In a new regular series on WTR, we speak with leading law firms around the world to identify the digital marketplaces that brand owners should monitor as part of their global anti-counterfeiting efforts. In this first edition, we focus on online marketplaces that are popular in Brazil.
With its population of 211 million, Brazil is the fifth most populous country in the world, and is reportedly a “goldmine” for counterfeiters. In fact, it is estimated that 73% of Brazilians purchase fake goods on an annual basis. Such counterfeits are usually imported (either through the ports or across one of the borders it shares with 10 countries), although a significant portion are produced locally – according to recent reports, São Paulo “is the largest distribution centre for counterfeit goods in Brazil”.
While fakes sold in Brazil are often traded at physical locations, many are sold on digital marketplaces – with online shopping growing in popularity in Brazil due to the covid-19 pandemic. For that reason, we reached out to partner Andrea Possinhas, attorney-at-law Pedro Matheus and legal intern Victoria Wolff from Gruenbaum, Possinhas & Teixeira to reveal some of the online marketplaces that are popular in Brazil that are particularly problematic in terms of counterfeit listings.
Online anti-counterfeiting enforcement in Brazil at a glance
In a nutshell, what should a rights holder know about enforcing against counterfeit goods sold online in Brazil?
The Brazilian Industrial Property Law (Law No. 9.279/96), which governs IP rights, establishes – among other things – the crimes against IP, such as counterfeiting. This law is unquestionably applicable to online sales and, furthermore, grants to rights holders the ability to seek the cessation of eventual infringements against their rights, including through a preliminary injunction granted by a court of law and the corresponding indemnification for the eventual damages.
Several Brazilian digital marketplaces have IP Protection Programmes (IPPP), including Mercado Livre, B2W Digital (Americanas and Submarino) and Magazine Luiza, which are available to brand rights owners that wish to report IP violations on the marketplaces. Therefore, it is important for rights holders to verify and participate in such programmes, since they can be useful in dealing with eventual infringements to their IP.
However, the Civil Rights Framework for the Internet (Law No. 12.965/14) states: “… the internet applications provider may only be held civilly liable for damages arising from content generated by third parties if, after a specific court order, it does not take steps, within the scope and technical limits of its service and within the stipulated period, to make the content indicated as infringing unavailable…” , and, thus, online stores are neither required by law to make a previous analysis of third party’s contents nor obliged to takedown content reported through their programmes, without a specific court order.
When faced with a violation of their IP rights, the holder can, firstly, try to solve the matter amicably directly with the marketplace, via the referred IPPPs and/or by serving the marketplace or the author of the infringing content with a cease and desist letter. Even though marketplaces are not directly responsible for the content nor obligated to act without a court order, many of them have been adopting as a best practice the evaluation of the owners’ complaints (instead of waiting for a judicial order) and, therefore, it is possible to solve matters amicably in this manner, by removing eventual counterfeit products’ advertisements from marketplaces. Finally, a rights holder may file a complaint before a court of law requesting a judicial order for the removal of any infringing content found online. If the author of the infringement cannot be immediately identified, it is also possible to request an order for the marketplace to present the user’s data, so that further measures can be taken against them.
Eventual costs to enforce IP rights may vary depending on which action is taken, whether it is necessary to retain a local attorney or not and, when it comes to judicial proceedings, depending on the state that the lawsuit will be filed, since court’s fees vary locally, but such costs range from a few hundred dollars to thousands of dollars, if it is necessary to file lawsuits, and seize products, which tend to be costlier measures that require retaining local attorneys.
Due to this variety of measures, and of the corresponding costs, it is a good strategy for rights holders to firstly try to solve eventual problems amicably and, especially, to join marketplaces’ IP protection programmes, if available, avoiding incurring in expensive judicial procedures unnecessarily.
Online counterfeit hotspots you should know in Brazil:
Description: Enjoei is a Brazilian marketplace founded in 2009 in São Paulo. Currently, the marketplace claims to have more than 370,000 sellers and 4 million products for sale, including items from brands including Apple, Zara, Vans, All Star, Louis Vuitton, Nike and many other marks. Used dresses, t-shirts and pants are the products that are sold the most.
Counterfeit risk factor: High
Fakes known to be sold there: Makeup and cosmetics, purses, backpacks, earphones, sunglasses, and electronic devices.
How to report counterfeits: There is the possibility to report a listing that is selling counterfeit products by clicking on the ‘report’ button on the advertisement’s page. There is also an operation called FALSIANY, aimed at controlling counterfeit products at the marketplace, being implemented, as informed by the company in their presentation regarding the company’s results in the four quarter of 2020, however the results of such an initiative are not clear.
Challenges of enforcement at this online marketplace: As many marketplaces, there is a difficulty to filter the products that are being advertised. According to complaints found online, the marketplace often seems to take a long time to analyse reports from customers regarding counterfeits and the takedowns can take a long time to happen.
Recommendations to brand owners: Enjoei is a Publicly Listed Company, with stocks available in the Brazilian Stock Exchange. It has an Institutional Relations page and, according to the company’s recent 2020 results, it is “approaching the main marks and creating direct collaboration channels, to coordinate efforts”, as part of the FALSIANY initiative. Thus, brand owners should contact Enjoei to understand the initiative and try to participate. Furthermore, brand owners may also proactively search the website for infringing content and report infringing content via the website’s Institutional Relations page through the ‘report content’ button on the listings. Moreover, monitoring consumer protection websites, such as RECLAMEAQUI (where consumers post complaints about products and services), may yield information regarding the sales of determined counterfeit products at the marketplace. As all marketplaces, they are not obliged to remove content without a court order and, thus, it may be necessary to obtain one in some instances, if the marketplace refuses to take action.
Description: Shopee is a marketplace which belongs to the Sea Group, a global internet company founded in 2015. Shopee arrived in Brazil in 2019, and since then it has attracted many consumers in the country.
Counterfeit risk factor: Very high
Fakes known to be sold there: Shoes, earphones, electronic devices, smartphones, purses, and clothes.
How to report counterfeits: Brand owners can report an advertisement that is selling counterfeit products by clicking on the ‘Report this Product’ or ‘Report this User’ buttons on the menu of the product or on the user page.
Challenges of enforcement: Shopee normally does not do a prior inspection of the products it sells, so there is not a proactive removal of fakes. Also, on its ‘Politics’ page, it specifies that the responsibility is of the seller, so the marketplace does not have any responsibility for the products it sells. Finally, as we can observe by accessing websites such as RECLAMEAQUI, the marketplace takes a long time to analyse counterfeit reports by consumers. The marketplace also does not seem to have any special IP protection mechanism.
Recommendations: Brand owners can proactively search the website for infringing content and report it, via the website’s interface. However, considering that the website seems to take so long to analyse violations, it may be beneficial to send a cease and desist letter, or seek a court order for the removal of infringing content found online, should the marketplace refuse to take any actions.
Mercado Livre Brasil
Description: Mercado Livre is a marketplace founded in 1999, and its headquarters is in Buenos Aires, Argentina. It is a very well-known marketplace in Brazil, with a reported income of USD 844 million as of 2016.
Counterfeit risk factor: Very high
Fakes known to be sold there: Protein supplements, electronic devices, footwear, clothes, and purses.
How to report counterfeits: The marketplace has a ‘Brand Protection Programme’ (BPP), through which registered companies may file infringement complaints. Users can also report counterfeit products directly through the website’s ‘Report advertisement’ button on every listing.
Challenges: The BPP can only be used by previously registered IP rights holders and their attorneys. The marketplace may take some time to analyse reports and the takedowns can take a long time to happen.
Recommendations: Brand owners should register in the company’s BPP and use it as soon as they verify counterfeit products are being sold. As all marketplaces, they are not obliged to remove content without a court order and, thus, it may be necessary to obtain one in some instances, if the marketplace refuses to take action.
A response from Mercado Livre
Following the publication of this article, representatives at Mercado Livre sent insights about their IPR mechanisms to further assist trademark professionals. You can also read our recent interview with Mercado Libre on recent brand protection and anti-counterfeit efforts.
When enrolling in the Brand Protection Program (BPP), Mercado Livre requires the applicant to submit the necessary documents (eg, trademark registration certificates, a copy of the deposit of the art work submitted before the competent authority). In addition, when acting on behalf of the IP rights owner, Mercado Livre also requires the applicant to submit a power of attorney or letter of authorization issued by the rights holder. We actually do not envisage this as a “challenge”, but rather a means to prevent fraudulent situations ensuring that the rights enforced through our program are valid and enforceable and that the applicant is indeed the IP owner or someone authorized by them. It is important to highlight the enrollment in the BPP and use of the reporting tool is free of charge for IP owners and their proxies.
Our reporting system bears fixed deadlines for the different stages, which results in the fact that following receipt of a notice submitted by a member of the program, the listing is immediately removed and both parties have four calendar days (the seller to counter notice and the member to reply to said counter notice and inform Mercado Livre its decision) during which the listing remains paused.
It is also important to clarify that if the IP owner is not yet a member of the program, and we receive a cease and desist letter from said IP owner or its legal representatives, in addition to removing the allegedly infringing content, our response includes an invitation to enroll in our program.
Finally, IP owners are encouraged to initiate court actions against the platform due to the fact that the Brazilian regulation does not include an out-of-court procedure for all the IPRs that could be part of a portfolio. However, this overlooks the fact that for several years Mercado Livre has been removing infringing listings and shutting down users’ accounts that were involved in IPRs infringements without requiring a court order.
Americanas and Submarino Marketplaces
Domain and marketplace description: Americanas and Submarino are owned by Brazilian company B2W Digital, which is a digital platform created in 2006 by the merger of Submarino, Shoptime and Americanas.com.
Counterfeit risk factor: Average
Fakes known to be sold there: Shoes, watches, earphones, sunglasses, electronic devices, cosmetics, perfumes, shampoos, and smartphones.
How to report counterfeits: Counterfeits can be reported through the APITO (Intellectual Property and Offense Handling Assistant) by any holder of intellectual property rights. It is also possible for anyone to report by sending an email ([email protected]), telephone (4003-4848), or using the website’s interface and ‘help’ sections.
Challenges: It is necessary to register in the APITO programme beforehand, and it can only be used by the owner of a trademark or their attorney. Americanas and Submarino may take a long time to analyse reports, and the marketplace does not verify the products that are being sold and they do not have a proactive removal of fakes.
Recommendations: Brand owners should register and use APITO, and report abuses as soon as they verify infringing content. As all marketplaces, they are not obliged to remove content without a court order and, thus, it may be necessary to obtain one in some instances if the marketplace refuses to act.
Domain and marketplace description: Magazine Luiza was founded in 1957 in Franca, São Paulo by José Donato and Luiza Trajano Donato as a brick-and-mortar store. In 2019 the store became a marketplace with more than 35,000 contributors and R$ 27 billion of sales. It is a publicly listed company in the Brazilian Stock Exchange.
Counterfeit risk factor: Average
Fakes known to be sold there: Electronic devices, cosmetics, clothes, perfumes, sunglasses, and footwear.
How to report counterfeits: Owners of intellectual property rights or their authorised representatives can report counterfeits through the ‘Trademark Protection Programme’. For that, they need to create an account. Also, anyone can report an advertisement that sells counterfeits or a user by using their chat, calling or sending an email.
Challenges: As all marketplaces, they are not legally obligated to filter third party content previously, and usually only act after being instigated by rights owners. Furthermore, it is necessary to register in the Trademark Protection Programme beforehand and it can only be used by the owner of a trademark or their attorney.
Recommendations: Brand owners should register in the Trademark Protection Programme and report infringing content. As all marketplaces, they are not obliged to remove content without a court order and, thus, it may be necessary to obtain one in some instances if the marketplace refuses to act.