Tag: counterfeits

Counterfeits, Copyrights, and Digital Dysfunction

Now that the holiday shopping season is officially underway, it seems like a good time to talk about counterfeit products; and it may surprise some readers to know that consumers have almost no meaningful protection against the tens of thousands of counterfeiters operating online.  At best, a counterfeit product will merely be disappointing; at worst, it will set the house on fire or maim someone; but a recent copyright lawsuit filed against the service provider CloudFlare demonstrates just how insufficient the mechanisms for addressing this problem really are.  

Though the subject of this litigation is wedding dresses and other formalwear, keep in mind that it can just as easily be a product that plugs in, a medical device, or a child’s toy with toxic properties. 

Mon Cheri Bridals and Maggie Sottero Designs are suing CloudFlare for contributory copyright infringement pursuant to the platform’s failure to comply with the terms of the DMCA.  As designer/manufacturers of bridal and formalwear, the plaintiffs see their works copied all the time by China-based counterfeiters, who then sell the knockoffs via websites featuring the plaintiffs’ own marketing photographs.  

The photographs are copyrighted works, and so the plaintiffs have filed hundreds of DMCA takedown notices requesting removal of their images from the various sites engaged in marketing counterfeits of their products.  Then, because the target sites have–not surprisingly–refused to remove the photographs, plaintiffs allege that this makes them “repeat infringers,” which then implicates CloudFlare’s obligation under DMCA to terminate their accounts.  Because CloudFlare has not taken action to terminate these accounts, plaintiffs allege the platform is liable for contributory infringement.

CloudFlare is already a deeply problematic service provider—a prime example of everything wrong with the kind of internet idealism that has for too long tolerated (and even celebrated) companies that hold themselves above the law while protecting the identities and maintaining the operations of criminal enterprises.  As a favorite provider of anonymous hosting for major pirate sites like ThePirateBay, CloudFlare is probably only still in business because, as Devlin Hartline notes in this 2016 post, “the DMCA is such a mess.”  “Courts have set the bar so high that CloudFlare wouldn’t likely be found to have red flag knowledge of the massive amounts of infringement it certainly knows its service enables for globally-infamous criminal infringers…,” Hartline writes.

It’s bad enough for creators that the DMCA is woefully inadequate for mitigating online infringement where copyrighted works are the central subject of a complaint.  But in this case for Mon Cheri and Sottereo, the copyright infringement is, of course, ancillary to the larger crime of counterfeiting; and it is truly unfortunate that the DMCA is the plaintiffs’ best—let alone only—means of targeting these foreign-based websites used to hijack their enterprises and defraud consumers.

While the plaintiffs are certainly correct that their marketing photographs are protected by copyright and the counterfeiters’ infringing uses are properly the subject of DMCA, both legitimate product-makers and consumers deserve a more robust mechanism for protection from this kind of online predation.  

If your kid wound up playing with a toy that scalded her (or worse), you’d want the counterfeit website selling that product to be shut down.  End of discussion.  And the American-based hosting provider shrugging at you while taking the counterfeiters’ money would provoke a justifiable pitchfork-and-torch moment for parents everywhere.  The fact that the counterfeiters also happened to be infringing the photographic marketing materials of the real manufacturers would reasonably be viewed as secondary to the fact that consumers ended up with dangerous products in their homes.  And DMCA is no way to address that problem.

The DMCA is in serious need of overhaul, if it is ever going to meaningfully address online copyright infringement.  But a matter of even greater urgency is perhaps new legislation that can provide legitimate businesses with a reliable and expeditious means of shutting down websites that intentionally traffic in counterfeit goods.

On this topic, readers may not remember that the SOPA/PIPA bills included provisions designed to keep counterfeit products out of the military supply chain (so soldiers wouldn’t end up wearing fake kevlar or something);  and that proposed legislation still remains every fool’s battle cry for defending the alleged sovereignty of “the internet.”  Of course, “the internet” is not even a weak sovereign.  If you end up with a foreign-made, counterfeit product that rips you off or kills someone, the service provider that helped you buy that product is free to KNOWINGLY continue hosting the fraudulent website and respond with a smug grin while he cashes the counterfeiter’s check.   

As any regular reader knows, I have never understood believing the premise that the major internet companies are squarely on the side of the angels—that Facebook is an unqualified good for democracy, that YouTube is an unqualified good for artists, or that Amazon is an unqualified good for all commerce, etc.  Yet, despite mounting evidence that such generalizations are far from accurate, we are presently watching yet another variation of the anti-SOPA campaign play out in Europe over the proposed Article 13 legislation to mitigate copyright infringement on major platforms like YouTube.  As Neil Turkewitz writes in a recent post on the topic …

“They have enjoyed the freedom of wolves without regard to the safety of sheep, and are naturally opposed to the restraints imposed by fences. But our interdependence makes fences essential for the functioning of democratic societies. By eliminating fear, we create freedom and enable the pursuit of happiness.”

The time to correct this level of dysfunction is long past due.  Both of the current liability shields protecting online service providers—as established in Section 230 of the CDA and in Section 512 of the DMCA—were based on an assumption of good faith and good-samaritan behavior.  But CloudFlare is just one extreme example that demonstrates why this expectation of good faith is, and always was, utter folly.  Limiting the liability of these companies has made them arrogant, predatory, and ominously powerful with the amount of wealth and information they wield.  If there is profit to be found within legal loopholes, it is the rare exceptions whose personal ethics will forego such an opportunity.  It is time to start writing internet policy based on the rule rather than the exception.

See also Consumer Guide to Counterfeit and Copyright-Infrigement Free Holiday Shopping from Copyright Alliance.

IP Skeptic Doctorow Notices a Problem

Last week, Cory Doctorow reported on Boing Boing that Amazon has a growing counterfeit products problem on its hands due to a change in company policy that allows Chinese suppliers to sell direct on the platform, bypassing domestic importers. If accurate, the issue itself is not very surprising. What is surprising is that Doctorow does not acknowledge—at least not in this article—that the counterfeit outbreak he describes is an inevitable result of the anti-IP agenda he has personally supported for years.

At some point, one must toss that copy of The Declaration of the Independence of Cyberspace into the digital dumpster and accept that the internet is not a magical cornucopia whose bounty will flow only so long as it operates beyond the legal limits of the physical world. To the contrary, the virtual increasingly has significant influence on the tangible. Doctorow describes the following:

“In late 2015, there were a spate of warnings about knockoff sex toys on Amazon made from toxic materials that you really didn’t want to stick inside your body. Now this has metastasized into every Amazon category. Sometimes its clothes and other goods that have weird sizing, colors, or poor construction. Sometimes its goods that generate no complaints, but are priced so low that the legit manufacturers can’t compete, and end up pulling out of Amazon or going bust.

Or it can be the worst of both worlds: super-cheap goods that make it impossible for legit manufacturers to compete, coupled with low-quality knockoffs that generate strings of one-star reviews from pissed off customers, meaning that even if the fakes were chased off the service, the sales will never come back.”

Sound familiar? Doctorow observes that Amazon is making money on transactions that may defraud—or even endanger—consumers while simultaneously causing permanent economic harm to legitimate suppliers. Isn’t that what many of us have been saying would happen when IP rights are not enforced online—that the “free culture” fiesta would extend beyond the supposed “harmlessness” of media piracy and eventually manifest as physical goods that can maim, poison, or kill people? Or at least just rip them off?

Unfortunately, the broader battle over IP protection on internet platforms has been distorted by a naive belief in the harmlessness of pirating entertainment media and the assumption that IP only serves the big conglomerates who produce those works. This feeds a sense that IP in general is just a “protectionist” regime for entrenched corporations to slow innovation. When it comes to physical goods, though, suddenly people begin to notice that protecting IP happens to protect consumers. This is why for instance trademark infringement is not a minor transgression. The knock-off Polo shirt won’t get anyone killed, but the knock-off Graco car seat certainly could; and when one distribution service like Amazon is vying to be the “Everything Store,” the possibility for widespread hazard becomes clear.

Presumably, Amazon will recognize the potential loss of consumer confidence if their counterfeit problem grows. The company could take mitigating measures akin to the effective, anti-fraud practices employed by eBay, which weighed heavily in its favor in a 2002 litigation with Tiffany over fraudulent products being sold on that platform. That Doctorow writes the following, however, is the real hypocrisy that needs to be addressed:

“Amazon is bending over backwards to refund customers who get bad fakes, but either can’t or won’t stem the tide of fakes themselves (I run into counterfeit editions of my books on Amazon all the time). It may be that it’s more profitable to offer refunds to customers who get bad products than it is to police the millions of SKUs that are pouring in now that Chinese industry has a direct pipeline to Amazon’s customers.”

Doctorow is criticizing Amazon for tackling the counterfeit problem one infringement at a time while failing to take broader measures to “police” its own platform to “stem the tide.” Is that not a familiar refrain copyright holders have been singing about mass infringement of their works on platforms like YouTube? I think it is. Either these platforms are under the control of their owners or they’re not. Either we want a digital market that protects suppliers and consumers, or we don’t. And we can’t have the former without shedding this naive premise that the technology itself obviates the need for intellectual property enforcement, or that IP is exclusively a barrier to access, information, or innovative services.

This subject actually refers back to the first article I wrote about any of these issues—one that appeared in December 2011 in Stars & Stripes supporting SOPA/PIPA because of their associated provisions designed to mitigate counterfeit products entering the military supply chain. You remember SOPA, right? Certainly, the cadre of “digital rights” activists won’t let you forget it as they chronically insist that all proposals to protect any kind of IP online are basically SOPA in disguise. (See Guide to Critiquing Copyright in the Digital Age).

Likely, nobody remembers that Tittle II of SOPA contained anti-counterfeiting provisions as did a companion bill to PIPA called the Combatting Military Counterfeits Act, authored by Sheldon Whitehouse (D-RI). These provisions and proposed amendments would not be protecting US consumers from Amazon-purchased counterfeits more than the existing statutes (Title 18) already do, but the bills did go further to protect against certain types of counterfeiting, and both bills expanded the principle that trafficking in counterfeits online poses a serious threat to consumer safety.

As Doctorow’s observations forecast, someone’s eventually going to get hurt. And unfortunately, that’s often what it takes for people to demand any kind of action. Or we could change the conversation before that happens.