E-commerce has also been growing in South-East Asia and it’s attracting many European Companies. Together with the growth of e-commerce, the presence of counterfeit goods on these e-commerce sites has also been growing. In today’s blog post we are discussing how to remove counterfeits from the major e-commerce sites like Lazada in South-East Asia.
A growing middle class coupled with increasing internet access has led to fast-paced e-commerce growth in South-East Asia in the past decades. The middle-class population of ASEAN, according to expert estimates, may grow from 190 million in 2012 to 400 million in 2020 . Additionally, there are approximately 200 million people in South-East Asia with access to the internet and this number is expected to grow three-fold by 2025. E-commerce in South-East Asia can thus offer many promising business opportunities for the European SMEs.
Besides being a forum for legitimate vendors and original products, the internet is also used by unscrupulous businesses as a platform for the distribution of counterfeit goods which infringe intellectual property rights of others. The explosive growth in access to the internet has resulted in counterfeiters to move their illegal activities online. Online e-commerce websites might become easy and anonymous options for counterfeiters to reach out to potential customers as well as popular social media platforms. A recent study reported that 20% of 750,000 posts on the popular social media platform Instagram alone in relation to well-known fashion brands involved the offer of counterfeit products for sales, with many of the vendors identified to be based in China, Malaysia and Indonesia among others.
How to spot infringing content online
Most of countries in South-East Asia provide legal protection of IPRs including trade marks, copyright, designs and patents on the online sphere. Regulations relating to the internet stipulate that if any IP protected material is uploaded without the right holder’s consent, he/she may request, in writing, that the e-commerce sites remove the infringing good, or remove the relevant website from the e-commerce platform and disable access to the IPR infringing material. This kind of written warning is known as a ‘take-down notice’. The general rule is that if the e-commerce site removes the infringing content following a ‘take-down notice’, it will not be held liable for any IPR infringement. If, however, the e-commerce site knew or should have known about the infringement, the e-commerce site may be held liable jointly along with the person who uploaded the infringing content.
Some of the top e-commerce sites in South-East Asia are Carousell, Lazada, Shopee, Taobao and Zalora. EU SMEs doing business in relation to South-East Asia should actively monitor possible online infringements in their online check routine. Checking these websites could be a good starting point when screening for counterfeit products in South-East Asia. While searching for names which are identical or similar to SMEs’ brand or product name, SMEs may wish to type in the following keywords that could help to quickly identify counterfeit products:
- Brand name / Product name + “Grade AAA”
- Brand name / Product name + “Replica”
- Brand name / Product name + “Inspired”
- Do not forget to search for your brand or product name also in local scripts
Some useful indicators that counterfeit or unlicensed products are being offered for sale are as follows:
- The products are sold at a much cheaper price below its market value;
- The seller is not part of SMEs’ official distribution or authorised channel in South-East Asia;
- The seller has many listings and many units for sale (i.e. powersellers);
- The product is listed several times with a wide variation between prices for each listing.
Liability for selling counterfeits
To avoid liability, various e-commerce sites have developed systems to aid ‘take-down notice’ processes to their websites and platforms which can be used by IP right holders whose rights have been infringed. EU SMEs should always remember that exercise a ‘take-down notice’ is different from actual IP enforcement legal actions and therefore do not constitute a legal decision nor an executive right in relation to the infringement.
In many SEA countries, the sale of counterfeits will also attract civil liability along with penal sanctions. However, if it turns out that the vendor is indeed re-selling genuine goods or ‘second hand’ products, they are regarded as “parallel imports” and not as counterfeits, and such sales, although generally unauthorised, are usually permitted in various SEA countries. For example, in Singapore, if threatened by legal action, such vendors could possibly have a claim against the IPR holder under the basis that the latter has made groundless threats of IP infringement. It is thus always recommended for EU SMEs to ensure that the goods in question are counterfeits before commencing any official correspondence with the e-commerce platform or the vendor.
Generally, in South-East Asia, there is no express legislation in place providing for the e-commerce sites’ responsibility in combating online sale of counterfeits. Thus, e-commerce sites which confine themselves to an intermediary role are unlikely to be found liable for IPR infringement. Any process or workflow provided by e-commerce sites to handle counterfeits, outside the scope of any potential copyright infringement, is a matter of discretion for the e-commerce sites. To address the general gap in legislation, EU SMEs can consider taking active steps to educate e-commerce sites and other intermediaries about their trade marks and other IPR rights.
Tools of removing counterfeits on popular e-commerce sites in South-East Asia
Generally, e-commerce sites are willing to work with brand owners to take down counterfeit products that are being sold on their sites. Some of them also take product authenticity very seriously and have launched their own guidelines to inform users and sellers that the sale of counterfeit products on including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited (for instance in the case of Lazada and Zalora). However, EU SMEs should take a very proactive approach to spot infringing goods which may damage their reputation on South-East Asian markets, especially when these are new markets for their products as local customers are not yet familiar with the features of the original goods to the point to be able to identify the lack of quality in the counterfeit ones.
EU SMEs that believe their IP rights have been infringed by e-commerce platforms should act to request an immediate take-down notice to the e-commerce platforms.
Generally, the set of documents that shall submitted to the e-commerce site for take-down procedure are the following:
- Proof of identity – For companies this includes business incorporation certificate or company license. For authorised agents (when allowed by the local regulations) this includes the proof of identity plus the relevant authorisation if the agent is not the IP owner.
- Proof of IPR ownership – The IP registration certificate or copyright recordal certificate is necessary.
- Links and Webpages – The exact links to the webpages of the infringing listings and details of the listings which SMEs are requiring having removed.
The e-commerce site will then handle the complaint according to its own policy and terms to remove counterfeits. SMEs should be aware that the e-commerce site might receive an objection to the complaint by the seller by mean of submitting a counter-notification.
General breakdown of the process can be summarized as follows:
- Step 1. The IPR owner submits requested documents in the system on his/ her own initiative after spotting the infringement;
- Step 2. The e-commerce site performs checks on the formality of the claim;
- Step 3. The alleged infringer will receive a notification regarding the IPR complaint from the e-commerce site;
- Step 4. The alleged infringer can submit a counter-notification showing that he/she is an authorised party or can confirm the case;
- Step 5. In case of a counter-notification, the IPR owner can either accept the counter-notification or submit the case for dispute;
- Step 6. According to the policy of the e-commerce sites, the company may have created specific programmes where IPR holders can register as a member to provide in advance IP ownership by filling in a standard form notice. The dispute will be handled through this programme, and they will decide whether the listings will be deleted or not.
There is generally no fee for registration and submission of IPR infringement claims though the ‘take-down notice’. In the case of the two e-commerce platforms Carousell and Qoo10, there are for instance clear policy guidelines when it comes to dealing with counterfeit products.
First, Carousell and Qoo10 will force the seller to take down the counterfeit products from their website once they are given notice of the offer for sale. As a brand owner and trade mark owner, EU SMEs should send a notice of infringement to Carousell and Qoo10. Second, if there are repeated reports and complaints of a particular seller who has been selling counterfeits, Carousell and Qoo10 will either suspend or terminate the seller’s account entirely.
Have an enforcement strategy in South-East Asia
EU SMEs doing business in South-East Asia should also keep in mind that an efficient IP strategy for those markets should include a plan for an enforcement strategy in the event IP infringement on a relevant scale. Removing counterfeit goods from e-commerce sites as soon as they appear is a very important goal to achieve and EU SMEs should act promptly to defend their IP rights.
However, online infringements can also be the opportunity to collect valid evidence to file subsequent legal actions against a repeated infringer or in a more complex litigation case to prove a connection of illicit activities from the same entity or individual. Thus, before exercising the request of ‘take-down’, it is recommended to make sample purchases from online accounts to confirm that the products being sold were indeed counterfeit items and collect the items and related purchase and shipment documents including information on the seller.
South-East Asia IPR SME Helpdesk Team
The South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (email@example.com) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.
The South-East Asia IPR SME Helpdesk is co-funded by the European Union.
To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at http://www.ipr-hub.eu/.