Tag: UDRP

Hoisting Scammers with Their Own Petard with the UDRP

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With the widespread availability of domain registration and hosting services and the advent of low-cost generative artificial intelligence (“AI”) software, the creation of fraudulent websites has never been easier—or more convincing. With little more effort than a few prompts of an AI program, scammers are able to quickly set up seemingly legitimate websites with text, images, and even video that can look and sound like the real thing. Online consumers, even those savvy enough to recognize your typical email phishing scam, may be fooled by professional-looking websites imitating existing businesses and organizations for less than savory reasons.

For brand owners, the consequences of these imitators can be myriad, including a loss of brand control, irate consumers looking for someone to blame, and ultimately a hit to your bottom line. Indeed, according to the FBI’s 2023 Internet Crime Report, Americans reported over $7.5 billion in losses stemming from intellectual property-related cybercrimes in 2023, up from 2022. Adding to this problem is the fact enforcing your rights against scammer sites can be costly and time-consuming. Scammers themselves are often anonymous and unsurprisingly unlikely to make themselves readily identifiable or easy to track down. Domain registrars and web hosts may require brand owners to navigate byzantine reporting channels in order to flag problematic conduct. And the resources required attempting to litigate every offending domain in court can make it an untenable option for many.

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Beyond whack-a-mole1: Maximizing the impact of your internet monitoring program

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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

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