Huge growth in online sales of fakes and online dumping of branded goods
During the pandemic, React’s main aims were to protect the legitimate online trade, disclose online supply chains and take effective measures jointly with platforms and other ISP’s. Furthermore, to provide as much support as possible to our members to enable the continued support of customs – and police enforcement activities despite budgetary constraints.
The first goal required the development of a strong intelligence team with great expertise on the coordination level and local experts in each region. A development, which we had already begun but had to be greatly accelerated throughout the year.
React’s philosophy currently is that an efficient online enforcement program relies mostly on skilled staff and understanding of the brand, the needs of the rights owner, the online enforcement options, local laws, the local enforcement infrastructure and enhanced intelligence processing using open sources expertly. This is combined with legal expertise to ensure the cooperation of ISP’s and/or law enforcement and is the best guarantee for a successful online enforcement program. Adequate and state of the art software is important but cannot do the job of competent human analysis.
To achieve the second goal, a continuous support from law enforcement in their anti-counterfeiting actions, React created a support program for those industries heavily affected by the pandemic and also confronted with budgetary constraints. The following up of notifications by customs officers were supported by React colleagues at heavily discounted rates. In this way React managed to keep the rate of customs enforcement at a high level and ensuring the long-term cooperation of officials.
Developments In REACT Enforcement Services In 2020:
REACT (online) E-Programme
In 2020 React improved our global network of online inspectors to meet the growing demand in online enforcement services. Currently we have monitoring teams in Macedonia (global team) and regionally operated teams in China, Vietnam, India, Russia and Brazil. The teams utilise our own React developed software but also software from other service providers and many specific non-React tools. React encourages the use of different types of software depending on the needs of the brands.
In the past year we noticed that major global platforms enhanced their supporting programs for rights owners effectively. Due to accelerated growth in online trade, the total number of detected infringements actually grew in 2020.
Next to that, there was a vast increase on infringement detection on local/national platforms, social media and standalone websites. The React teams investigating subsequently expanded their monitoring scope to include many local platforms and social media all over the world, notably in India, China and on the African continent.
This required an increased demand for intelligence processing in order to disclose clusters and supply chains. React online enforcement strategies moved from simply take downs to a combination of take downs, researching supply chains and suggesting targets for future investigation.
The Intelligence processing teams were introduced in 2017. In the past year we enhanced our network of intelligence units globally to upgrade the reporting reach and be able to investigate suppliers and traders quickly and effectively wherever the trade is taking place. Our global network exists to link incidents and identify supply chains and sources and is indeed a unique asset of React.
The investigations have become far more technically proficient; using enhanced OSINT tools and for example becoming acquainted with malicious scripts in webpages and SSL certification and verification.. This has resulted in a high number of major cases whereby large quantities of fake products could be seized.
Furthermore, we decided to appoint and train specific Local intelligence Officers (LIOs) in each React office, in order to assist the Online Teams on personalized projects for our members. React, now have at least one LIO in each office who is in charge of online research and can then escalate targets concerning future enforcement opportunities offline via such methodologies as C&D letters, test purchases and raids whenever a promising target is identified.
This takes the burden off the Online Teams and also guarantees better assistance to our members, owing to a stronger understanding of local laws and practices. The experience with the LIOs has really benefited our individual offices, enabling us to define smooth procedures and a swift handling of cases from online to offline, obtaining extremely positive cooperation from the local law enforcement authorities and ultimately speedier resolution for our members.
An essential link in the enforcement process to manage fraud incidents, is the collection of evidence. The physical securing of infringing items was a key element behind React’s strategy to develop the intelligence units. During 2020, we managed to improve our facilities to make covert test buys possible anywhere in the world.
By setting up new accounts, expanding payment facilities, undercover companies, and making optimal use of our network opportunities (including those in Africa and Eurasia countries), we have developed a very professional service which is being used not only for anti-counterfeiting strategies, but also to detect undesired parallel importation, the illegal sales of medicines and traditional fraudscam/purchases. On top, we see an increased demand from members not only to buy physical items but also digital items and items of a technical nature (IPTV/Gaming credits). The move towards digital items is certainly a trend observed throughout 2020.
Compliance of ISP’s
React prepared a guideline, a roadmap for a conscious ISP in 2020. At our Asia annual meeting, we awarded certificates of recognition to ISP’s complying with the fundamentals of the roadmap. Furthermore, we reach out to ISP’s individually (particularly the newcomers) to discuss how to achieve these standards which are in our view reasonable, proportional and which will provide rights owners appropriate tools to protect their IP assets.
Our international network and governmental as well as nongovernmental contacts have been used to enhance the cooperation with the platforms and social media platforms. With the goal to accomplish a better cooperation with those platforms, React joined the EU MoU on the sale of counterfeit goods on the internet.
Next to the strategy of positive recognition of accomplishments, React will not hesitate to point out the legal obligations and liabilities of ISP’s to protect IPR. Consistent bad practices/breaches will be taken to Court, either jointly with interested members or through a class action. In 2020, we have examined our options to initiate class actions in this respect. A first action to demand the disclosure of account holders information from sellers of counterfeited goods on behalf of multiple brands (in the name of React) has been initiated and feedback was positive.
The React legal team has developed specialist knowledge on all the principal anti-counterfeiting procedures, including customs protection, civil/criminal and online enforcement. The domain name enforcement procedures (UDRP’s) were all concluded successfully in 2020.
The React legal team was expanded in 2020 to meet the growing demand of questions with regard to ISP rights and obligations, domain name procedures, other online issues like scam and phishing, c&d campaigns and the preparation of civil proceedings including the class actions in Europe.
Furthermore, we introduced a specialised team to coordinate all the customs recordals worldwide. In this way we enable rights owners to apply for customs protection anywhere in the world in the most efficient and cost-effective manner.
REACT OFFLINE ENFORCEMENT
React Market Surveys & Enforcement
In 2020, plans were in place to organise market surveys globally. The pandemic obviously frustrated these plans. However, React still pursued aggressively where possible and in some Asian countries and also a few European React managed to perform several market surveys.
Geographical Expansion Of Customs Recordals
React has a clear goal to offer customs protection for its members wherever in the world there is a formal or informal procedure to apply for protection at the borders against the importation of IP infringing products. In 2020, the geographical scope was again expanded.
Cambodia: No formal recordation procedure but the rights owner can record exclusive right of distributorship with the Department of IPR’s
Bangladesh: Formal recordation procedure was put in place.
Uzbekistan & Kyrgyzstan: React successfully completed the first customs recordals in those countries.
Kazakhstan: A previous serious obstacle in the Kazakh customs recordation procedure was having to provide evidence of the import of counterfeited goods. This formality was cancelled in 2020 which is a great improvement.
Although there are no formal customs enforcement systems in place, React managed to informally involve customs official regarding the protection against IP infringements in Zambia, Mozambique, Uganda and Tanzania, by addressing the issues directly with the Police, Bureau of Standards, Ant-Counterfeiting Authority and Fair Competition Commission.
United States React activities with US customs have increased significantly last year. The US customs enforcement is a most IP friendly system and with the support of React cases can be managed with the highest efficiency.
Canada: Canada introduced customs enforcement a few years ago. Over the past year we have observed positive results at the Canadian border.
REACT NETWORK CHANGES
New partners were introduced in the React network in 2020.
Brand MO Ltd
IP Mark Asia Law firm
Kestenberg Siegal Lipkus LLP
Eldip & co
React started the year as a co-owner of DWZ, a social workplace to recycle fake goods, together with a recycling company and a psychiatric institution. The two latter organisations preferred to give up their shares and transfer those to React making React the sole owner of DWZ.
Throughout the year, the demand for services of DWZ increased significantly resulting in a positive financial year after all.
Medium Sized Status for accountancy control
Since React met the criteria for a medium sized company in both 2019 and 2020 with assets on the balance of > 6 mln Euro; revenues > 12 mln Euro and > 50 employees, the accountancy control will be intensified and made more formal.
Members which have joined React in 2020 are:
BioNTech, Groasis, Payoneer, Alliance Against Counterfeit Spirits, Allergan, VOODOO
Gymshark, RELX Technology, Who Gives a Crap, 3M, Beiersdorf, UWELL, Wanshengda Poker Co Ltd., IVECO, Minotti, Huawei, Mahle International GmbH, Birkenstock, Parsons Xtreme Golf, Thermofisher