MoU on sale of counterfeits online works, but constant vigilance is needed

European Union

The European Commission has issued its report on the functioning of the Memorandum of Understanding on the Sale of Counterfeit Goods via the Internet (MoU).

Signed on May 4 2011, the purpose of the MoU is to establish a code of practice in the fight against the sale of counterfeit goods over the Internet and to enhance collaboration among its signatories. The MoU promotes trust in the online marketplace by providing detailed measures against online offers of counterfeit goods and enhanced protection for consumers who unintentionally buy a fake, as well as legitimate sellers of goods who may feel that they are unduly restricted/delayed in presenting a product to sell online. The MoU encompasses 39 internet sites, including Amazon and eBay, along with 33 companies and trade associations of major brands of fast-moving consumer goods, consumer electronics, fashion goods, luxury goods, sports goods, film, software, games and toys.

The MoU provides for proportionate, dissuasive actions against those who repeatedly try to sell counterfeits, promoting a strategy based on three lines of defence operating simultaneously in real time: 

  1. making available to buyers and sellers appropriate information to enable them to understand the counterfeiting phenomenon, its inherent risks to consumers and its effects on right holders;
  2. offering proactive and preventive measures to ensure that offers of counterfeit goods do not appear online; and
  3. establishing simple, fair and expeditious notice and take down procedures for removing online offers of counterfeit goods.

This is complemented by better consumer protection - for instance, the possibility of receiving a replacement product or a refund under certain conditions - and by a series of dissuasive actions against repeat infringers.

Articles 40 and 41 of the MoU provided for a 12-month period in which to assess its functioning subsequent to signing, unanimously extended by the signatories for a further six months.

The report recently released by the Commission analyses the progress, implementation and functioning of the MoU, and takes stock of the signatories' evaluation of its effectiveness in reducing online sales of counterfeit goods in the European Union. The report:

  • details how certain rights holders have undertaken systematic test purchase programmes;
  • finds that all internet platforms continue to have offers of counterfeit goods on their sites, while sellers have become more adept at presenting their offers;
  • notes that one major internet platform blocked or severely restricted the accounts of more than 8,600 sellers in the third quarter of 2012;
  • finds that, on another platform, counterfeits in a specific product category decreased from 40% to 0%, while another platform recorded a 50% reduction in the number of repeat infringers;
  • notes that sales of counterfeits were shifting to platforms that did not implement the MoU; and
  • highlights that some rights holders spend over €3 million a year on brand protection measures, including the monitoring of online services and the notification of infringing offers.

The report shows that the approach adopted by the MoU works, but highlights the need for internet platforms and rights holders to remain alert and vigilant. It concludes that the MoU should be extended for another two years and that the number of signatories should be expanded. The Commission is considering further action to deal with the fight against counterfeiting more broadly and may propose an initiative before the end of this year.

Juan José Caselles, Elzaburu, Madrid

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