Big improvements to be made in tackling counterfeiters
- Counterfeiting will have to be tackled on a big scale
- Anti-counterfeiting will involve addressing issues concerning privacy, data protection and publicity
- People who are used to managing data are moving into managing intellectual property – anti-counterfeiting is ripe for this
Counterfeiting is changing. As recent annual EU customs reports have shown, more counterfeits are being ordered online and shipped across borders in small packages, making it hard or even impossible for enforcement authorities to stop them. This poses a challenge to brand owners, but also to their outside counsel.
“Counterfeiting continues to be a very big area of focus and a resource drain. There are big improvements to be made in battling counterfeiters,” says one in-house counsel, who adds that many law firms are simply unable to deal with the problem: “A high-volume, low-profit practice doesn’t fit their business model. It doesn’t interest them if you can’t charge $650 an hour. Partners are more interested in litigating claims over points of law and charging millions of dollars, and anti-counterfeiting doesn’t fit that bill.” Yet, as something that is unpredictable, often requires local legal knowledge and sometimes needs to be at arm’s length from the business, anti-counterfeiting work is often not suited to in-house teams either.
The answer, says this client, is a combination of technology and strategy: “I’d like to see more law firms be more creative in helping clients manage the process. You have to come up with interesting creative solutions, mass takedown solutions, tackling payment accounts and intermediaries.”
The technology required is rapidly becoming more sophisticated. Some of it is being driven by online businesses such as Alibaba, some by IP and brand management service providers, and some by law firms themselves (see box on Incopro). The challenge for law firms is how to use such technology to offer clients a tailored, strategic service – and at a reasonable cost. “No one is doing the equivalent of packaged search opinions in counterfeiting. There is opportunity for firms to add value. Absolutely there is demand for it,” says one in-house head of intellectual property. “Most law firms are not thinking creatively or trying to understand the problem. We want partners who are willing to dig in and put together solutions.”
Case study: Incopro
Anti-piracy service Incopro provides an example of an innovative technology developed inside a law firm, which is now widely used by brand and copyright owners and legal advisers.
When working on litigation over site blocking, initially in the copyright field but later in trademarks, Wiggin partner Simon Baggs recognised there was an urgent need to be able to select which counterfeit-selling websites to prioritise. But he also realised that the solution needed to be global and technology based, so he would need to work with non-lawyers with a background in coding. “I couldn’t do it on my own,” says Baggs.
Wiggin, a medium-sized firm specialising in the media industry, already had a record of investing in non-legal projects, including films and a TV channel. To get Incopro off the ground, Baggs had to persuade each of the (then) 13 equity partners to invest their own money in the project, and to accept that he would be spending a large chunk of his time developing and running the new business. “The challenge was how to persuade them to invest in something that won’t make money for five years… Longer-term strategy is challenging for the partnership model,” says Baggs, who adds that he was “stunned” by the unanimous and positive response: “I had never thought I would invest in a business run by a lawyer!”
Six years on, Incopro has had three further rounds of investment but all the original equity partners maintain a stake, as do new members of the partnership (though Wiggin partners no longer have a majority shareholding). Today, the company is an independent business, says Baggs – “It doesn’t dance to the Wiggin tune” – and several other law firms offer it to clients, including Bird & Bird and Stobbs IP. It has recently expanded to the United States, with two offices and 20 employees, and is now looking to grow in China.
“As a lawyer you talk to businesspeople all the time. But I had never understood how difficult it is to establish, create and build a business,” says Baggs. However, he adds that lawyers bring valuable skills to launching a company, including a focus on detail and the ability to sell themselves: “The metrics of a business – the financials – may not come naturally. But the most important thing is the ability to communicate, and lawyers are good at that.”
He believes that Incopro worked because of the synergies with the legal practice, and the fact that it is scalable: “When I started out I was given the advice: have a product. Think about the customer need and the product they want to buy at scale. There’s a lot that lawyers know about, but you need to meet the broader customer need. And you will need funding to scale the business.”