Anti-counterfeiting 2015 A Global Guide

Brand owners and rights holders rely on intermediaries at virtually every step in the process of producing, distributing, marketing and selling their products and works. Intermediaries play a critical role in providing services within the supply chain, connecting producers and consumers and opening new market opportunities. Most intermediaries are reliable and responsible business partners which do not want to do business with criminals or facilitate the illegal practices of counterfeiting and piracy.

Global markets and extended supply chains make it much harder to know, manage and control every intermediary and see their every transaction. This is complicated by the explosion in internet use, which now connects more than 3 billion people and their devices through a myriad of connected services and platforms. A number of supply chain vulnerabilities have become more evident under these pressures and criminal agents have seized opportunities to exploit them. Identifying and pursing counterfeit and pirate producers and suppliers is now a multi-jurisdictional and diffuse task, with supply chains that can more easily re-establish themselves after action is taken.

The International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy has released a major new paper, Roles and Responsibilities of Intermediaries – Fighting Counterfeiting and Piracy in the Global Supply Chain looking at a range of important intermediaries to show how criminal networks and other infringers routinely use and abuse intermediary services to facilitate the global trade in illicit merchandise and digital products, documents the steps being taken to prevent this infiltration and suggests further steps to curb these abuses.

The paper looks at intermediaries operating both in the physical world and online that are particularly susceptible to counterfeiting and piracy:

• Raw materials and component suppliers are a complex network of first-stage intermediaries that provide multiple opportunities for counterfeit ingredients, parts and components to enter the supply chain of otherwise legitimate products. Examples include tainted or poor-quality chemicals used in manufacturing pharmaceuticals, agrochemicals and consumer goods. Poor-quality counterfeit electrical components, software and metals can find their way into cars, aircraft, appliances and computers.
• Transport operators provide critical services that are misused as part of the counterfeiting supply chain. Counterfeit goods depend on land, air and sea shipping and transportation services to cross borders and reach foreign markets. These intermediaries are critical players, together with customs authorities and rights holders, in stopping the flow of fake goods. The shipping process requires documentation that yields a paper trail which can help to identify the originators and owners of the counterfeit goods.
• Landlords play a role in counterfeiting and piracy when they provide a place to manufacture, store and sell illicit products. Landlords may knowingly or unknowingly rent the space needed for one or more of these activities. As landlords are typically not involved in inspecting goods on their premises, much of this activity goes unchecked until notice from rights holders or raids from law enforcement.
• The category of online sites, platforms and portals includes a wide group of services that connect users to make offers and sales or share content or links. It comprises marketplaces, such as eBay and the Apple App Store; usergenerated content sites such as YouTube; social networks such as Facebook; and cyberlockers such as Hotfile. The group also includes websites such as The Pirate Bay, which connect users of peer-topeer networks. Many of these are used legitimately millions of times daily. They have all been vulnerable to significant abuse through counterfeiting and piracy and must continually improve their systems to tackle such abuse. Others are simply dedicated to piracy and counterfeiting and encourage users to fill the sites with infringing content.
• Infrastructure providers form the technical backbone of the Internet, on which all web services are built and delivered. Three main services are covered in this category: hosting providers such as Rackspace, which offer the server space to store either a whole website or specific content displayed on other sites; domain registries such as Nominet and their registrars, which provide names for websites and connect them to the IP address of the hosted site; and internet access providers such as British Telecom, which connect users to the Internet – these are the final link as all data must pass through their systems to reach end users and consumers.
• The economic viability of online services depends on search providers, online advertisers and payment processors to find an audience and generate revenue. Search is the critical function that enables discovery within the network across all of these sites; advertising provides both a means of discovery and a source of revenue; while direct payment takes place using credit cards and other payment services such as PayPal.

With knowledge comes understanding

Documenting the ways in which intermediary services are abused is an important first step. Awareness is critical to help responsible intermediaries to deal more effectively with vulnerabilities in their operations, and to curb the activities of intermediaries that knowingly propagate and/or permit IP infringement through their services.