- by David Goldstein -
Counterfeit and pirated goods in the European Union is big business. In 2019 imports of counterfeit and pirated goods were worth €119 billion, representing 5.8% of all goods entering the EU, according to the Intellectual Property Crime Threat Assessment 2022, a joint report by the European Union Intellectual Property Office (EUIPO) and the European police body Europol. Increasingly the criminals responsible for these counterfeit and pirated good are assembling, and even running, full production cycles within the EU.
To reach their consumers, criminals are increasingly relying on the digital domain to source components and distribute their products (both tangible and non-tangible) to consumers via online platforms, social media and instant messaging services. The COVID-19 pandemic has further entrenched this development.
The goods range from exploiting the global shortage for semiconductor chips, mobile phone accessories and components; food products, particularly drinks; intellectual property infringements relating to perfumes, cosmetics and the production of everyday goods such as shampoo, toothpaste, cosmetics and detergents; illicit pesticides; illicit pharmaceutical products frequently manufactured in illegal laboratories within the EU and the illegal distribution of audio-visual content hosted on servers across Europe, Asia and the Middle East.
For those goods seized at EU borders, over half of all items (50.38%) and 45.02% by value came from China, while a further 10.8% of articles and 23.73% by value came from Hong Kong.
China (including Hong Kong) and Turkey remain the main countries of origin for counterfeit goods seized at the EU’s external border in the categories of clothing and accessories, shoes, sunglasses, bags (including wallets and purses), watches and jewellery. These types of counterfeit goods are most frequently ordered online and discovered as part of postal shipments or on passengers entering the EU.
So where do domain names come into this? Well, domain names are used to host the websites through which the counterfeit goods are often sold. Although these days social media is often used as an avenue of establishing fake webshops and selling the counterfeit goods.
Regularly since 2014 law enforcement bodies from the European Union, United States and INTERPOL have a joint operation called Operation In Our Sites. In its 2021 iteration, the twelfth, 494,516 websites were taken down as well as 12 suspects arrested, €2.6 million worth of counterfeit goods seized, €460,468 in cash seized, 48 criminal cases opened while 42,055 counterfeit articles (shoes, clothes and multiple accessories), 181,445 boxes of counterfeit medical products, 11 fake artworks being sold via online auction sites and 37 cars and one motorcycle were seized.
With the COVID-19 pandemic, there were new business opportunities, including for criminals attempting to capitalise on the high demand for certain goods, including healthcare products such as face masks and home testing kits. The distribution of counterfeit and substandard goods has been one of the key criminal activities during the pandemic. Throughout the pandemic, criminal networks involved in IP crime were highly adaptable in adjusting their business model by shifting product focus and marketing, based on the developments of the pandemic and the changing needs of individuals, and public and private sector organisations.
A 2021 study by EUIPO and the OECD called “Global Trade in Fakes – A worrying threat” estimated counterfeit and pirated goods worth €119 billion were imported into the EU in 2019, representing up to 5.8 % of all imports. The study found most of the companies whose IP rights are infringed by counterfeiters are located in countries featuring highly innovative economies. Almost 39% of customs seizures performed from 2017 to 2019 related to products that infringed the IP rights of US rights holders, immediately followed by EU rights holders from France (18%), Germany (16%) and Italy (9.8%).
In a series of sectorial studies, EUIPO estimated lost sales amounting to more than €83 billion per year (2013-2017) as a result of counterfeiting. This corresponds to estimated losses of €15 billion in tax revenue and of 671,000 jobs.
To inform consumers of the risks and cost of online counterfeiting launched an awareness campaign in 2021 called Don’t F***(ake) Up. The campaign aims to put an end to the fast-growing market of counterfeit products sold online is to stop buying counterfeit goods online.
The campaign alerts consumers that when they buy fakes they put at risk not just the health and safety of the purchaser but also of those around them; that consumers risk losing their money and their personal details going to organised crime; they deprive consumers and others of better public services and more jobs through a loss of tax revenue and their purchases help fund organised crime.
Please feel free to contact the Brandshelter team to learn how you can protect your domain names from counterfeiting products.