Alibaba, Amazon, eBay, and other e-commerce websites provide an ideal platform for counterfeiters to peddle the estimated $1.7 trillion in counterfeit goods expected to be produced in 2015. While these e-commerce sites reap billions in revenue and profit from transaction and associated fees, counterfeit detection efforts and consumer protection is severely lacking.
The Justice Department and FBI will launch a new collaborative strategy to more closely partner with manufacturers in intellectual property enforcement and prosecution. The FBI will work to ensure that third party e-commerce marketplaces have the right analytical tools and techniques to combat intellectual property concerns on their websites.
The FBI also will serve as a bridge between brand owners and third-party marketplaces in an effort to mitigate instances of the manufacture, distribution, advertising and sale of counterfeit products. Crimes will then be investigated by the FBI and other partners of the National Intellectual Property Rights Coordination Center, and finally prosecuted by the Department of Justice.
Investigations by The Counterfeit Report, a popular anti-counterfeiting website, provide details and insight into the e-commerce websites ecosystems to advertise, list, manipulate, sell, finance, ship and encourage the sale counterfeit and fake products. The Counterfeit Report received over 2,000 counterfeit products from test purchases on Alibaba subsidiary AliExpress, Amazon and eBay. Alarmingly, the sellers and many of the fake products often remained, and sales continued to unsuspecting consumers. The test purchases disclosed counterfeit product sales to hundreds-of-thousands of duped online buyers who often will never know they purchased a fake product.
Part of the ease with which counterfeit goods are bought and sold on e-commerce websites is that existing regulations don’t burden the websites with removing listings of counterfeit goods, and the lack of any penalties for the e-commerce websites. Furthermore, the e-commerce websites don't notify consumers when they purchase a counterfeit and may be eligible for a refund.
Several manufacturers have filed lawsuits to protect their intellectual property rights.
In March, Gucci, Yves Saint Laurent, and other brands owned by Kering-SA, filed a lawsuit against the Alibaba Group alleging Racketeering (RICO), Trademark Infringement, Trademark Counterfeiting and that Alibaba’s e-commerce platforms “knowingly encourage, assist, and profit from the sale of counterfeits,” including granting “gold supplier” and “assessed supplier” status to companies that engage in the wholesale manufacturing of fake Gucci products. The Alibaba Federal Lawsuit alleging 15-cv-03784, can be downloaded here.
In August, a civil Racketeer Influenced and Corrupt Organizations (RICO) lawsuit against eBay and PayPal was filed in Federal Court claiming eBay knowingly and deliberately facilitates, proliferates and profits from the ongoing sale of counterfeit and fake products on its website. The eBay Federal Lawsuit 8:15-cv-01330, can be downloaded here.
The e-commerce giants, including Amazon, Alibaba and eBay should expect civil, criminal and legislative consequences when they fail to police their own websites and protect the consumer community. Consumers should look to buy brand-name products directly from the manufacturer or authorized retailers, or risk getting a fake.