The UK Intellectual Property Office (IPO), has published a report detailing the extent and prominence of transactions for counterfeit goods on social media sites. The report titled “Share and Share Alike: The Challenges from Social Media for Intellectual Property Rights” named particular social media sites as “breeding ground(s)” for the sale of illegitimate goods, predominantly blaming Facebook and the proliferation of its closed groups for providing a platform for these transactions.
The research specifically focused on how social media facilitates the sale and distribution of counterfeit goods and tried to understand to what extent transactions for counterfeit goods were moving online.
The research included interviews with Google, Facebook and Twitter, the tracking and assessment of alcohol, cigarettes, clothing, footwear, perfume and watches, a consumer survey of 3,000 adults aged 18 and above for the month of July 2015 and considered the impact on the markets overall looking at direct loss suffered by industry leaders as well as damage to reputation.
The report’s findings concluded that social media plays a significant role in facilitating counterfeit transactions. The summary from consumer data concluded that 17.5% of transactions on social media were found to be for counterfeit products and that communications within closed Facebook groups, (which are invite only and therefore much harder to monitor), were five times more suspect than the activity in open groups. The report notes such groups provide “relative safety” for counterfeit transactions and links are posted within the groups to payment sites to help secure the deal.
Importantly the study showed that 88% of those who transacted for counterfeit goods did so knowingly as opposed to being deceived. In the IPO Intelligence Hub survey response, it was identified that the majority of the British public perceived counterfeit goods as socially acceptable, being an affordable alternative.
The report is however limited in scope and use, being merely a snapshot within 2015. It also ran into difficulty trying to quantify lost revenue, noting the issues with drawing out confidential data from participating companies.
Criticism has been slung between both social media companies, government and industry. The social media players are naming the current legal process as fragmented. Such accusations mirror those of large internationals on tax affairs which state that they pay just as much tax as they are obliged to under law. Such a position is summarised by Peter Barron, Google’s European public affairs chief in 2016, stating: “Governments make tax law, the tax authorities independently enforce the law, and Google complies with the law.” Such a passive attitude is being applied by social media companies as a means to allow counterfeit sales, described by the report as “reactive-only…cumbersome takedown policies”, which are ultimately the rules laid out by government.
The report recommends education and awareness campaigns to inform consumers, which should prove useful in tackling complicit users. Whether the government wishes to take on this responsibility or compel the social media entities to do so, only time will tell. The report does however praise search engine Bing for its educational program on tackling counterfeit medicines.
Ultimately the report states that the facilitation of counterfeit transactions undermines industries’ brand protection and revenues, prevents government from collecting taxes and protecting jobs, the latter of which are usually transferred to China and Southeast Asia, and ensures the consumer is left with a lower quality product. Importantly, the report notes that social media companies may only become proactive once the issue affects their own profit, stating “online platforms are most likely to act against illicit activity on their sites if their own business interests (such as advertising) are under threat”. Until social media companies’ revenues take a hit, it’s unlikely their attitude will change.