IPOPHL raises concern over growing trade in fake products

Published June 13, 2020, 12:00 AM

by manilabulletin_admin


The country’s authority on intellectual property rights protection has raised concerns over increased trade of counterfeit products as e-commerce goes full blast boosted by strong demand for online shopping during the lockdown period.

Intellectual Property Office of the Philippines Director General Rowel Barba raised this issue as he expressed support for House Bill No. 6122 “An Act Protecting Consumers and Merchants Engaged in Internet Transactions, Creating For The Purpose The Ecommerce Bureau And Appropriating Funds Therefore” as introduced by Representative Wes Gatchalian.

Barba stressed that the trade of counterfeits and pirated goods are not only proliferating in various e-commerce but also in social media platforms, particularly Face Book.

He urged the House Committee to look at the DHS “Combating Trafficking in Counterfeit and Pirated Goods” report, which called for the swift adoption of best practices by e-commerce platforms that operate third party marketplaces and other third-party intermediaries.

The top 10 priority best practices include comprehensive “Terms of Service” Agreements, significantly enhanced vetting of third-party sellers, limitations on high risk products like medicines, efficient notice and takedown procedures, enhanced post-discovery actions, indemnity requirements for foreign sellers, clear transactions through banks that comply with enforcement requests, pre-sale identification of third-party sellers, establish marketplace seller IDs, and clearly Identifiable country of origin disclosures.

Barba also cited several studies this year addressed global trade in counterfeit and pirated goods.

The Organization for Economic Cooperation and Development (OECD), based on 2016 data, just issued a report on the latest trends in trade in counterfeit and pirated goods. It showed that trade in counterfeit and pirated physical goods has risen steadily in the last few years and now stands at 3.3% of global trade, estimated at US$509 billion). These are some industries significantly affected than others—22% for footwear, 15% for clothing, 13% for leather goods, and 12% for electrical equipment. The OECD report identified the key factors behind this growth, i.e. corruption, poor IP enforcement, free trade zones, China’s role as a top producer of counterfeit and pirated goods, and the use of post or courier services to send small shipments.

The Better Business Bureau (BBB) of the US issued a report finding that “[organized criminals operating out of China are behind the vast majority of this fraud,” and that they are “supported by a large ecosystem of groups that arrange for credit card processing.” It recommended that credit card payment processors increase their efforts to combat the sellers of counterfeit goods. A study by Ghostdata of counterfeit goods sold on Instagram found that the “top payment system is by far WeChat Pay,” which is owned by a Chinese company.

Earlier this year, the US Department of Homeland Security (DHS) report noted that, although e-commerce has supported thousands of legitimate businesses, e-commerce platforms, third-party marketplaces, and their supporting intermediaries have also served as platform for the trafficking of counterfeit and pirated goods. This is so because selling counterfeit and pirated goods through e-commerce platforms and related online third-party marketplaces is a highly profitable venture, with low cost of production, big market online, convenient transactions, and the cover of well-known platforms for legitimacy. Sellers of illicit goods are in another country are exposed to relatively minimal risk of criminal prosecution or civil liability.

Hence, he said, e-commerce platforms need to take additional actions to combat trafficking in counterfeit and pirated goods and reduce, if not eliminate, the availability of such goods on their platforms.

“It cannot be emphasized that intellectual property protection is critical to fostering innovation,
research and development so businesses and individuals can enjoy the full benefits of their
inventions, and for artists to be fully compensated for their creations and so cultural vitality
will prosper,” said Barba.

IPOPHL already submitted a Position Paper and we will be submitting a Supplemental Position.