E-commerce was already booming when the pandemic struck, and now it feels ubiquitous. Consumers spent $861.12 billion online with U.S. retailers in 2020, up 44.0% from $598.02 billion in 2019, representing 21.3% of total retail sales last year compared with 15.8% the year prior.2 The statistics only underscore what we’re all witnessing — technology stocks appreciating rapidly, a steady drumbeat of brick-and-mortar retailer bankruptcies, shopping mall closings, conversion of massive properties to logistics centers, catch-up efforts by traditional retailers to offer online sales and curbside pickup, and our own increasingly online shopping habits. Even when the sale of goods and services are not executed online, brick-and-mortar sellers are nonetheless utilizing the internet like never before to reach potential customers, educate them about their products, and coax them into stores. Whatever the world looks like after the pandemic ends, these e-commerce gains are likely here to stay.
It has never been more important therefore for brand owners to monitor and protect their brands online. E-commerce is a counterfeiter’s paradise, as explained succinctly by the OECD, “E-commerce platforms represent ideal storefronts for counterfeits and provide powerful platform[s] for counterfeiters and pirates to engage large numbers of potential consumers.”3 Why is this? E-commerce enables counterfeiters to send cheap knockoffs, which garner high margins, to unwary purchasers across the globe with little risk of legal repercussions.4 The first obstacle to legal enforcement is the anonymity afforded by both the internet generally and e-commerce platforms specifically. ICANN’s interpretation of Europe’s GDPR privacy legislation has generated a blackout of Whois information, making it more difficult to identify the perpetrators behind many illicit webshops.5 Moreover, e-commerce platforms do not operate by the same “know your seller” obligations burdening brick-and-mortar retailers. Whereas a brick-and-mortar retailer could be found liable for selling a counterfeit product in its store, and therefore presumably conducts diligence on and obtains contractual protections from each of its sellers, e-commerce platforms are considered mere intermediaries connecting sellers with buyers, ignorant of and without liability for the nature or quality of the products transacted. As summarized by the U.S. Department of Homeland Security, “While the U.S. brick-and-mortar retail store economy has a well-developed regime for licensing, monitoring, and otherwise ensuring the protections of intellectual property rights (IPR), a comparable regime is largely non-existent for international e-commerce sellers.”6
Based on a recent restitution submission prepared by Faegre Drinker, a federal judge in Harrisburg, Pa. awarded Eli Lilly and Company $1.9 million in restitution from an individual convicted of trafficking in drugs bearing counterfeit trademarks of Lilly and other pharmaceutical companies. The defendant in this matter was sentenced to 70 months in prison and ordered to pay $3.6 million in restitution, the remainder split between the other companies based on the defendant’s conduct involving their trademarks. In this instance, crime clearly didn’t pay for the defendant and success was achieved by partnering with our client to fight counterfeiting and illegal importing. So how does this work?
In February 2020, Faegre Baker Daniels and Drinker Biddle & Reath LLP combined to form one of the nation’s 50 largest law firms. Soon after the combination, Faegre Drinker shifted to a virtual work environment to protect our clients, colleagues and loved ones during the global COVID-19 pandemic. We nevertheless remained committed to the success of our clients in a challenging year, and focused on serving clients with our new firm’s combined capabilities.
This month marks not only the first year of Faegre Drinker, but also the inaugural year of TCAM Today – Faegre Drinker’s blog covering all things trademark, copyright, advertising and media. In 2020, Faegre Drinker’s team of more than 30 T-CAM professionals shared their insight on topics ranging from social media influencers to trademark trolls.
Companies in 2020 must comply with more data privacy laws than ever before. Effective on January 1, the California Consumer Privacy Act (CCPA) contains the most complex data privacy compliance requirements in U.S. history. Some other states have their own requirements, and more states are following suit; many are considering data protection laws while their legislatures are in session.
Compliance with the CCPA and other relevant privacy laws and industry standards involves much more than a brief privacy law update and presents multiple opportunities for customer engagement. Consider using those opportunities to enhance your relationship with your customers. How companies handle consumer data has already become one way in which consumers evaluate whether to do or continue doing business with a particular company. Poorly handled data privacy issues quickly create negative customer experiences, online reviews, and bad press. Differentiate your company by handling customer data — and customer relationships — with intentionality and care.
As many brand owners know, WHOIS data is the publicly available information on who has registered a particular internet domain name. In layman’s terms, WHOIS records are akin to land title or property tax records: a record of who owns the internet property of domain names available in .com, .net and other generic top-level domain (gTLD) spaces. Each WHOIS record contains basic contact information for the domain name registrant: name, address, phone number, email address and certain other technical attributes. Since the dawn of the internet, gTLD registrars and registries – those companies who sell domain names – have collected contact information from all registrants at the time of registration.
Faegre Drinker Biddle & Reath LLP (Faegre Drinker) launched global operations on February 1, 2020. Faegre Drinker is the combination of Faegre Baker Daniels, an international law firm with deep roots in the Midwest, and Drinker Biddle & Reath LLP, a full-service national law firm with storied East Coast origins.
With more than 1,300 attorneys, consultants and professionals in 22 locations across the U.S., U.K. and China, Faegre Drinker is one of the nation’s 50 largest law firms based on size and projected gross revenue.
We are very excited to introduce TCAMToday, Faegre Drinker’s successor to the DB®anding Blog. Our newly expanded team of over 30 T-CAM professionals will continue to provide fresh commentary on Trademark, Copyright, Advertising and Media topics ranging from anticounterfeiting to sweepstakes and promotions. Watch this space!
The ability of any individual, without access to sophisticated technology, to decipher the “authenticity” of any experience is diminishing daily. Moreover, this threat to the integrity of the law goes beyond digital impersonation and “deep fake” software driven by artificial intelligence. The famous Marx Brothers line, “Who ya gonna believe, me or your own eyes?” was once funny because it was ridiculous. Soon, it will be a description of our jobs and our lives.
If trademark infringement and dilution are frequent headaches for brand owners, counterfeiting – which the U.S. Trademark Act defines as use of “a spurious mark identical with, or substantially indistinguishable from, a registered mark” – is a migraine. As a practical matter, counterfeiting in most cases renders perfunctory the task of analyzing the “likelihood of confusion factors” required in traditional infringement cases. In counterfeit cases, the marks and goods are identical, and the counterfeit mark was applied with the intent to deceive consumers into believing that fake goods are genuine, so it’s reasonable to assume it will do exactly that.
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