A selection of challenging e-commerce platforms highlighted by IP owners to the USTR and EU Commission
The Office of the United States Trade Representative (USTR) and the European Commission now publish extensive reports on notorious marketplaces, which are locations where counterfeit goods are widely available. These reports also identify e-commerce platforms and streaming sites which offer illegal IP violations, whether pirated digital files or physical counterfeit goods offers.
In both the USTR1 and EU Commission2 reports, IP owners and stakeholders reported Bukalapak, Tokopedia and Shopee as online marketplaces in Southeast Asia which played a direct or indirect role in global counterfeiting and piracy.
Bukalapak, one of Indonesia’s largest B2C e-commerce platforms, was recorded for allegedly allowing sales of counterfeit electronics, clothing, fashion accessories, books, films, mobile phones, car and motor spare parts, industrial goods and pesticides. The majority of the goods on the platform allegedly originate from mainland China. Chief complaints from IP owners were long response times, burdensome takedown processes and allowing use of contentious keywords such as “Replicas”. IP owners have also reported that their removal system was ineffective due to the lack of pro-active measures and the failure to deter repeat infringers and known counterfeit sellers.
Shopee, one of the biggest e-commerce marketplaces in Southeast Asia, was reported by stakeholders in 2020 for allowing high volumes of counterfeit goods including watches, jewelry, leather goods, clothing, fashion accessories, food and beverages, sport equipment and pharmaceuticals to be sold. It is stated that their platforms in Malaysia, Taiwan, Thailand, Indonesia and Vietnam offer more counterfeit goods relative compared to other local national platforms and the Shopee platforms in Singapore and the Philippines. Common issues on Shopee are said to be the lack of responsiveness, inconsistency and failure to deter and apply a repeat infringer policy, lack of proactive measures and a complicated takedown process.
Tokopedia, one of Indonesia’s largest B2C and B2B e-commerce markets, was listed for allowing a wide variety of counterfeit goods including academic textbooks, clothes, sport goods, electronics, food and beverages, jewelry, leather goods, watches, cosmetics and toys. IP holders reported issues such as allowing advertisements of “replicas” of genuine brands and onerous documentation requirements. IP owners also found that reporting procedures are complicated to navigate and that there were ineffective anti-counterfeiting measures to deter repeat infringers.
According to both reports, platforms that responded to the allegations claimed that their anti-counterfeiting policies are placed to prohibit the sales of counterfeit goods with procedures to enable brand owners to notify IP infringements. The platforms also refuted that they had proactive measures in place to remove infringements and that there was cooperation with stakeholders such as enforcement agencies, regulators and brand owners in regards to IP issues.
From our experience in engaging both brand owners and online marketplaces in Southeast Asia, most platforms do not proactively monitor IP infringements. Instead, they rely almost entirely on the IP owner to file complaints. This is now a major challenge for brand owners to address. In Indonesia where Shopee, Tokopedia and Bukalapak operate, while primary laws do not require online marketplaces to actively monitor IP infringements, secondary laws (Circular No. 5 of 2016) state that a platform has the obligation to manage electronic systems and platform content in a reliable, safe and responsible manner. The lack of clear three strike-type rules, denial of access to services for repeat infringers, blacklisting infringers, as well as a lack of commonality within countries or across the ASEAN region make dealing with IP violations a major challenge for IP owners. These platforms will need to develop systems to deliver functions such as self-monitoring and removal of obvious illegalities (e.g. health products with no government regulatory approvals), monitoring repeat offenders and reporting to IP owners, reporting suspicious merchants to authorities for investigation, fast track systems for special situations (high volume fake products, active IP owners).
This is now the crux of the conflict between platforms and IP owners in Southeast Asia, with Indonesia at its forefront. Recent developments such as the MOU signed in Thailand and the MOU proposed in Philippines are the start of a regional dialogue to address the need for platforms to do more. As they are massive beneficiaries of a COVID-driven acceleration in e-commerce, the expectation is that they must step up to address the mounting volume of IP violations on their platforms. With Shopee now under the NYSE-listed SEA Group in Singapore and Tokopedia in talks for an IPO, the repeat identifications of their lack of proactivity on IP issues and poor regulatory systems will run risks for them.
Written by: Benjamin Li, Consultant
1 USTR-2019 Review of Notorious Markets for Counterfeiting https://ustr.gov/sites/default/files/2019_Review_of_Notorious_Markets_for_Counterfeiting_and_Piracy.pdf
2 European Commission- 2020 Counterfeit and Piracy Watch List https://trade.ec.europa.eu/doclib/docs/2020/december/tradoc_159183.pdf