US Urges ICANN And Global Governments To Tackle Online Counterfeit Goods

An agency of the US government has urged ICANN and global governments to do more to help prevent the proliferation of counterfeit goods online.

In a report from the Office of the United States Trade Representative (USTR), criticism is made of registrars that allow domain names to be registered and used in the distribution of unauthorised copyright-protected content.

Registrars were a new focus of this year’s report and it raises concerns on how the intellectual property rights enforcement system can break down when the tools available to rights holders become ineffective, due to, among other things, the failure of registrars or other similarly situated entities to follow rules intended to help combat illicit activity.

The report notes how the agreement between ICANN and registrars requires registrars taking action when notified of illicit activity occurring on a website whose domain name they have registered. But some registrars reportedly disobey court orders and other communications, including from government enforcement authorities while some registrars apparently even advertise to the online community that they will not take action against illicit activity. These entities reportedly refuse to abide by the rules that are designed to foster legitimate activity on the internet, and instead help to create an atmosphere of lawlessness that adversely affects others, often profoundly.

One respondent the report quotes identified several registrars that have apparently refused requests to lock or suspend domain names used to sell suspected counterfeit pharmaceuticals to consumers worldwide. While this conduct is a threat to brand owners, it also presents a public health challenge due to counterfeit drugs being made available, and requires a coordinated response by governments and a variety of private sector stakeholders.

The findings of the Special 301 Out-of-Cycle Review of Notorious Markets for 2014 report also highlights certain physical and online markets around the world that are reported to engage in and facilitate substantial copyright piracy and trademark counterfeiting that harms American businesses and undermines its workers. The report helps the United States and foreign governments to prioritise IPR enforcement that protects job-supporting innovation and creativity in the United States and around the world.

The report also refers to a 2012 report from the National Association of Boards of Pharmacy, an estimated 96 percent of online pharmacies targeting US consumers are operating in violation of applicable US law and standards.

The World Trade Organisation estimates 50 percent of websites worldwide that hide their physical address are selling illicit pharmaceuticals, including those labelled with counterfeit trademarks. The website reviewed over 40,000 online drug sellers, but found fewer than 400 to be legitimate. Studies have found that counterfeit anti-cancer, anti-HIV/AIDS, and other medications are not only ineffective, but in some cases may contain toxic or deadly adulterants, such as rat poison.

When internet users search for drugs they may be interested in, and sometimes cheaper sources, they are often led down a path of relatively few lawful sources amidst a sea of harmful ones. In addition to the public health and safety risks, there is also economic harm. Illegal online pharmaceutical sellers can generate significant revenues each month, diverting income from legitimate innovative and generic pharmaceutical manufacturers, and depriving governments of tax revenues from legitimate sales.

To help deal with the problem, the USTR says registrars can play a critical public safety role in the internet ecosystem. The USTR says ignoring that role, or acting affirmatively to facilitate public harm, is of great concern. The USTR is urging trading partner governments and ICANN to investigate and address this very serious problem.

The report also names 25 online marketplaces and 19 physical markets that are considered to be where counterfeit goods can be purchased online and lists country-by-country the problematic marketplaces.

Whilst the onus in this sits with the registrar community, the role of the brand holders cannot be ignored.  Robust, brand protection strategies ensure that organisations are not solely reliant on domain name registrars adhering to compliance requests, putting themselves on the front foot and ensuring they stay one step ahead of any threats to their reputation, revenues and customers.