European Commission takes fight to online counterfeiters
Updated: Jan 15
Is help coming to tackle the scourge of counterfeits sold on online marketplaces? Counterfeit goods affect all businesses as they grow from fashion to merchandise and related goods.
On 15 December 2020, the European Commission published its “Europe fit for the digital age” proposals: the Digital Services Act (the DSA) and Digital Markets Act (DMA) . If adopted, they will replace the eCommerce Directive, which was introduced 20 years ago.
The DSA is particularly positive for IP rights owners affected by counterfeiting and piracy. It sets out obligations that apply to all digital services that connect consumers to goods, services or content. These obligations include:
Rules for the removal of illegal goods, services or content.
Requirements for very large platforms to follow risk-based action to prevent abuse.
New rules on traceability of business users in online marketplaces.
A new oversight structure will also apply to platforms that reach more than 10% of the EU’s population.
Counterfeiting and piracy are mentioned as some of the harms to be addressed by the DSA. It proposes to require online businesses to trace traders, organise their interfaces in certain ways, and make flagging of counterfeit goods easier. It also provides for audited risk assessments.
Why is action needed?
Recent years have seen huge growth in the sale of counterfeit goods on online marketplaces, and that growth has, unsurprisingly, intensified this year as many people have taken up online shopping due to lockdowns.
Most consumers find it very hard to distinguish between real and fake goods online, and rights owners have been fighting a losing battle to identify, locate and take action against sellers. Fake reviews and misleading adverts exacerbate the problem. While some online marketplaces have set up notice-and-takedown mechanisms, and verified seller schemes, these do not go far enough.
The Together Against Counterfeiting Alliance, which represents almost 100 companies and 20 trade associations and NGOs, welcomed the DSA proposals to create strengthened seller identification requirements and harmonise notice and takedown procedures. But it also urged legislators to go further, and introduce a horizontal obligation for all online intermediaries to implement proactive and stay-down measures.
What happens next?
The EU proposals will now be discussed by the European Parliament and Member States, a process which could take two years. If adopted, they will become Regulations that apply directly across the 27 EU member states. They will not of course apply in the UK, as the Brexit transition period ends on 31 December 2020.
Meanwhile, the UK Competition and Markets Authority published a new code of conduct for technology companies on 9 December 2020, including the creation of a new Digital Markets Unit with powers to issues fines of up to 10% of global turnover. The new regime does not cover IP issues but does recommend that the new Unit monitor illegal content online, and makes some recommendations to the government on tackling illegal and unlawful content.