Most counterfeiting occurs in physical marketplaces, not online
Jonathan Berroya, 2021 - Senior Vice President and General Counsel, Internet Association. Testimony before the Subcommittee On Courts, Intellectual Property, and The Internet Judiciary Committee U.S. House of Representatives. The SHOP SAFE Act: Stemming the Rising Tide of Unsafe Counterfeit Products Online. 5/27, https://docs.house.gov/meetings/JU/JU03/20210527/112713/HHRG-117-JU03-Wstate-BerroyaJ-20210527.pdf //DH
A small percentage of bad actors misuse online marketplaces to offer counterfeit goods. But counterfeiting did not begin with the internet. Spurious trademarks are as old as trademarks themselves; by the early 1980s, long before the commercial internet, 30 percent of businesses responding to an ITC questionnaire reported that their goods had recently been subject to counterfeiting.4 Nor did counterfeiting through brick and mortar stores end with the growth of online services. Some of the most significant recent secondary liability trademark cases in the United States involved physical storefronts, not online companies.
Even as the sale of goods has moved increasingly online, physical markets continue to play the dominant role in facilitating the trade in counterfeit goods, including markets in China, Russia, and Vietnam, among other places. In 2019, the Organisation for Economic Co-operation and Development (“OECD”) released a report titled Illicit Trade: Trends in Trade in Counterfeit and Pirated Goods, which provides a comprehensive, “quantitative analysis of the value, scope and magnitude of world trade in counterfeit and pirated products.” The report demonstrates the complex 6 issues with tracking and identifying counterfeit goods. The problem is only compounded as “parties that engage in the trade of counterfeit and pirated products tend to ship infringing products via complex routes, with many intermediary points... to facilitate falsification of documents in ways that camouflage the original point of departure, establish distribution centers for counterfeit and pirated goods, and repackage or re-label goods.” This often makes it nearly 7 impossible for external experts, and even trained government officials, to spot counterfeit goods.
Efforts to stem the flow of counterfeit goods should not focus solely on online marketplaces. To protect consumers, any proposal must also take into account the dominant role that physical marketplaces continue to play, and should also be directed at the sources of counterfeits manufacturing.