Connecting the community: brand protection and enforcement takeaways

Fighting fraud: the USPTO perspective

The issue of specimen fraud was already proving a challenge for the USPTO before David Gooder took up the role of commissioner for trademarks in March 2020. Reflecting on the phenomenon, he suggested: “This activity is largely being driven by those wanting to get onto Amazon’s brand registry and other e-commerce platforms.”

Whatever the reason, action has been required and the office has formed a task force to root out the problem. Among these efforts Gooder revealed that the USPTO has been developing an AI-powered tool that serves as an automated specimen analysis tool. “It essentially allows people to put in serial numbers and it will then go into the register and will show the internal lawyer where those exact specimens are showing up, so they will know they have a problem to deal with. Right now it is really hard to find these things, but this tool will really help.”

Alongside this are revisions to existing procedures, although Gooder noted the role that the wider community has to play as well: “I appreciate and encourage you all to take the time, if you see something that doesn’t seem right, to contact us directly. It is great to have issues highlighted on blogs but the more we hear directly, the better able we are to respond.”

Fakes on the rise everywhere

A key message at the beginning of the unexplored trenches masterclass focused on the increase in fake goods caused by the ongoing covid-19 pandemic. Louise Butler, global head of brand protection at Diageo (home to brands including Guinness and Smirnoff), revealed that the most copied brand globally for her is Johnnie Walker, while she has also seen a rise in counterfeiting in most regions of the world. “If you’d asked me a year ago, I’d have said we don’t have much of a fakes problem in Western Europe – but since the pandemic we certainly do.” Further, Lynn Schreier at Swarovski – which has an 11-person IP team covering virtually every facet of intellectual property – said that there has been a “definite increase in the quality” of fake goods in recent years, in terms of both products and packaging.

As to where these counterfeit goods are being sold, Butler revealed the struggles that Diageo has recently had in enforcing its trademarks on online marketplaces in Latin America. A key issue, she said, has been on the various platforms owned by MercadoLibre – the leading e-retailer in the Latin America region. “In the past, we used to get a very mixed response on MercadoLibre,” she explained. “We have found engaging directly with the platform was very helpful and they have been incredibly respectful.” In fact, such interaction saw MercadoLibre launch its own brand protection portal six months ago, meaning that enforcement now occurs on an entire platform level rather than on a country-by-country basis. “That’s been a huge improvement for our online enforcement in Latin America,” Butler concluded.

IP offices are there to help (even with anti-counterfeiting)

Based in Beijing, Julie Herve is an IP counsellor at the French Embassy in China, where the office’s international service (currently comprising 10 IP counsellors based in different embassies around the world) was developed in the 1990s to help French companies fight counterfeiting in specific regions. Over the years the mission has expanded significantly but the original aim remains. “A few years ago the French Embassy organised, in liaison with French companies, some training for local Chinese authorities on counterfeiting,” Herve recalled. “The idea was to create a link between the authorities and brands in the wine and spirits sector. A few months after the training, one of the IP owners was informed by Customs that more than 10,000 bottles had been seized. They asked them to confirm that they were counterfeit, which they were. So the products were destroyed. This is a good example of what a facilitator can help you do – to create a link. Once you know the stakeholders, you can work with them in the future.” Thus, the French IP office and its IP counsellors are there to help. However, Herve continued, “we know these links are not easy to establish and maintain”. Therefore, it takes both sides reaching out to keep communication lines open.

Fighting fakes on Weixin

Weixin, for Chinese users, is accessed via a different platform from WeChat, which is geared towards international users, explained JoJo Chen, senior manager, global brand protection at Tencent. Nevertheless, Weixin has become a way of life for many users – whether to chat with contacts, send voice messages, play games, order food and drink or pay for products.

Yet its nature as a social messaging site, rather than an e-commerce site, makes policing difficult for brand owners. There are options for rights holders though, Chen reassured in her keynote address, including the Weixin brand protection platform. “The platform allows users to submit clues on counterfeits, via the system, to the brand owner. The rights holder can then investigate the clues and inform Weixin.” The company then conducts its own review and issues an enforcement decision.

Last year, Chen revealed, more than 300,000 infringement tips were passed on to brand owners, with over 60,000 accounts subsequently taken down. At present, nearly 400 brand owners have taken part in the programme.

Offline enforcement is where the rubber meets the road

In terms of infringing listings, Graham Clemence, senior director, global IP enforcement and security at Alibaba Group, noted that 96% of takedown requests are processed within 24 hours, while Alibaba’s systems also engage in their own review of listings. Clemence explained: “In 2019 96% of all proactive removals took place before there was a single sale, which shows our algorithms are learning all the time.” However, he urged rights holders not to fixate solely on listings, noting: “You can take down as many listings as you want but sometimes it is the source that matters. Going back a few years, a lot of brands were very focused on listings. It was certainly great to show that you took down millions of items, but offline enforcement is where the rubber meets the road.”

In response to offline investigations, Alibaba has a three-pronged approach. First is to generate leads and then cooperate with rights holders on law enforcement referrals. Second is where the rights holder provides the leads, with Alibaba then helping to build a case for law enforcement cooperation. Third sees enforcement authorities themselves coming to the company for assistance.

As to results, in 2019 more than 1,045 leads were passed on to law enforcement, with 4,125 arrests subsequently made. This action also resulted in 2,029 illicit manufacturing and distribution facilities being closed by law enforcement. In short, online matters but offline is where truly meaningful action is taken.

Being an ally is not enough

If the IP industry is going to continue to make strides in improving diversity and inclusion (D&I), then the next step is to tackle this thorny issue on a personal level. “D&I is personal,” said Debra Hughes, assistant general counsel at Blue Cross Shield. “It’s not about what happens at a session like this, or the grand gestures law firms make, it’s the intimate conversations you have with friends, at networking sessions or in the breakroom at the office.”

So how do you make a change personally? For starters, Adraea Brown, director legal, trademarks and brand protection at Harley-Davidson Motor Company, recommended the American Bar Association’s 21-day racial equity habit-building challenge. “It’s very different from other D&I training,” she admitted. “It’s personal.”

By reflecting in this way, you can start to take daily micro-actions that advance things further than a discussion can. To quote John Lewis, you have to “get in good trouble” said Tina Pompey, principal counsel, intellectual property at Walt Disney. This means having difficult conversations, speaking up for people when they are not in the room and demanding more from firms and external partners in order to elevate others.

This is the difference between being a passive ‘ally’ and an active ‘accomplice’. Accomplices demand that teams not only have diverse participants, but that those participants have meaningful work. Summer internships that combine in-house and private practice experiences are one way to achieve this, as is threatening to withhold work if diverse attorneys are not represented on a firm level. Ultimately, we have to proactively support each other.

How covid-19 has busted counterfeiting myths

In ‘Fakes, frauds and fixing it’, Jeffrey Hardy, director general of TRACIT, noted that the covid-19 pandemic has highlighted the legitimacy of warnings that have been issued to legislators and the public for a number of years. “We always come to governments with policy recommendations and we have cried out that organised crime is involved in counterfeiting and piracy,” he stated. “One of the observations that can be made due to the pandemic is that criminals have now exposed themselves as being really involved in this. The amount of criminal activity has never been as high as it is now.”

“The second myth is that counterfeiting is a harmless crime,” he continued. “And a major observation that can be made is that there is a lot of harm. We have seen that clearly recently.” The key now is ensuring that law makers act on this knowledge and that the message is not forgotten post- pandemic.

“Chinese undertakings have come back forcefully” at the EUIPO

Like many registries, the EUIPO experienced a sudden fall in applications as the covid-19 pandemic took hold, followed by a resurgence to previous levels, executive director Christian Archambeau explained in a fireside chat with WTR. “At the beginning of the crisis there was a significant reduction in filings. It was quite dramatic – more than 40% – and it came in waves; at the beginning of the year it started with China applicants and then when it came to Europe we saw a crash in filings from Italy, then Spain. You could track the collapse of filings alongside the spread of the virus and at one stage in the second quarter we were making contingency plans for a possible 20% drop in EU trademark applications over the whole year. I must say that over the past few months this situation has really changed.”

One notable comeback has been with regard to Chinese applications. “Chinese undertakings have come back quickly and forcefully… They had overtaken German companies by 1 September to become the number one source of EU trademarks applications. Thanks largely to this increased interest from China – which is around 150% growth compared to last year – we now anticipate that the level of filings will be slightly over what was anticipated in our initial work programme.”

As to whether this surge in interest from China will continue, Archambeau reflected: “It has been like this for the past three months and we are studying the situation, but still don’t know if it is sustainable or not. There is discussion of government-sponsored actions to file in Europe but what we also see is a shift in the markets.”

Specifically, he pointed to the shift to online selling, which has led to a growth in applications centred on the electronics sector in general, and audiovisual devices, communications and computers in particular. “More recently, there have been a lot of applications related to personal protective equipment or medical devices, which is linked to the growth in demand due to covid-19,” he added. “We also believe that the increase in volume is partly due to shift towards e-commerce because, if you want to sell on a platform, you often have to show rights. We think a lot of applications were due to a shift from the model where you didn’t need this to one where you have to show evidence of rights in products you want to sell online.”

Commercial awareness is a brand’s best friend

Whether in-house or private practice, cross collaboration is important and understanding where your brand fits into the wider business, as well as the overall market, is essential. “Be careful of who you partner with,” cautioned Laura Altieri, deputy general counsel at Del Monte Foods. Future-proofing a brand means allowing it room to grow – whether it is creating sub-brands, entering new territories or being in a strong position for partnerships and licensing – but “it can take an agency five minutes to ruin something for you” she warned, so “it is also important to make sure we have good partners in terms of outside counsel and licensees”.

“I value senior external counsel who get to know our business,” Catrin Turner, IP counsel at Dr Martens Airwair reiterated. At Dr Martens, this means being clued up on everything from pop culture references to the types of leather that the company uses. “We’ve tried to encourage trademark counsel to be more hip than they might necessarily be,” Turner chuckled. “If we’ve been using a brand off and on for 30, 40 or 50 years, the risk is actually quite low… we need senior external counsel who know this stuff.” This knowledge also helps to weigh up the pros and cons of pursuing enforcement in specific areas. “We’re pretty aggressive with cease and desist letters but it’s too expensive to file everywhere so you have to pick where’s core to your business,” said Altieri.

Niall Trainor, senior director, brand protection, family and brands at Entertainment One, knows this all too well. Responsible for more than 100 Peppa Pig characters, his team has to think carefully about what to file and where. “When we’re thinking about filing a trademark we first ask: Are we likely to need it? Are we actually going to use it?” Once those rights are in place, enforcement is considered on a case-by-case basis. “Try to think like a consumer and take that as a starting point for how you want to tackle piracy,” Trainor suggested. “You can’t eliminate crime, you can only mitigate the impact it has on your business.” As such, a successful enforcement strategy aims “to reduce piracy to a level where it no longer has a material effect on revenue”.

This is particularly pertinent when it comes to domain names. “We don’t even bother to look at domains if they rank below a certain level on the google barometer,” admitted Turner. The costs involved in such takedowns are rarely worth it if the website receives little traffic anyway. “It’s a thankless task and it doesn’t deliver that much value... you take one down and another pops up.”

Microsoft tech philosophy spurs trademark department

In ‘Using technology to transform in-house practices’, moderator Cam Gatta, head of trademarks at Microsoft, urged all brand protection teams to consider how certain new technologies could help to streamline the often overwhelming workloads of corporate counsel, joking: “I realised when I switched from private practice to in-house that I didn’t have the time to do an A+ job on everything – so I aim to do a very solid B, and if I can do a B with an AI bot, even better.”

Elsewhere, Michael Woods, operations programme manager at Microsoft, acknowledged that implementing technological solutions “isn’t easy” for legal teams – but can be well worth it in the end. “For example, we use automation programs, so rather than send out multiple emails manually with similar information, we can apply them to a standardised email template to use for emails to counsel around the world. This is a great time saver and the team loves it.”

Further, he revealed that the Microsoft trademark team reviewed the types of trademark searches that it conducted – including the types of class, jurisdiction and mark – and, “powered by that data”, was able to negotiate a fixed-fee with outside counsel for such work. Ultimately, Woods said that all trademark departments should keep an open mind about how technology can assist them. “Stay curious – don’t be afraid to try anything new with technology and see how it could help develop a whole new process for your team.”

Bringing the heat to enforcement costs

Having a predetermined strategy for when to take action can be a useful way of reducing the time spent debating over enforcement activity, suggested Christa Cole, head of brand development, enforcement and licensing at Nestlé. As you can never take action against everything, she looks for marks that hit the bullseye in a tier system that decides on the level of priority for an enforcement action. Additionally, a brand heat map in the form of a target can help to keep track of how close other businesses’ brands are getting to your own and whether they are at risk of diluting your brand. Visual tools such as the tiered bullseye and heat map are also helpful when explaining to the business how and why the trademark team does the work that it does.

A business-aligned online strategy will save headaches in the long run

The key takeaway from a masterclass on online enforcement for brand owners? Establish a clear process for aligning your online strategy with business needs, so that the most valuable rights are fully protected from the outset. “Have strong alignment with the business in terms of what brands you care about and what your strategy should be from the beginning,” said David Llewellyn, head of trademarks at Arm. Having a plan in place and determining what is most important to the business “makes it so much easier further down the road”, agreed Jeff Bonham, director, brand protection, the Americas at FitBit.

This means identifying the company’s most valuable brands, educating and training colleagues, prioritising the key areas of focus – including specific platforms and sites – and determining when to pursue action – and when not to. That way, you can hone in on the intellectual property that is core to business objectives and ensure that the relevant rights are filed properly ahead of enforcement.

Inside Amazon’s Counterfeit Crimes Unit

In June Amazon established a Counterfeit Crimes Unit focused on tackling counterfeiters that violate the law and Amazon’s policies by listing infringing products in its stores. Leading the unit is Cristina Posa, whose specialism in tackling transnational organised crime and cybercrime during her time at the Department of Justice has provided insight into Amazon’s intention with the new unit. “When I was applying for this job, they asked: ‘Can you dismantle transnational criminal networks?’ And I said: ‘Yes, I’ve done that.’ ‘Can you build teams of world class investigators and lawyers?’ ‘Yes, I’ve done that too.’ Those were the factors they were looking for and that tells you a lot about the team and its mission. It is not just about going after bad actors on Amazon but about breaking down the networks that are assisting them worldwide.”

This approach is rooted in the recognition that counterfeiting crime is organised crime and should be tackled in a similar way. “Counterfeiting has all the hallmarks of organised crime,” Posa acknowledged. “Actors go to great lengths to disguise themselves and their activities, they have sophisticated international mechanisms to transfer money and hide the proceeds of their activities, and they have big support networks around the world.”

This mindset informed the recruitment approach of the Counterfeit Crimes Unit, with Posa stating that in six months Amazon has “put together a dream team of specialists”. She expanded: “They are great at finding risk signals – on the customer side, on the seller side and from the rights holders’ side. They are good at not only analysing data based on ad hoc leads that we receive, but also at developing risk signals more systematically… We have also brought in investigators from the world of law enforcement and intelligence. We had someone who joined us recently from Homeland Security Investigations who was the lead agent on the Silk Road dark market case. We have people from Customs and the FBI. We have two really skilled former federal prosecutors, one of whom was in the computer crimes and IP section, really specialised in IP crime and counterfeiting.” Also on the team is a former prosecutor from the US District Court for the Southern District of New York, who focused on white collar and financial crime. “So we have really put together a great group which are able to attack this problem from all angles,” Posa summarised.

As to how the work is approached, she explained that lead generation is a mixture of incoming intelligence (from brand owners and enforcement agencies) and the unit running its own analysis to identify those “risk signals” that can be further investigated – with a view to leads then being shared with the authorities.

Of course, even with deep collaboration across the board, the fight against counterfeiting is unlikely to ever be truly won. However, Posa is confident that significant progress can still be made. She concluded: “Do I think that someday we can walk away from the problem because it has been solved and gone away? I haven’t seen that in any other form of criminal activity. But we can make an impact. Going after individual sellers can only get you so far, but the more you go against networks and the supply chain, the bigger difference you can make. I think that as long as we focus on taking out the network and raising the risk-reward ratio, that will make a big difference.