27 Dec 2018
European Commission’s Directorate General for Trade publishes Counterfeit and Piracy Watch List
The Watch List specifically targets wide-spread counterfeiting and piracy at a commercial scale, in an effort to alleviate the high financial losses caused to European right-holders. It also aims to eliminate the link between counterfeits and risks to consumer welfare insofar as counterfeit products are subject to scant quality controls and certification protocols during manufacture. According to Commissioner for Trade Cecilia Malmström, “This Counterfeit and Piracy Watch List is part of our broader effort to ensure that European companies can operate on a level playing field when trading outside the EU’s borders and that EU consumers are safe”.
This move follows the Commission’s Communication on A balanced IP enforcement system responding to today’s societal challenges published on 29 November 2017 which includes specific actions in the fight against IP infringements in third countries. The actions undertook, among other matters, to prepare a Watch List of the most problematic online and physical markets situated outside the EU that are reported, via stakeholder consultations, to engage in or facilitate IPR infringements. Brand owners (of sports goods, automotive, luxury, fashion, footwear, electronics and cosmetics), brand associations, chambers of commerce, brand protection companies and associations fighting against counterfeiting, reported on both physical marketplaces and e-commerce platforms.
Hong Kong operators and traders should note that the Watch List neither constitutes an exhaustive list of reported marketplaces and service providers, nor an official finding of legal violations. Instead, the Commission services will update the Watch List every two years, monitoring the measures and actions taken by relevant domestic actors with respect to the listed marketplaces to curb IPR infringements.
This information will be used to continue the cooperation with EU trading partners in the framework of IPR Dialogues and working groups, enabling the exchange of information on multilateral and bilateral IPR enforcement-related issues in order to identify shortcomings and make proposals for improvement. In this context, the Commission already meets regularly with jurisdictions including Hong Kong, Taiwan, mainland China and Korea. Indeed, noting that many physical goods suspected of infringing IPR appear to originate from Hong Kong and mainland China, the Commission has established specific action plans on cooperation in customs enforcement of IPR with Hong Kong and mainland China. Further information specific to enforcement and protection of IPR in third countries is available in the Commission’s separate biennial Report on the protection and enforcement of IPRs in third countries published on 21 February 2018.
Hong Kong operators should further note that the Watch List only identifies marketplaces located outside the EU. Online marketplaces are considered to be located outside the EU for the purposes of the Watch List where their operator or owner is known or assumed to be resident outside the EU, irrespective of the residence of the domain name registry, registrar or hosting provider of the targeted country. The main criteria for the selection of online and physical marketplaces to be included in the Watch List are their reported widespread global or regional popularity and high volume of sales. Marketplaces visited from the EU, and those visited only from third countries but which harm EU right-holders and EU trade with those countries are taken into account.
The Watch List is divided into four “focus areas” in terms of the different marketplaces and types of service providers common to each. In the first focus area – online marketplaces offering copyright-protected content – the Commission identifies problematic services including: (i) cyberlockers – i.e., cloud storage and sharing services enabling users to upload, store and share content on centralised online servers; (ii) stream-ripping websites, allowing users to convert and download content from streaming platforms; (iii) linking or referrer websites, which aggregate and index links to content stored on hosting websites, and (iv) peer-to-peer indexing websites, where users are able to share content via peer-to-peer technology.
In terms of the second focus area – e-commerce platforms – the Watch List specifically targets the sale of counterfeit goods over the internet, identifying platforms with high volumes of traffic and low levels of detection or removal mechanisms for counterfeit products. The third focus area looks at e-commerce platforms in more detail, dealing specifically with online pharmacies and service providers facilitating the sale of medicines, with the final focus area dedicated to the trade of counterfeit and pirated goods in physical marketplaces.
Within the above-mentioned focus areas, the majority of physical marketplaces and e-commerce marketplaces were reported to operate from mainland China or South East Asian countries. This finding is consistent with the Commission’s 2018 Report on the protection and enforcement of IPRs in third countries, in which mainland China is identified as the number one so-called “priority country” in terms of the state of its IPR protection and enforcement.
With over 80% of counterfeit and pirated goods seized in the European Union originating in mainland China or Hong Kong, Hong Kong operators should be aware that the Commission has raised particular concerns with respect to copyright piracy and counterfeit pharmaceuticals in these jurisdictions.