What You See vs. What You Actually Get: Enforcement against Online Counterfeit Goods

Loo Wai Hoong discusses some strategies in tackling online counterfeit goods.

 

With the emergence of e-commerce giants such as Alibaba and Amazon as well as Shopee and Lazada which are hugely popular in the South East Asian region, a large portion of the retail market has shifted from brick-and-mortar premises to the online sphere since this not only saves consumers time from having to visit a physical store but also enables them to easily compare prices and products online with the help of online reviews. Unfortunately, online marketplaces are not spared by the influx of counterfeit goods and unscrupulous merchants who ride on the goodwill and reputation of genuine brands to prey on unsuspecting consumers.

As a result of the infringers’ use of brand owners’ trademarks and clever copying of official marketing materials, consumers are likely to be duped into purchasing items based on online product listings which appear to be seemingly legitimate. Consumers who realise they have been short-changed may be rendered helpless in attempting to get a refund or any other form of recourse since rogue merchants deliberately conceal their real identities behind a façade of fictitious accounts. It is also not uncommon for them to delete their accounts overnight as soon as issues arise. Brand owners may suffer from the loss of legitimate sales and additionally face the possibility of having their reputation tarnished in the event consumers who receive the counterfeit goods believe them to be genuine goods but of a lesser quality.

While at the outset it may seem like an uphill and never-ending task for brand owners to combat the sale of counterfeit goods online, this article seeks to explore some enforcement options which may be considered.

 

  • Lodging Complaints and Take-down Requests with E-commerce Platform Operators (“EPOs”)

 Upon the discovery of infringing product listings, complaints may be lodged directly with the EPOs to request for the removal or “take-downs” of the sellers’ accounts, product listings and misappropriated trademarks and images. Some EPOs provide an avenue to submit such complaints on their respective websites but in the absence thereof, brand owners or their counsel may also issue Cease and Desist letters to the EPOs, requesting for the removal of the infringing materials.

 

  • Identifying the Sellers

Apart from conducting test purchases of suspected counterfeit goods, private investigators may be engaged to uncover the sellers’ true identities. The sellers’ details may also possibly be revealed through official channels by making an official complaint with and engaging the Enforcement Division of the Ministry of Domestic Trade and Consumer Affairs which has investigative powers to compel EPOs to reveal such information. Further, brand owners may  also resort to commencing civil suits against the EPOs to obtain a court order to disclose the sellers’ details.

 

  • Conducting Raid Actions, Issuing Cease & Desist Letters and/or Commencing Civil Suits

Once successfully identified, brand owners may consider conducting raid actions at physical premises where the counterfeit goods are stored, issuing Cease and Desist letters, and commencing civil suits for trademark/copyright infringement and/or passing-off. In Nexgen Biopharma Research & Innovation SARL v. Celcom Planet Sdn. Bhd. (Suit No. WA-22IP-3-01/2018), the High Court allowed the plaintiff’s application for summary judgment against the defendant, an EPO which operated the popular online marketplace, 11Street (now PrestoMall).

The Court held that the defendant had infringed the plaintiff’s “ ” and/or “MFIII” trademarks (“MFIII Trademarks”) which were used in various product listings. The Court granted, among others, a perpetual injunction to restrain the defendant from infringing the MFIII Trademarks and an order that it disclose the details of the relevant sellers who were infringing the MFIII Trademarks or selling counterfeit MFIII supplements on the defendant’s platform. The defendant was also ordered to remove all publications and/or listings containing the MFIII Trademarks, infringing products or any product bearing the MFIII Trademarks or similar trademarks likely to deceive or cause confusion.

 

Conclusion

Pursuing a combination of the above-mentioned measures may provide brand owners with some compensation and relief. Nonetheless, the ongoing efforts to eradicate counterfeit goods from e-commerce platforms will continue to be severely hampered without stringent statutory and enforcement measures in place to cater to the modus operandi of online sellers. Due to the practical difficulties in identifying offending online sellers, these sellers continue to brazenly commit infringing acts anonymously since they are aware that the chances of being identified or caught are rather low.

Moving forward, the Consumer Protection (Electronic Trade Transactions) Regulations 2012 (“ETTR”) should be amended to make it mandatory for EPOs to implement enhanced verification and registration processes before allowing online sellers to trade on their e-commerce platforms. Under the ETTR, online sellers are currently required to disclose their true details on the websites which they trade on but few comply with such requirement due to a lack of enforcement of the relevant provisions. In addition to increased authentication safeguards, EPOs should further consider utilising artificial intelligence to detect and crackdown on suspicious product listings of counterfeit goods. Not only would such modernised measures help to boost consumer confidence in online marketplaces, but at the same time make them safer places for consumers to shop on and prevent any adverse impact on the brand owners’ reputation.

 

Loo Wai Hoong is a Senior Associate at Wong Jin Nee & Teo. He develops and implements enforcement and anti-counterfeiting programs for various clients including multinationals.