SUCCESS STORIES: BRAND AND PLATFORMS … allowing employees to be brand ambassadors Inform and educate customers on how to use our IP: Proper use Guidelines, warning letters, etc.

SUCCESS STORIES: BRAND AND PLATFORMS FIGHTING ONLINE COUNTERFEIT SALES TOGETHER

Leo Longauer, Director Global IP Enforcement, Swarovski AG

Corporate Legal Intellectual PropertyPage 2

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ONLINE COUNTERFEIT: THE ISSUE IS GROWING

Rise of the Brand & Rise of China

Globalization & Rise of the Middle Class and cheap Manufacturing possibilities in Developing Markets

Rise of the Internet:

Internet reaches more and more countries and people: 40% of the population worldwide, 3 bn people in 2015 (75% in Europe, 65% in Americas, 32% in Asia, 20% in Africa)

Counterfeit economy growing 25% year on year (estimated $ 600 bn annually, $ 350 bn online)

Anonymity for counterfeiters and other bad guys

Huge amount of cheap internet “real estate” and expanding channels from which to host illegal businesses: websites, marketplaces, social media, apps, emails: Low cost sales, marketing, and distribution for counterfeiters

Internet Service Providers’ (ISPs) incentives are at best mixed (they make money from hosting counterfeiters & have limited liability)

Mail order counterfeits largely avoid border and Customs controls (2014: 95’000 shipments detained by EU Customs)

Scope is expanding: everything is sold via Internet: apparel, luxury, pharma, auto parts, aviation, electronics, food, toys, etc.

Increased professionalization: counterfeit is often linked to organized crime using advanced technology such as search engine optimization and marketing tactics

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IMPACT OF COUNTERFEITS

Negative impact of counterfeits:

Lost revenue (estimated 10% of manufacturing revenue worldwide)

Increased return, warranty and customer service costs

Brand damage (consumers often blame the brand owner)

Strained channel relationships

Diverted web traffic and increased SEO costs

Desirability of top brands, the existence of the brand premium,asymmetry of manufacturing costs, globalization, and the internet

all fuel the counterfeit business model

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COUNTERFEIT IMPACT IN THE JEWELLERY AND WATCH INDUSTRY IN THE

EUROPEAN UNION *

* The economic cost of IPR infringements in Jewellery and watches: EUIPO report 2/2016:

https://euipo.europa.eu/ohimportal/en/web/observatory/ipr_infringement_jewellery_and_watches

13.5% of sales lost by the sector due to Counterfeiting

€1.9 billion of revenue lost annually by the sector

Additional €1.6 billion of sales lost in related sectors

15 000 direct jobs lost

28 500 direct and indirect jobs lost

€600 million of government revenue lost (social contributions and taxes)

Italy is the largest producer of Jewellery in the EU with production of €5 billion each year, the Jewellery and watches manufacturing sector in Italy loses approx. €400 million every year due to counterfeiting

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FAKE WEBSITE: www.swarovskioutletaustria.com

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FAKE WEBSITE: www.swarovskifrance.com

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FAKE WEBSITE: www.swarovskis.co.uk

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MARKETPLACE INFRINGEMENTS

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SOCIAL MEDIA INFRINGEMENTS

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INTERNET MONITORING AS PART OF ENHANCED IP ENFORCEMENT

Raising IP awareness in

Swarovski, allowing

employees to be brand

ambassadors

Inform and educate

customers on how to use our IP: Proper use

Guidelines, warning letters,

etc.

Legal actions: Cease & Desist letters, seizures and raids, civil, administrative and criminal

actions, contract termination

Monitoring third party trademark

filings and domain names:

oppositions cancellations, trademark gap

fill filings

Regular business

updates and communication

about enforcement

cases and strategy

Internet monitoring and enforcement re illicit use of our IP on websites, marketplaces, social media

EDUCATION &COMMUNCIATION

LEGAL ACTION

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RISK OF IGNORING THE ISSUE

Lost revenues (estimated 10% of manufacturing revenue

worldwide)

Increased return, warranty and customer service costs

Brand damage (consumers often blame the brand owner)

Strained channel relationships

Diverted web traffic and increased SEO costs

Resource-intensive: both in-house capabilities and outsourced solutions

Retaliation/Back-fire: negative brand image if too aggressive approach to brand protection (social media

campaigns)

Loss of trust from ISPs and Marketplaces

Damaged to client/channel relationship

RISK OF OVER-ENFORCEMENT

IP ENFORCEMENT IS A BALANCING ACT

LEGAL BUSINESS

• By IP team, using agent• By staff send email to

[email protected]• By customer or general public

contact customer service or local KAM

Input/Detection Assessment

By IP team, according to agreed set of criteria and risk level, taking the client relationship and local situation into account.

Action

• Misuse or infringement by customer B2B solution is preferred (IP supports)

• Misuse or infringement by non-customer IP team to handle

Pre-enforcement warning

Known customers are whitelisted & informed about PuG, incl. deadline to correct their branding and to prevent enforcement actions

For marketplaces: whenever possible, active communication of PuGs to all sellers (incl. indirect customers) to correct their branding and to prevent enforcement actions

PuGinfo

INTERNET ENFORCEMENT: IMPLEMENTING THE “EDUCATE FIRST” APPROACH

mailto:[email protected]

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ONLINE COUNTERFEIT: MAIN CHALLENGES*

Anonymity of infringer whack-a-mole dilemma

Huge Volumes, short deadlines “Industrial” enforcement solution needed

Growing number of channels: Websites, social media, marketplaces, apps, sms, etc.

Civil, criminal, admin measures available, but not top priority of law enforcement authorities

Usually multi-national cases difficult enforcement of foreign judgments

No international arbitration mechanism

* WIPO/ACE/12/9 Rev. 2: Advisory Committee on Enforcement: Study on Approaches to Online Trademark

Infringements; Dr. Frederick Mostert.

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ONLINE COUNTERFEIT: TYPES OF ACTIONS

Voluntary measures of online intermediaries: Notice and take-down procedures

Notice and stay-down procedures

Notice and Disclosure procedures

Advertising code of conduct

Constructive collaboration

Limitations: Freedom of speech

Lawful competition

Privacy/Data Protection

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EXAMPLE OF GOOD COLLABORATION: ALIBABA

In addition to take down procedures, we collaborate in the following fields:

Test-buy project: Alibaba uses data mining techniques to determine best products for test-purchase.

Seller education: Fair-Use-Guidelines sent to all Swarovski-sellers.

Alibaba-education: Train Alibaba staff to enhance identification of counterfeit goods.

On-To-Offline cases (O2O): Using data mining techniques to select targets, collaboration with PSB for criminal actions.

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Test-buy project: We provide list of suspected counterfeits, Alibaba uses data mining techniquesto determine best products for test-purchases:

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Seller education: Fair-Use-Guidelines sent to all Swarovski-sellers & specific educational website.

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Alibaba-education: Train Alibaba staff to enhance identification of counterfeit goods.

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On-To-Offline cases (O2O): Collaboration to detect counterfeiters and file PSB actions.

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ENFORCEMENT WORKS!

SUCCESS STORIES: BRAND AND PLATFORMS … allowing employees to be brand ambassadors Inform and educate customers on how to use our IP: Proper use Guidelines, warning letters, etc.

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