commerce platforms, using online counterfeit sellers in the role of motivated infringers, online consumers in the role of suitable targets/potential victims, and the e-commerce platform itself as the place wherein infringer and target meet and interact.39 The motivated counterfeit seller operates as an “unseen competitor” to legitimate companies, using the e-commerce platform as a place to hide from detection and fool consumers, while reaping illicit economic benefits.

In the opportunity structure triangle for trademark counterfeiting, e-commerce platforms should have varying levels of influence over counterfeiting schemes by 1) de-motivating sellers of counterfeits on their sites, 2) protecting consumers by deterring potential infringers or assisting consumers in protecting themselves from victimization, and 3) controlling the conditions that allow illicit actors and consumers to come together and interact.41 As a result, when an ecommerce platform fails in one of more of these three activities, and the counterfeit seller and consumer meet on their platform, counterfeit sales on the platform are more likely.42

The operators of e-commerce platforms can significantly mitigate opportunities for the sale of counterfeit goods on their platforms by acting as guardians or controllers, engaging in proactive activities and implementing policies that target motivated counterfeit sellers and consumer targets.43 With regard to addressing motivated sellers of counterfeits, platforms have the ability to identify potentially infringing listings and proactively embargo or reject these listings.44 These activities can disrupt the opportunity for third party sellers to sell counterfeits to consumers. See Figure 1.

However, these activities alone will not entirely prevent counterfeiters from listing their illegal goods online as many counterfeiters have adopted a strategy built around inundation – posting a large volume of listings to hedge against takedown efforts. While platforms cannot know every possible trademark worldwide, they have access to publicly registered marks through the USPTO and should be aware of high selling products on their platform, particularly those of which the counterfeit version can impact health and safety.

Consumers can play a large part in the success of trademark counterfeiting schemes as well.46 Because consumer decision making is something outside of the platform’s full control, place management strategies designed to make websites less conducive to counterfeit trade are also essential.47 Many of these strategies have been implemented in traditional brick and mortar stores or markets and can be adapted to e-commerce platforms. The challenge for e-commerce platform operators is to remain cognizant of, if not ahead of, the curve being set by trademark counterfeiters by taking active steps to protect consumers, engaging in place management strategies designed to make their sites less conducive to counterfeit trade, and remaining aware and ahead of the ever-changing curve set by trademark counterfeiters, which any legislation should seek to encourage.