Trademark Owners and Internet Platforms Decide They Are Stronger Together Than Apart

Following several years of negotiations and stakeholders' dialogues, over 30 trademark owners, Internet platforms, and trade associations signed a Memorandum of Understanding (MOU) on May 4 in Brussels to fight the sale of counterfeit goods online. Signatories include Amazon, Nike, Microsoft, Burberry, eBay, and Louis Vuitton. This voluntary agreement placed a year-long moratorium on any new litigation "concerning matters covered by" the MOU to facilitate cooperation between the right-holders and major Internet platforms in fighting online sales of counterfeit goods in the European Union.

Key Provisions of the European MOU

The main goals of the MOU are to "establish a code of practice" in the fight of online sales of counterfeit goods, as well as "set an example" for other trademark owners and Internet platforms not yet signatories to the MOU. Much of the MOU is dedicated to the Notice and Take-Down (NTD) procedures. The Internet platforms committed to offer "efficient and effective NTD" actions. Specifically, the Internet platforms promised to make the NTD procedures simple to subscribe to and limited to necessary information, such as the name of the reporting party and clear identification of the violating Internet listing. Additionally, the Internet platforms said they would deal with the incoming NTDs in a comprehensive and timely manner, so as to avoid any unreasonable delays that may hurt the trademark owners and consumers. In turn, the trademark owners agreed to avoid "unjustified, unfounded, and abusive" NTDs.

The MOU provisions also cover preventive measures that both the Internet platforms and trademark owners commit to undertake. The stakeholders will work with the Internet platforms to inform them about products "particularly susceptible" to counterfeiting activity, including items that are non-existent in the mark owner's product line but have been specifically developed by counterfeiters, as well as a list of keywords routinely used to sell counterfeit goods online.

The Internet platforms have committed to facilitate legal actions and investigations against individual sellers of counterfeit goods by providing, upon request, contact information and names of individual sellers. Additionally, the MOU requires the Internet platforms to address the issue of repeat offenders by suspending and restricting accounts of sellers distributing infringing goods, as well as preventing re-registration of repeat violators whose accounts have been permanently suspended.

Twelve-Month Probation: Will It Work?

The MOU, signed on May 4, 2011, in Brussels, provides for an "assessment period" of 12 months, during which the signatories agreed to a moratorium on all new litigation concerning the matters covered by the MOU, i.e., the sale of counterfeit goods. At the end of the "assessment period," the European Commission, upon consultations with the signatories, will decide on the effectiveness of the MOU in curbing online counterfeiting activities in the European Union, as well as provide recommendations for the future.

The MOU addresses many of the key issues that have been aggressively debated and litigated between the signatories in different countries, including the United States and European Union. The courts in different jurisdictions often have not been consistent in their approach to the NTD procedures, the Internet platforms' obligations to monitor counterfeiting activity on their Web sites, and who should bear the burden of policing cyberspace for counterfeits.

The MOU is a concerted effort on the part of both right-holders and Internet platforms to find a unified solution to a problem that ultimately hurts everyone's bottom line. Significantly, the MOU may signal a transition of the counterfeit battlefront from the courtrooms to negotiation tables. Indeed, at least several industries have been successfully relying on self-regulation to resolve disputes and protect consumers. For example, the advertising industry in the United States for 40 years has heavily relied on self-regulation in resolution of advertising disputes and protecting the public from deceiving advertising practices through the National Advertising Review Board (NARB) and the National Advertising Division (NAD). While the NAD/NARB decisions are not legally binding, non-compliance is a rare occurrence. In fact, both the courts and the Federal Trade Commission have given significant deference to the NAD/NARB decisions.

While the European MOU, as it currently stands, is not legally binding and "is not to be used as, or form part of, evidence in any legal proceedings," it has the potential of eventually evolving into a global code of conduct or best practice, non-compliance which will fall on unsympathetic ears of both the courts and government agencies. With an optimistic eye toward the future, the MOU's concluding provision states that the "signatories may prolong this MOU for an indefinite period" following the initial 12-month assessment.

Reprinted with permission from the IP Litigator, published by Aspen Law and Business. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.