PTO, Officials Address E-Commerce Counterfeit Explosion

Sharing data to prevent the sale of counterfeit goods online should be a voluntary practice so companies can protect trade secrets, said Patent and Trademark Office Attorney-Adviser Jennifer Blank Thursday. Industry officials warned against stringent regulation that could give e-Commerce giants like Amazon an unfair advantage.

All trade secrets and any other kind of intellectual property "have to be shared in a manner that is voluntary, that is protected, that is appropriate to the purpose,” said Blank on a Center for Data Innovation webinar Thursday. “You certainly aren’t going to get much voluntary cooperation if companies feel they are going to damage themselves in their cooperation.” There are ways to share data without damaging IP or trade secrets, she said.

U.S. Council for International Business members very much value commercial data and protecting trade secrets, said Megan Giblin, USCIB director-customs and trade facilitation, agreeing voluntary sharing is the correct approach. She noted there are different motivations for industry-to-government sharing and industry-to-industry sharing. Members support data sharing for law enforcement purposes, if guardrails ensure the data is used for intended purposes, she said.

The internet is creating a “perfect storm” for counterfeiting due to the rise of online shopping during the COVID-19 pandemic, said North Carolina Secretary of State Elaine Marshall. An important role for government is education, she said, noting her experiences with consumers who are unaware they have been buying useless medicine from phony online pharmacies. As with cybersecurity, combating counterfeit goods is a “race without a finish,” said Marshall.

Proactive, industry-driven, public-private partnership is the right approach, said Global Innovation Policy Center Senior Vice President Patrick Kilbride. He warned against overly prescriptive approaches from government stepping in and trying to manage industry problems. Privacy regulation, for example, has had an impact on investment and innovation, he said. It’s important to remember the economic benefits of innovation, Kilbride said: The benefits of e-commerce far outweigh the costs associated with counterfeiting. But he warned industry that if companies aren’t proactive, government will step in.

It’s important to reward and incentivize good actors who proactively pursue voluntary best practices, said Piotr Stryszowski, Organisation for Economic Co-operation and Development senior economist. But there must be a combination of voluntary and mandatory standards, he said. He agreed with Blank about the need for voluntary data-sharing. There's a cost to sharing, and companies should ask themselves if they can incur that cost, he said.

No one-size-fits-all solution can address problems globally, said Blank. Standards that Amazon can implement voluntarily aren’t the same as those a smaller entity trying to break into the market can follow. Solutions can’t be something that prevent startups from developing an “honest business,” she said. There's tremendous benefit to voluntary standards, but the issue is bad actors who “won’t come to the table,” she said. Some combination of mandatory and voluntary best practices, as seen in the Department of Homeland Security’s 2020 report on counterfeiting, is a good approach, she said. She agreed with Marshall about the need for education, saying informing consumers how to purchase wisely may shrink the market for fake products.