Recorded Webinar - Consumer Electronics Counterfeiting: What, Who, and How to Tackle It

Consumer Electronics Counterfeiting: What, Who, and How to Tackle It

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With stories of exploding smartphone batteries and blenders bursting into flames, it’s no wonder that it’s estimated that one in 10 consumer electronics products is counterfeit.

The counterfeit consumer electronics industry is set to exceed $3 trillion (U.S.) by 2020. With fraudsters using the anonymity afforded to them by the online world, it’s costing genuine brands lost revenue and also reputation.

Join CSC® product director for brand protection, Elliott Champion, for a free webinar about the current landscape of consumer electronics counterfeiting, plus key brand protection strategies.

In Consumer Electronics Counterfeiting: What, Who, and How to Tackle It, Elliott will cover:

  • The current state of the counterfeit consumer electronics market
  • Risks to brand owners
  • Four steps to help mitigate these risks
  • Case study samples of solid brand protection strategies

Slideshare

Webinar Transcript


Annie: Hello, everyone and welcome to today's webinar, "Consumer Electronics Counterfeiting: What, Who and How to Tackle It."; My name is Annie Bruxelles and I will be your moderator. Joining us today are Elliott Champion and Irene Oh.

Elliott is the Product Director for Brand Protection at CSC. He is responsible for building client-specific strategies and evolving the CSC brand protection services, including optimizing a brand's online presence, protecting its digital assets, and aligning its online presence with the overall strategic goals.

Irene is part of CSC's brand protection operations team and is a subject matter expert on the Asian marketplaces. She has six years' experience in brand protection and anti-counterfeiting. Irene also forges and maintains key relationships with Chinese marketplaces. And with that, let's welcome Elliott and Irene.


Elliott: Thank you very much, Annie. Welcome, everyone, to today's webinar. Today's agenda will be looking through firstly at the current state of the consumer electronics industry and the scale of the infringement to the industry as a whole. Then we'll be looking at risks to brand owners, what these risks are by way of infringement type and also what forms these risks later take, and also, finally, who they affect.

Then after that, we'll be looking at four steps to help mitigate these risks. This is the real meat of the discussion where we'll be looking at us sharing our methodology and detailing how we build a successful strategy. Finally, then we'll be looking at some case study examples and going through those strategies. We can then go into detail on how these evolve over time to keep one step ahead of the infringers.

So, first thing's first, the current state of the consumer electronics industry. Here's some summary statistics from our whitepaper, that I thoroughly suggest you download. The first one is very staggering—one in ten IT products worldwide is suspected to be counterfeit. Online retailers facilitate 60% of fake electrical goods sales. That's both on ecommerce standalone sites, those rogue sites and also online marketplaces. Social media has facilitated 7% of counterfeit sales in 2016.

And around 8% of people in the UK have knowingly bought counterfeit electronics and in the US, that's around 12% and I've talked to Irene about this before. You can ask yourself either people in the UK are less aware that they're buying counterfeits or less honest about actually buying those counterfeits. Overall, electronic product counterfeiting is a $169 billion industry worldwide. That puts it just between the Dominican Republic and Azerbaijan in pure GDP terms.

Now let's review some recent cases that have been in the press. So, here we have some notable examples. First, looking on the left-hand side, I do like the title of particular press item, "Could you spot a fake?"; We certainly couldn't miss those earphones. This was a recent raid in West London carried out by Trade and Standards and they identified thousands of counterfeit items not limited just to consumer electronics, but that was the majority of what they had found.

We've also had similar raids conducted in the UK by the Police Intellectual Property Crime Unit, PIPCU. That's through Operation Jasper 1 and 2. Then you look at on the top right-hand side, this is something that was caught in the press very recently about an individual that was selling fake iPhones that included detailed packaging, serial numbers and also dimensions of iPhones. So, pretty much a perfect counterfeit. He actually managed to smuggle over 40,000 iPhones into the US market over here. So, we're certainly glad that he got caught on that one.

Then looking at autumn 2016 on the bottom right, we've had a number of major cases where we've had fake Samsung and also iPhone chargers. Unfortunately, these have then exploded or caused damage to the phones themselves.

So, an interesting point on this—this is certainly a running theme as we go through the presentation today is this can affect multiple different stakeholders. Let's look at one specific example of the iPhone cable. So, the iPhone cable in the bottom right is MFI-certified, which means it's have a certain patent to regulate the electricity that runs through it, that basically allows it to stop overheating and also damaging the battery. So, I know that there are a number of manufacturers at the moment who are developing apps to be able to test those charging rates for those phones and their equipment and that makes sure it doesn't actually damage it.

So, to end this section, let's look at CES in 2018. So, at the start of the year, Kensington has invested a lot of research and development, I imagine, into developing an advanced YubiKey for verification. This is where you effectively swipe over your thumb and it will bring back a verification that you are the correct person. We use this for VPNs in CSC.

Unfortunately, an enterprising counterfeiter has already copied a number of their materials. So, they've copied their dimensions table, their marketing material and also their compatibility statements with Microsoft support. So, you can see that even in the most recent cases, we've seen a number of examples.

Now, moving on to risks to brand owners, at this point, I'll hand over to Irene and she'll go over some example infringements in the consumer electronics industry that we've seen before.


Irene: Thank you, Elliott. So, going forward, we'll look at some examples of potential infringing listings that are found across the online platforms. So, here we have the first example, which is a Xenon bulb that are found on Alibaba.com. As you can see from the picture on the right, that is the original Philips Hue bulb. So, by comparing these two listings, you can actually see they have similar design. Therefore, we may be able to report this listing as designer infringement only if Philips has this design registered worldwide.

Looking at the second example, here we have the picture on the left, a listing that's using the copyright image that's owned by Huawei. So, if I were to buy a Huawei mobile phone and I come across this listing, I would have thought that this could be an authorized seller because they're allowed to use the copyright image, therefore, they must be selling a genuine Huawei mobile phone. Looking at the price, it's cheaper, so I'll buy it from this seller. Now, here is the dangerous thing where if it's a counterfeit, it could have a health and safety issue.

Next, we come across what appear to be a standalone ecommerce site, also known as a rogue ecommerce and it's selling a Xiaomi air purifier. So, this seller claims that this listing is an original item and if I was a generic buyer, I wouldn't be able to tell the difference between the item on this listing as well as the item on the genuine goods.

So, I would think the price looks okay, could be a little bit cheaper. From the picture, it looks fine. So, I will be convinced that this is a genuine good. The only concern we have with standalone sites is that they tend to not have any specific legal team that can deal with customer complaint in case if anything happens after we bought a good, therefore, this could have an impact on your brand value.

Onto the next example, this is where an independent website, which is using the LG logo, we don't know for sure whether this website is authorized to use the LG logo. Seeing this, it could be as a generic public user, I would think they're using the LG logo, therefore they must be authorized and endorsed by LG, therefore this must be a legitimate website.

Next, I will pass back on to Elliot to give you further examples.


Elliott: Thank you, Irene. So, not only can we look at individual marketplaces and look at those different infringement types, it actually doesn't take too much digging to find a number of different areas where consumers themselves are finding them. So, we did a brief bit of research on social media and here are some examples on Twitter.

So, we've got examples here of fake televisions, fake chargers, fake compatibility statements, printing items. This was quite an interesting one where on the image, it will have a deep shortened URL and all of them ping directly to an Amazon seller. Then on the right-hand side, we've got portable chargers that appear to be fake as well.

So, looking earlier on at the original cases where some of these things were damaging, you can see there's actually a plethora of different product areas that are being attacked and being sold online as well.

One example that Irene and I also found was the smartwatches4u example. So, when we were looking at this, we were trying to find an example that would show areas that were first being exhibited primarily by the customers. So, customers' feedback was very, very poor. We also found that they were using copyrighted images and also, they were using this to promote their own infringing website and then from there, be able to sell those items as well. So, this is quite an interesting example that covers multiple different areas.

So, Irene, did you have anything further on this one?


Irene: Yes, this is a very interesting example. As well as directing the users to their independent website, they're also directing users to their Amazon store. So, the users will be able to buy from Amazon.


Elliott: So, it's kind of a very well-networked infringer here with multiple different avenues to sell their items. I suppose they have to promote themselves as well.

So, next moving on to the final slide on this, just a brief overview, the previous slides are examples of potential infringements. In order to take action, we require the appropriate IP rights aligned with each brand and the relevant territory. We will explain our methodology in more detail and which processes in section three.

So, let's move on to something that's a little bit more specific to the consumer electronics industry. We often get asked these questions around compatibility. There are a number of different cases where you have an item that says this item works with or is compatible with, is for, is similar to or is suitable for. Essentially, wat these infringers are doing, they're using the brand or very well-known product title or keyword to allow themselves to be returned in those original searches by consumers.

So, they're actively, if you see this from the consumer standpoint, they're just searching in the brand or keyword, when they do so, then these items are being returned and we get asked a lot of these questions where it's not necessarily trademark infringement because they are aligning themselves that this is similar to, but we do have a lot of our partners asking if we could remove those.

So, there's a few examples on some marketplaces where you can do this under two main grounds. That would be either under safety-related grounds or misguiding. So, first, under safety, an example of that would be different bolt-ons or adapters or plugs and sockets that are against the manufacturers' details or that we know wouldn't be safe. The second would be misguiding reports. So, it would be them effectively purporting an affiliation type rather than just a likeness. So, the brand would be very prominent, perhaps the first actual textual reference in the title of a listing.

As you can see at the bottom here, we do know that this is a very hard argument for removing listings and has very little return on investment. We would first certainly suggest that you use rule of typical IP rights and violations through IPR centers.

So, next, let's look at potential risks to brand owners. This has got a multitude of different areas that we're going to cover, both from a stakeholder perspective, but also how these risks can affect an organization. So, first, starting at the top, there could be examples were these counterfeiters are using dangerous materials that are producing these items in a very dangerous way. They could also be incompatible. As we stated before, there's the example with Apple where they have their MFI-certified lightning cables.

Thirdly, we need to look away from just the physical environment, but also the digital environment. We want to make sure we're protecting our customers from using hackable hardware as well. We've seen examples of that in laptops and also network routers.

Next, looking at the risks of threatening a clean online presence, marketing departments around the world are spending billions on making sure they've got a clean and consistent message online. These can really, really affect it if they have infringements on the first page of Google or perhaps even transfer items that are on the homepage of a major marketplace. That also, with the popularity that is referrals through social media now, that can also be compounded with social networks, as we've seen already, where they can actually be promoting themselves.

Next, looking on to protection of IP and brand value—with some of our customers and partners that we work with, intellectual property specific to consumer electronics industry, their intellectual property is at the center of their business because this is how they gain their revenue and this is how they build their business. So, making sure that they're protecting their patents and their design rights is very crucial. Also, following that, the trademarks and the associated references that they have to that, things like descriptions or dimensions we mentioned before.

We also want to make that others aren't capitalizing by just being their first by creating a footprint on marketplaces. They can be purporting to be the official store of said manufacturer on eBay. So, this then nicely links into protecting official partners and channels. So, these are key facilitators for these organizations because they facilitate the sales and facilitate the revenue. Interestingly, we also get asked the reverse of organizations that have a direct sales model. So, with that, we also can put in a number of different measures to make sure that we're protecting them and they are policing their policy guidelines that they had.

Then looking onto resolving traffic bleed, there's a reason why it's known in marketing terms about traffic bleed because if you have a business model that relies on the relationship between traffic, likes, or views, you want to make sure that that is absolutely protected. So, if you work within a business model that uses things like affiliate networks, we can also police that and you want also make sure those are being used properly.

Then finally, looking at returning revenue, this obviously often gets the most attention apart from consumer safety. This is making sure that ultimately we're reducing the chance of those hoping to seek authentic items do not get carried off into buying counterfeit items. So, the ultimate goal is if someone is trying to look for those authentic or counterfeit items, that they get redirected to the official channels or main manufacturer. So, these programs are made to protect both parties.

Then final thought just on this slide, I also want to just mention the different areas that we've looked at are influencing different stakeholders you have within an organization. The way a person from security would review these issues in comparison to the way someone from marketing or legal would review these is very different. So, often, even a simple domain name can be seen very differently between different departments.

Now let's look at four steps to help mitigate these risks. So, first, we'll look at evaluating a landscape and establishing those crucial aims, then monitoring the critical online channels, enforcing using the most impactful strategies, and then finally evaluating that impact and realigning back with those strategies.

Looking at the first one, we need to evaluate the wider landscape that we have and establish those aims. So, first looking at the landscape piece, we need to conduct manual or automated analysis. We do this internally when we first have a brand on board. So, we'll be looking at producing snapshot reports or marketplace sweeps. They're looking at different online channels and then looking for the incidents and sampling that data.

So, that can be as simple as creating a table with a number of different major marketplaces against the number of items that are available or number of listings that are available and then looking at a percentage sample of infringing items that you had on those to get yourself a nice aggregate of here is where we had the overall number or most amount of infringing listings.

After that, then we need to review that and then look at identifying those high-risk areas. One thing we used in quarterly reviews—Irene and I have done this a number of times—is using heat-map indicators. So, here is where we've had a number of infringements and we can then scale those and see them in relations to others and really weigh up where the issues are. So, that's very different from looking at traffic-related statistics for individual rogue websites or on social media or just recorded sales.

Then we need to align that with the business strategy. So, what are the overall strategic goals of the organization going forward? So, as an example, let's say if it was to grow business in North America, we would make sure that we were focusing on protecting those western marketplaces such as Amazon and eBay and making sure that they were as clean as possible.

Finally, looking on to reviewing those global IP rights that are available—so, what rights can be utilized and also what regions or product classifications can we cover? We need to review that and cross reference that against what we have at the initial stage.

So, then looking at the aims of the program once we've established that landscape and we have that in front of us, what kind of aims do we have as part of this program? What would success look like? It could be as simple as I'd like to identify two or three high-value targets per month of which we can then do further investigations and see what we can do with those. Or it could be I want to see some compliance investments and review the whitelisting to see whether we can split these out between official partners and others.

It could be much more straightforward and traditional. So, things like I just want to make sure there's a reduction in the massive trademark infringement problem that we have and I want to do that on x-marketplaces.

One other thing that we have of the partners we've worked with for a while is preempting new products or brand launches. If you have something coming up, we suggest that review that and put something monitoring in place beforehand, before they've actually been launched. And then finally, redirecting channels to official channels, whether that be on marketplaces or to the official store.

Finally, here's an example on this on establishing the aids. So, this is an achievable example, significantly removing the fringes from the top 15 marketplaces we've identified, social media accounts and clean the first page of Google in Q1 and Q2.

The next, looking at the second stage, which is monitoring the critical online channels—at the outset, we need to really review how do people get to the point of sale? Is it the way that your customers views those keywords? Is it the way they would use those brand terms, those titles? We need to have a very broad keyword list and then we need to be able to use that to make sure we get the most amount of data.

Also, we want to look at the different variables that we can scrape from those websites to make sure that we can use that in further investigation and also enforcement. So, obvious one for marketplaces would be seller information, so their name, where they're based and the number of sales they have. We also want to look at things like the quantity, if possible. So, on Alibaba, they have the supply ability element, how many they can actually ramp up production for.

Price indicators are always key, product characteristics. Screenshots are excellent for future reference. So, let's say we were taking action and then we look at something retrospectively, we can see that if they have a copyrighted image and now it doesn't or the trademark infringement has, in fact, been removed.

And then finally, things like seller risk. So, our own proprietary software will bring in when monitoring all of these different variables. So, we've set up our keyword list and every time a seller actually lists one of these examples, we'll pick up on that and we can track it. The interesting thing about this is we can also track this on multiple different marketplaces. The way we do that is by looking at the individual seller, name and the characteristics they have.

So, we have a very clever product consultancy team that builds those rules and algorithms and characteristics at the outset of the service to make sure they can gather all that interesting information straightaway.

Then looking onto the third element—we've looked at the landscape, we've established the aims, we've reviewed what we want to monitor, we're monitoring it. Now let's get on to let's take this down. What we want to do is establish the most impactful strategy. So, if we can review these, we want to make sure that we're approaching them correctly on each individual marketplace. So, as an example here, a strategy can be enforcing against high-value targets and the tactics below that would then be using the three strikes policy and good faith takedown process.

As I said, the way you approach these is extremely different depending on which online marketplace you set out to remove listings on. So, on Alibaba, maybe you're using a good faith takedown process. On eBay Vero you may be using a three strikes policy and kind of teeing up different infringes to get a seller suspended. You may also want to ask for the seller information from eBay as well after you've done that.

And then a completely different landscape would also then be Amazon, the way that you'd enforce on Amazon may be just to protect the products that you have or consolidate that brand product catalog.

So, finally, one point I'd just add to this is because we've processed an almighty amount of listings on these marketplaces, we've found great impact and efficiency using these tactics. So, one thing we'll do now is if I possibly can, Irene, we'll go through the toolbox actions we have. So, on here, we have—I'll briefly explain the table. At the bottom, we have our primary actions, which are more of our everyday actions. Then secondary actions, we can go to as an escalation point and then finally the tertiary actions that we rarely get to but it's good to know they're there and we can also escalate to those.

So, first given an example of an infringing website, we may identify those rogue website and we say, "This hosting provider we know is compliant."; So, we first send out an ISP content suspension notice on the bottom right. We may also send a cease and desist with that. Also, one of the tactics we use is using a number of different measures at once. You may also want to use a registrar domain-level suspension as well. That's in the secondary actions.

As the largest corporate registrar in the world, what that allows us to do is point to other registrars and we say, "This individual website is fraudulent under specific ICANN policies and we please request that you could suspend this site.";

Often in those cases, what happens then is that the individual registrar will suspend that domain name for the rest of the registration period and that's much more of a permanent kill to those websites than just the host level suspension because often what happens in those cases is they will move to another hosting provider and it will be kind of a whack-a-mole process. If we can suspend that domain name, that would make it much more of a permanent kill.

Just looking at perhaps a less complex but really interesting secondary action in invalid WHOIS domain suspensions. So, if we have an infringing website, we can look at these cases and we can say actually, I don't believe that these—or I have proof and know this address is not real. We can flag that to ICANN and ask them to suspend the domain because it has invalid WHOIS details. This takes less than ten minutes and has the same effect as we just described.

Irene, did you want to go through multilingual enforcement notices?


Irene: Yeah, sure. So, we have a lot of analysts here, especially based in the Cambridge office, where we can speak multiple languages. It is especially important whereby, for example, if we want to contact a Chinese-based domain registrar, often you'll find that they don't actually understand English and they can't speak English.

So, it is very important that we send the local language, which is Chinese language, notice to stop domain registrar. They will be able to understand what we want and they can help us to solve the issue. So, apart from Chinese, we have Spanish, Romanian, Italian language speakers as well.


Elliott: Excellent. Thanks, Irene. One other one that we spoke about earlier on was also social media issues. So, Irene is one of our SMEs. We also have an SME for social media issues who builds those relationships and takes action on those cases. So, if need be, we can really appropriately review an individual case and then look at what would be the best recommendation for next action.

So, next I'll look at this example with Alibaba group. So, we process thousands of listings through them every year and we protect their own brand themselves, which is a very interesting strategic partner for us. So, this relationship that we have with them goes between both protecting their brand and also protecting other brands on their network. So, if I could now, Irene, could I ask you to go through the next steps on using an impactful strategy on Alibaba?


Irene: Sure. So, as Elliott said, we have a great relationship with Alibaba Group. Alibaba, previously when we wanted to do enforcement of any infringing listings to Alibaba, we will have to send them an email, but now Alibaba created this IPR portal, whereby an agent like us, we can register an account and upload all the relevant intellectual property certificates to this portal. After that, once this has been approved, we will then be able to process and submit any infringing listings.

Specifically, only one login is needed to enforce across all of the various platforms owned by Alibaba group. As you can see, on this screenshot, we can see Taobao.com, Tmall.com, 1688.com, Alibaba.com and AliExpress. Now, it's interesting to note that each platform might have different requirements on the IP certificates.

So, for example, Taobao, Tmall and 1688.com will only accept IPs registered in China. However, on Alibaba.com and AliExpress.com, they accept IPR registered worldwide. So, this is very important. As a brand owner, if you haven't had your IP registered in China yet, then we will be able to look into any other IPR registration worldwide or perhaps we can look at copyrights.

Going on to the next slide, I can show you an example of the online form we can use to submit the Taobao infringing listings. So, when we submit listings, we will analyze them and we'll have to match them with the correct IPR certificate. We have to provide them with a reason as to, for example, why this particular listing is a counterfeit or why is this listing a copyright infringing listing and then we can attach any documents that we like to the form and we just click on submit.

Essentially, the process is Taobao will review this complaint and then once this is approved, they will forward on the complaint to the sellers and the sellers will get the chance to provide any feedback, whether they agree or not agree with the complaints. Now, this is where it gets interesting because we do get a lot of phone calls and emails from the sellers saying, "Why have you taken my listings down? This is not right."; But really, we have reviewed your listings. If you are in fringing on an IP rights, you should remove the listings and not selling any counterfeit goods.

So, we've covered a lot—yes?


Elliott: I was going to say you just reminded me of a very funny case when I worked in the Cambridge office when we got that curse through the post. We do get some very funny replies from individual sellers that are not too happy. Sorry I stopped you because the next process explains how we can make sure that they're more permanently removed and we don't get those interesting replies.


Irene: Exactly. So, Taobao and Alibaba, they have these three strikes rules for counterfeiters. Taobao and Alibaba are actually looking at the three strikes a bit differently. One thing to know is they are continuing to review the process and the three strikes rules. This is how it stands today. It might not be the same tomorrow, but it could be easier for you to submit any counterfeit listings.

So, just to give a quick run through on Taobao, for any content submitted within three days for one brand, that would be considered one strike. Any complaints after seven days, that would be considered as the second strike and so forth.

For Alibaba, any complaint submitted within five days for one brand, that would be considered one strike and any complaints submitted after the seven days, that would be considered as the second strike. It is quite important to know the time period between these three strikes. However, we do come across some examples where the sellers actually change the way they advertise the listing. That is one thing to bear in mind when you submit the counterfeit listings to Alibaba group.


Elliott: Thank you, Irene. That's really important.


Irene: Here we have the Taobao good faith takedown, where it's becoming more popular. We do have quite a few of our brand owners who have joined the good faith takedown. In order to join this, all the submitted complaints that are approved by Alibaba, it has to be deleted over 90%. The successful content notification must be less than 1.5% and the quality of the IPR document submitted must be stable. Therefore, it's very important to know which trademarks or which copyright statement that Taobao or Alibaba will approve. You should only submit those that you know you'll get approval on.

The good thing with joining the good faith takedown is that Taobao will be able to process your complaints a bit more quicker and essentially, you are actually requiring less evidence to show Taobao why a particular listing is infringing. However, Taobao is improving the process. So, even though you're not joining, you haven't joined a good faith takedown, we should still see a reasonable processing time.

I'll pass this back to Elliott at this point.


Elliott: Thank you, Irene. That's really insightful. To hear those strategies that you and the team use day to day really helps actually add to the point of how to make a greater impact rather than playing a volume game and trying to hit the easy, low-hanging fruit, we can make sure we make a value-based approach.

Finally, let's look at evaluating that impact and realigning strategies. How do we value this? Well, we can look as we similarly did at the start in the first initial stage, is there a lower instance of enforcement or reported cases? Perhaps that can be as simple as the numbers that we have coming into the system that reviewing month over month, or it can also be those that are outside of that, perhaps customer complaints on things like social media, things like number of seller removals—so, the amount that's been suspended and the amount we've see continue to tail off.

The traffic has been redirected or the lower frequency of seeing sites with high amounts of traffic that have diminished. Looking at increased sales through official stores or seller accounts—that would be very easy on examples. I've got some customers that look at that on Amazon and eBay on their official stores. Then finally, looking at a clean presence on a social media or search engines, which we can look at as well.

So, then how do we then realign that strategy? We reviewed the impact we've made through those enforcement measures, but we need to make sure we make full circle and then review what we've done. So, are there any new takedown procedures that we can use? Are there any new tools that we can use to now attack these infringers?

One thing that we spoke about earlier on was design right infringement. That's something that's really come on with a number of different marketplaces, certainly Amazon in the past few years. So, we can use that to our best advantage with the brand owners we work with.

Are there any new IP rights to be able to use? There were some examples earlier on of domestic Chinese marketplaces where you need, as an example, for Taobao, you would need a color copy of a Chinese trademark certificate. Perhaps that was being registered at the time and now we can actually use that.

Should any additional marketplaces be now added? I'll come on to that in a moment.

Evaluating any new products or sub-brands or keyword additions. What often happens is as we work through a program, you'll often have cases where individual infringers will—Irene and I will often laugh about this—they will adjust the trademarks to the point where it's almost insurmountable what they're trying to portray. They'll get to a point where they'll show the brand's name with completely different keywords, with letters and numbers in the middle that they're hoping these have either been misspelled or still being returned in the searches. We need to be continually changing those infringers to make sure we're changing that environment.

Finally, what is the overall trend and where's the most impact to resource? So, in certain areas where perhaps it's a little more easier to make a bigger impact straightaway, we can review these, let's say, on social media. We can quickly remove these infringing accounts or tweets and then move on to the next area.

Finally, are sellers moving on to other marketplaces? So, Irene is, I'm sure, very bored of me talking about springs, but I often use the analogy of springs when thinking about these programs. At the initial stages of a program, you can look at this as we have a fully expanded spring where we have a very large environment with lots of different types of infringements within a set area that we've understood within the landscape.

As we continue to put pressure on that, we can change that and put that to a point where actually we've made a very big impact and we can just leave one thing, they're holding on to it and then leaving it there. Now, we work with the biggest brands in the world and we know full well that they are big and they will continue to sell products and therefore there will be new people who will try to be enterprising and infringe and counterfeit their goods.

What we can do is leave that in a more monitoring state and then we can focus and realign that resource in other areas, whether that would be on the ground investigations or perhaps other areas that you maybe want to look at, like other modules, so social media monitoring or online website monitoring.

So, that concludes the final piece of evaluating the impact and realigning strategies. We'll just briefly go on to some notable case studies and then we can go through two major examples just before questions. So, first, we'll look at a very key customers of ours, Belkin. Irene, did you want to introduce it?


Irene: Yes. So, we've been working with Belkin since early 2015. Just to give you a little bit of background, Belkin is an ecommerce electronics company. It's most well-known for its mobile chargers, specifically any iPhone users or iPad users will know Belkin. Since we've worked together, we've managed to remove more than three million items across the online channels. Our focus has been on the lining products, but we are also monitoring and covering other different categories such as car charger or even keyboards and mousepads. We also are looking at the marketplaces or any fake social media pages and any unauthorized websites.

So, going through to the next slide, we have broken it down by the takedown by issue type across the two or three years that we've been working with Belkin. So, to start with, as you can see in 2015, our focus is on rapid takedown in counterfeit listings. Across the time, we've gradually moving on to taking down the design right infringement listings. So, the concept behind this is we should tackle the low-hanging fruits first. As you can imagine, counterfeit listings are easier to take down compared to design right infringement listings.


Elliott: I was just going to say I think that's a really good example here where you can also see the environment change. We started off in 2015 with an environment that perhaps was a little bit more populated with these different types of infringements and now it's becoming more and more difficult to actually find these and that we're pushing those infringers to different areas. I know going on to the next slide, you're probably about to tee it up, Irene, but looking at this one, you can see we're covering a number of different territories. One of the questions we're often asked is where is our problem moving to now?

That's something that we will always want to be covering off within our quarterly reviews with our customers. So, we'll always be chasing the new marketplaces, whether they be new ones that are just very popular or those that are, actually, a bit of a hotbed for infringers and manufacturers. So, particularly with Belkin, we've had the majority of our problems within China, but I know that we're looking at other territories, even to this date now in South America that may be potential future hotbeds when we look at that heat-map analysis we spoke about initially.

Then looking at the overall distribution, this is a really good example of how that flattens out across the different years that we've had. You can see this is a bit of a Pareto law distribution here where we have some clear and major marketplaces. At the top of that has been Taobao that we've been enforcing on. You can see there Mercado Livre Brazil is actually very popular here as well. Again, this is about aligning both the issues that you have as an organization against the key strategy and the aims that you have as well. You want to be making sure that you're first covering those areas.

And then we also have some brand monitoring areas. Irene, did you want to go over the support issues?


Irene: Yes. So, often, we come across this fake support issue where they were actually using the Belkin brand name or logo and saying, "We'll give support for any issues you have with the Belkin products."; Often, we actually find this quite dangerous. It's because they will ask you for your individual data, including your name, your IP address, your house address and your phone number. Usually, they will actually use this data to do any fraudulent activities. So, this is quite a high-risk for the brand owners as well.


Elliott: Definitely. It's something that's very specific to consumer electronics. We've had this with a number of different customers. We also, as you showed earlier on in another example, continue to have claims of affiliation. So, individual rogue sites, standalone sites, will be saying they work with or have partnered with said manufacturer for a number of years, when perhaps that manufacturer hasn't even been around that long. So, that continues to be a big problem.

And then finally, we have another case study of a smaller company and a smaller program. But it's quite different. You can see 50% of the takedowns that we've done here have been on Shopee, which is a new marketplace to me. Irene, can you explain Shopee?


Irene: Yes, actually Shopee is quite a big marketplace or it's becoming more popular nowadays. It has various local websites, so, for example, Taiwan, Indonesia, Thailand, Malaysia, etc.


Elliott: Yeah, it's really interesting. Sorry, go on.


Irene: If you're asking which are the sites you should monitor or look at, then I would definitely suggest to look at Shopee as well.


Elliott: And also Tokopedia, which in recent years, certainly for consumer electronics has become very big. We've seen that continue to grow with our customers.

Just looking then at the final slide in the interest of time for questions, we have the compliance rates and also the overall number of takedowns. We can see that we do have those typical main marketplaces, but again, there's a large distribution where the majority of your issues are going to be in certain marketplaces, when we remove those, then we can move on to others. That's certainly what we're doing with this customer.

With that, I'll conclude and then move on to evaluating what we did before. We need to evaluate the online landscape and create specific brand protection aims. We need to—if you decide to take action, use the four-step process that we outlined. Use that methodology, by all means, and align that with the best enforcement strategies that you have. Irene gave some great examples of how to do that more impactful actions on Alibaba.

Then finally, like the case study, begin with a manageable sized program that can develop, change the environment, and keep those infringers away. So, with that, I will pass back to Annie and any questions.


Annie: Thank you, Elliott and Irene, that was great. Folks, we will now open the Q&A session. Also on the screen for you, we have one final question—would you like be contacted by a digital brand specialist? So, if you can please select one of the options on your screen to indicate how you'd like to be contacted, that would be great. Also, just as a reminder, you can download a copy of today's materials from the resource widget.

So, now we'll take some questions from the audience. Elise is asking, "Which regions are the most popular for counterfeits that we should monitor?";


Elliott: Irene, do you want to take that first one?


Irene: Yeah. As we all probably know, China is always the main region to look at, simply because all the counterfeiters are mainly from China. Recently, we've come across more and more of the South American sites and Southeast Asian sites that are becoming more popular among the counterfeiters. Do you have anything more to add, Elliott?


Elliott: Yeah. I completely agree with everything you said. One other thing I'd say is specific to consumer electronics, a customer was telling me the other day that it's actually becoming cheaper to manufacture items in Mexico with labor costs than it is in certain regions of China. I think this is an ever-shifting landscape, but as you can see with the case studies we've already given, Asia continues to be the main player in infringement items.


Annie: Great. Thank you. Martin is asking, "We don't have any IP rights registered in China. Could we take any enforcement action on the China-based marketplaces, domains, or websites?";


Elliott: I'll have a first go at that. The first thing you could certainly do would be looking at using copyrighted images and referencing those and clearly referencing those within the takedown notice that you have. That's going to be specific to the marketplace, but most major marketplaces will accept that. Irene, did you have anything else?


Irene: Yeah. For example, earlier we spoke about Alibaba.com and AliExpress.com. They are a couple of sites that will accept worldwide registration. So, it's definitely worth keeping an eye on those.


Annie: Great. Thank you. Jasper is asking, "How do you identify or define high-value targets?";


Elliott: I think we would probably reference the earlier on landscaping piece in stage one and we'd initially do a marketplace sweep or a brand snapshot. We do this at CSC. So, you can request one of those and then we will review that. We also do them as part of our quarterly reviews with our customers and then we review where the overall instance of popularity and also the sampling of infringements are as well.


Annie: Great. Thank you. Sue is asking, "Which online marketplace can and can you not take action against gray market products?";


Elliott: That's a very good question and you need a better answerer than me. I'll leave that one to Irene.


Irene: Thank you, Elliott. With this one, we often get a lot of feedback from the various marketplaces, saying that gray market products it's not an issue they can help with. In particular, that's because they think this is the brand owner's distribution issue. So, it should be the brand owner to communicate with the resellers and find out where they got the suppliers from and where they're supplying to any other sellers without the brand owner's authorization. Saying that, we do try to look at the listings and see if the sellers are using copyrighted images without any authorization, then we can definitely report them.


Annie: All right. We have one more question. Alicia is asking, "When is the best time to evaluate the impact and strategy?";


Elliott: So, typically with our customers, we do that on a quarterly basis. You also need to be able to give yourself time to really see what impact has been made. So, between each quarter and perhaps on a bi-annual basis. But when doing so, I don't know, Irene, if your suggestion is the same, but my suggestion would be not only looking at that, but also looking at those areas of where perhaps those issues have moved. You may actually find that those sellers, you've made a big impact of them being on the main marketplaces, but they can now move to a lesser than marketplace. We want to make sure we continue to put pressure on them.


Irene: I definitely agree with Elliott.


Annie: Awesome. Thank you both. Folks, that's all the time we have today. If we didn't get to your question, we will contact you with a response after the webinar. Thank you to everyone who joined us today. We hope to see you next time.