IP Infringement: Managing The Costly Impact On The Luxury Goods Industry

Posted by Crisp on

IP Infringement - managing the costly impact on the luxury goods industry-1.jpgIn previous years intellectual property infringements in an offline world were arguably a more manageable issue to detect and police. Internal legal teams and law firms, working with custom officers, were tasked with enforcing the protection of a brand’s IP when looking for the illegal use of a company name, brand name or trademark.

In the digital age however, the rapid growth of counterfeit trade online - driven by easy access to an audience of billions – has caused myriad of new risks for luxury brands. Earlier this year, a report by the Organization for Economic Co-operation and Development on global trade in counterfeit and pirated goods revealed some startling facts about how risks are escalating.

The report analyzed 500,000 seizures around the world between 2011 and 2013 and concluded counterfeit goods are worth 2.5% of global trade, including 5% of imported goods into Europe. China, Russia, Malaysia, Indonesia and Ukraine were identified as the top countries were traders were based. 

Key findings from the report concluded that:

  • Almost 20% of 750,000 social media posts about top fashion brands featured counterfeit and/or illicit products;
  • Digital marketing techniques were being employed by traders to engage with a wider audience online, including messenger apps like Telegram or Whatsapp, which provide end-to-end encryption; and
  • Fake social media and messaging accounts (or spam-bots), are being broadly used to deploy botnets to bypass internal security systems, and give traders the ability to post thousands of images daily.

Assessing The Impact And The Financial Loss

Despite the fact luxury brands generally perform well in today’s economic climate, IP Infringements do have a significant impact on their financial performance. Illicit trade continues to plague the sector, costing European clothing and accessories companies an estimated €26.3 billion according to The European Union Intellectual Property Office (EUIPO) – just under a tenth of their sales.

Luxury brands are however starting to fight back. Calvin Klein, Chanel and Alexander Wang have all recently lodged court action against manufacturers illegally copying their brands; and Christian Dior is the most recent company to fight the counterfeiters in court.

Brands are also seeking extensive action against counterfeiters, including injunctive relief for the websites to cease trading and an order that other online marketplaces will cease relations with the counterfeiters involved. Dior is also seeking around $6M in statutory damages for trademark infringement and an additional $100,000 for each domain name counterfeiters used to sell the fake goods.

How To Protect Your Luxury Brand From Social Media Risks

General Counsels, brand protection and anti-counterfeit teams working in luxury are becoming increasingly overwhelmed with the volumes of counterfeit products detected. Not only is the cost of detection increasing, but so too is the resource required to investigate and implement takedown procedures.

Luxury brands need to act quickly to identify fake counterfeit sites within minutes and take down any mentions that appear on their social media channels. However, problem is this solution is extremely resource intensive and inefficient when managed within an internal team.  

Crisp works with some of the world’s leading luxury brands in the business today to tackle this problem head on. Working through our dedicated team of expert moderators and our leading edge technology, we quickly and accurately remove any mentions or links to counterfeit sites on our clients’ owned social media channels. We also monitor the wider web for our clients for any new and continuing risks.  

By doing this, we help brands to prioritize issues by making it easier to spot fake sellers and allowing luxury brands to handle any PR crisis as it happens in real time.

To find out more about Crisp and about other risks we protect luxury brands from, click on the link below to talk to one our social media risk experts today.

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Written by Crisp

Crisp’s mission is to provide the fastest detection of critical issues and crises to protect global brands and platforms. From supporting PRs in reputational management and helping pharma brands to remain compliant, to protecting vulnerable individuals from the exploitation of bad actors... wherever social media has the potential to trigger a crisis, you can be sure we have expertise to share.

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