As 2021 nears its end, here at IPSecure, we enjoy looking back and assessing how the online brand protection landscape has changed. We also look ahead to what 2022 might bring in the way of major changes or new solutions to help address the rapidly evolving, and sometimes overwhelming, an avalanche of unauthorized counterfeit sellers, unlicensed interlopers, and stolen goods now proliferating for sale online.
The COVID-19 pandemic drove more consumers online for their shopping, mainly for convenience and to avoid in-store contact. However, making purchases over the internet resulted in a greater risk for fraud and counterfeit products. eCommerce fraud is expected to exceed $20B this year. With the new COVID variant, Omicron, now on the rise in the US, it’s safe to assume online shopping will continue its exponential growth. In addition, inflation and supply chain delivery problems resulting from the pandemic will keep consumer demand for popular products high thereby making the production and sale of fakes and counterfeits more likely in 2022.
Because of these trends, brand owners will have to continue to invest in anti-counterfeiting prevention, detection, and enforcement tools and technologies. Brand protection companies will continue to innovate their products and services to stay ahead of criminals. Consumers will have to remain vigilant when buying online, particularly, when they are seeking popular goods offered on eCommerce marketplaces at unreasonably low prices by disreputable sellers.
These circumstances and trends will continue. But what might be different in 2022? IPSecure sees two significant trends that accelerated in 2021, and, in our view, will continue into 2022. There will be, in some form for another, an increase in marketplace accountability. On the solution side, online brand protection as a corporate function will evolve from a services-based approach to more automated, integrated SaaS solutions that are narrow and deep vs. broad and shallow.
Marketplace Accountability
Earlier this year, IPSecure evaluated two pieces of proposed legislation in the US aimed at imposing greater responsibility and liability on marketplaces for failure to take steps to prevent the sale of counterfeit goods on their platforms. The first was the SHOP SAFE Act, a bill that makes online marketplaces contributorily liable when a third-party seller sells a counterfeit product that poses a risk to consumer health or safety and the marketplace platform fails to take required certain actions. This proposed legislation also requires online marketplaces to implement reasonable proactive technical measures to proactively screen their platforms for the promotion and sale of counterfeit products.
The second piece of legislation, the INFORM Consumers Act, is a bill that requires marketplaces to collect and verify the accuracy of information regarding third-party sellers operating on eCommerce platforms. This proposed bill is a signal that Congress wishes to make eCommerce marketplaces more trusted, safe, and secure and reduce the number of counterfeit products sold to consumers.
In addition to legislation, IPSecure foresees another potentially significant driver in creating more marketplace accountability - lawsuits by product owners and manufacturers.
Last month, the firearms accessory manufacturer, Maglula, settled its lawsuit against Amazon after suing the company for selling counterfeit versions of their products. The US District Court that heard arguments for summary judgment dismissed Amazon’s claims that it could not be liable for the infringement of Maglula's intellectual property when counterfeit products were sold on its platform. The Court also ruled that Amazon had to submit to inspections of its inventory by Maglula representatives.
In another federal court case pending before the Eastern District of Virginia, five publishing companies sued Shopify for selling infringing copies of textbooks and other products. The publishers argue that Shopify received “detailed notices virtually every week for years” that identify infringers selling pirated content but has failed to block sellers from using their eCommerce platform.
These lawsuits are the first of many more expected to be filed against marketplaces due to brand owners’ increasing frustration with eCommerce platforms’ failure to take more aggressive action against sellers of counterfeit products. Legislation and lawsuits might be the “one-two” punch needed to “knock” some sense into marketplaces and to “knock out” counterfeit sellers.
OBP Solution Evolution
Since the early 2000’s Online Brand Protection, as it's typically defined, has gone through several periods of evolution and expansion. The last two years, and the introduction of COVID, have only accelerated the current pivot pushing brand protection into an important business element of any good online eCommerce strategy.
By their very nature, services-based solutions with an extremely broad focus will not be best equipped to help customers directly connect their brand protection actions and decisions to increases in revenue, in addition to a reduction in abuse. New entrants into the market and established vendors with more of an eCommerce perspective will benefit from this trend.
The evolution of the online brand protection industry is inevitable, as valuable IP and online commerce converge. Unauthorized sales and even to a lesser extent counterfeit product sales represent a huge illicit market - but a market nonetheless. Eventually, and this has already started, legal professionals and eCommerce teams will join forces and take over this market.
For more information on how to detect counterfeits and protect your brand on Amazon, visit www.ipsecure.com and sign up today!
