Alibaba's Tmall Luxury Pavilion is an invite-only e-commerce platform for luxury brands. Though consumers have comfortably shifted to online shopping, many luxury brands have been hesitant to venture into e-commerce, concerned about selling their products alongside brands whose image and quality of goods are not of the same caliber. Though Alibaba's Tmall Luxury Pavilion where “luxury brands can deliver the same kind of exclusivity and custom-tailored shopping experience online as they offer in their brick-and-mortar stores,” Gucci waited three years since Tmall launched in 2017 to finally join the platform.

Kering, the French Luxury group that owns the Gucci brand, has also announced plans to against Alibaba. In the lawsuit, which has been ongoing for five years, Kering sued Alibaba for alleged counterfeiting. In an agreement between Kering and Alibaba in 2017, the two companies agreed to to protect Kering’s brands (which also includes Saint Laurent, Bottega Veneta, Balenciaga, Alexander McQueen), and utilize Alibaba technology to help regulate and remove counterfeited products from the platform. A notes that the companies have “come to a groundbreaking agreement to cooperate in their efforts to protect intellectual property and take joint enforcement actions online and offline against infringers in order to provide the best consumer experience and a trusted environment.”

Alibaba has faced various allegations in the past that its online shopping sites do not proactively prevent the sale of copyright-infringing products, which has been a significant concern for luxury and everyday brands across various e-commerce platforms. In October 2020, priced over $100 in order to address counterfeiting issues. The seller will now be required to send the sneaker to an independent third-party authentication facility for a comprehensive inspection before shipping. After verification, eBay will use expedited shipping to send the sneakers to the buyer. Forbes from Jordan Sweetnam, the SVP and General Manager of eBay in North America: “eBay operates the world's most diverse sneaker marketplace—with the widest selection and best prices—and by removing any uncertainty with the buying process, our community can buy and sell with total confidence.”

The Consumers Council of Canada , highlighting the concerns faced by brand owners and consumers alike with respect to the counterfeiting and pirating of consumer goods and services. Strikingly, the report notes that law enforcement agencies have reported an increasing concern that distributors of counterfeit goods are associated with organized crime and terrorist groups.����������

A notes that "in 2018, Gucci chief executive Marco Bizzari said during BoF’s China Summit that he was reluctant to partner with China’s e-commerce platforms due to concerns regarding counterfeits." Though counterfeit products continue to remain a pressing concern for branded goods, innovation, and consumer health and safety, with the COVID-19 outbreak pushing retailers to move online, it is unsurprising that Kering's Gucci brand has moved in the direction of partnering with Tmall.

Alessia Monastero is an Intellectual Property and Branding Lawyer and IPilogue Senior Editor.

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Counterfeit goods are an age-old consequence of economic markets. These consequences are especially troubling when raising concerns about the delivery of prescription medicines that the public are presumed to trust. The (WHO) recognizes this. To improve the global supply chain's security, they have defined Pharmaceutical counterfeiting as medicine that is deliberately and fraudulently mislabeled concerning the identity and/or source. Counterfeiting is not limited to either branded or generic products. It occurs in different fashions, such as the inclusion of wrong ingredients, deficiencies of active ingredients, and false packaging.

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Problem with IP Regulations and the Supply Chain

A more technical consequence of pharmaceutical counterfeiting is that these medicines can often violate companies' patent rights offering legitimate medicines. In Canada, three pieces of legislation compose the legal framework surrounding intellectual property rights in the biopharmaceutical industry: (1) ; (2) the ; and (3) "Data Protection" found in ¹. Together, these regulations serve to protect innovations from being stolen or reproduced for consumer use and profit.

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Manufacturers of fake medicines are motivated by profits. They are likely to avoid the expense of precision measurement and formulation that directly infringes upon patent holders' rights. Unfortunately, many technicalities are involved in drafting biopharmaceutical patents, and because counterfeit manufacturers often cut corners in the production process, direct patent infringement may not always occur. Thus, patent holders and regulatory officials have two separate issues on their hands pertaining to supply chain security: counterfeit drugs that fail in effectiveness altogether and efficacious but patent-infringing generic drugs.

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Potential Solutions

Several recommendations to protect biopharmaceutical manufacturers may be offered. First, raising public awareness on the issues of pharmaceutical counterfeiting is essential¹. By pushing for campaigns that warn of pharmaceutical counterfeiting risks, we can limit the purchase and use of these fake medicines¹. Next, improving regulatory oversight could restrict the manufacturing of pharmaceutical counterfeits¹. Criminal sanctions and massive fines would likely deter companies from making counterfeit drugs while strengthening biopharmaceutical intellectual property rights¹. Finally, incentivizing domestic production of pharmaceuticals would limit the import penetration of counterfeits in the market. Nonetheless, a significant consideration for manufacturers is production cost, which is much cheaper in other countries.

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High taxes, high salaries, and, most importantly, inadequate intellectual property protections have discouraged Canadian manufacturing as well.��It is entirely possible that to fully secure the biopharmaceutical supply chain and eliminate counterfeits from the market, Canada will need to shift its focus to strengthening intellectual property rights.

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Written by Khristoff Browning. Khristoff is a first year JD candidate at Osgoode Hall Law School. He is a contributing IPilogue editor and IP Innovation Clinic Fellow.

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While the counterfeit products industry has persisted for many decades, it was previously localized and limited to a specific geographical region. However, this is no longer the case. The internet and e-commerce has allowed the counterfeit products industry to evolve into a very complex entity.�� The roots of this industry now extend beyond their initial geographical barriers and illegitimate products easily find their way into global markets. The ease of flow and production of these counterfeit goods is particularly concerning for Canada, and many other jurisdictions, because it:

1. Causes confusion amongst the consumers as to the source of the product; and
2. Infringes the rights of a registered trademark holder.

Fortunately, trademark law exists to and in the past the Canadian Trademark Act has been successful at doing so. However, the issue now is that the operators of online counterfeit industries are usually foreign based and holding a judgement, let alone obtaining one, against them can prove to be a difficult task. Therefore, the existing Trademark Act, although evolving, cannot solely address the complexity of counterfeit products over e-commerce; rather, efforts must be made at a global scale to address this global issue.

The Canadian government has already taken to address the need of IP enforcement at a global scale. On September 15, 2017, Canadian officials met Chinese delegates in Ottawa, ON to discuss the IP enforcement strategies of the two respected countries, including a discussion on .

The Canada Anti-Fraud Centre (CAFC) established Project Chargeback in 2012 to address the issue of deceptive practices employed by fraudsters to sell counterfeit goods over the internet. Project Chargeback was developed with the following objectives: to protect consumers by reducing their losses, to reduce organized crime profits that originate from the sale of counterfeit and pirated materials, and to protect and support the intellectual property rights of owners. To effectively achieve these objectives, CAFC requires the assistance of the Royal Canadian Mounted Police, credit card companies, banks, right holders, and the victims themselves.

The process of Project Chargeback is simple in theory and begins when the victim with the CAFC. The CAFC then contacts the right holders of the product in question to verify if the complaint is valid, and whether the online website is in fact selling a counterfeit product. If the right holder confirms the validity of the complaint, the CAFC then requests that the victim contact their credit card issuing bank and provide them with the CAFC report. Credit card companies, upon receiving the required information, begin the chargeback process whereby they refund the victim’s money and subsequently remove money from the sellers account. The CAFC also requests that the bank close the account associated with the seller to prevent future sales of the counterfeit products over the internet. As well, to further punish the counterfeit products seller, the CAFC asks that the victim not return the product thereby causing a further loss to the seller.

Although, Canada is the only country with Project Chargeback, other jurisdictions have previously employed a similar mechanism. In Tory Burch v Yong Sheng International Trade Co. [1], the US Court froze the PayPal accounts of 41 Chinese companies that sold counterfeit versions of Tory Burch and subsequently released these PayPal funds to Tory Burch. Similarly, the US Court in Gucci America Inc v Frontline Processing Corp [2] held a credit card processing company liable for contributory trademark infringement because of their involvement in processing the payments on a website that sold counterfeit goods.

Despite the availability of similar mechanisms, the major incentive offered by Project Chargeback, and not by other jurisdictions, is the ability of individual consumers to hold accountable the sellers of counterfeit products. Comparatively, individual consumers in the US do not receive the same level of protection and their options are to proceed through the Courts or contact their credit card company and begin a chargeback process. Given that a large monetary sum is often not involved when purchasing a counterfeit product, to proceed through the Courts could be an unreasonable and a lengthy method. Alternatively, the US chargeback process does not prevent future victimization of other individuals by the seller, nor would it induce a strict liability on the seller.

Ankit Sareen��is a JD Candidate at Osgoode Hall Law School and was enrolled in Osgoode’s Intellectual Property Law Intensive Program. As part of the program requirements, students were asked to write a blog on a topic of their choice.

[1]��Tory Burch LLC v Yong Sheng International Trade Co Ltd, No. 10-cv-09336 (SDNY 2011)

[2]��Gucci America Inc v Frontline Processing Corp, 721 F Supp 2d 228 (SDNY 2010)

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The Federal court's decision in this case was in line with previous decisions made regarding counterfeit goods in cases such as , , and . This blog reported on the Louis Vuitton cases.

In this case, Microsoft Corporation was entitled to a default judgment. Although defendants' businesses have been dissolved, Microsoft was awarded statutory damages, punitive damages -��amounting to $200,000 for copyright infringement -,��$50,000 solicitor/client costs, and was given a permanent injunction against the defendants. Both retail stores and their named employees were liable for damages.

This case is noteworthy since it affirms Canada's stand regarding counterfeit products. It is interesting, for owners of intellectual property rights, to analyze the factors that led to the Court's decision and the damages awarded.

Default judgment:

On a motion for default judgment, where no Statement of Defence has been filed, Plaintiff should establish the following two criteria:

1.�������� Plaintiff should show that the Defendants were served with a Statement of Claim and that they have not filed a defence within the deadline specified in .��

2.�������� Plaintiff should put forward evidence that allows the court to find on a balance of probabilities that infringement has occurred within the meaning of the and the .

Criterion 1:

In this case, given the provided affidavits, the Court was satisfied that the defendants were served. Furthermore no Statement of defence was ever filed with the court within the deadline. Thus, the first criterion was met.

Criterion 2:

Copyright gives the owner of a literary work the exclusive right to produce or reproduce the work. of the Copyright Act defines infringement as doing anything reserved to the owner.�� It is also an infringement for a person to offer for sale, sell or distribute copies of a work that the person knows infringes copyright.�� A registered trade-mark in Canada gives the owner the sole right to use the mark throughout Canada for specified wares and services.

According to Microsoft's private investigator, there were 15 occasions where the defendants sold unauthorized copies of Microsoft software, containing Microsoft marks. This was sufficient to establish that on a balance of probabilities the defendants infringed on Microsoft copyrights and trade-marks.

Since both the criteria were satisfied and the timeline for filing a Statement of Defence had expired Microsoft was entitled to a default judgment pursuant to .

Statutory and Punitive Damages:

Statutory Damages:

, allows the copyright owner to seek statutory damages between the range of $500 and $20,000. assist the court in determining the amount.

(a) the good faith or bad faith of the defendant;

(b) the conduct of the parties before and during the proceedings; and

(c) the need to deter other infringements of the copyright in question.

In this case the defendants demonstrated bad faith. As stated by the private investigator, the defendants were well aware that their activities were illegal. They were previously put on a notice regarding the infringing nature of their activities. In addition, defendant corporations were dissolved voluntarily after Microsoft commenced its action. The Statement of Dissolution falsely stated that there were no proceedings in any court against the corporations. These factors led the court to decide that the defendant activities showed total disregard not only for Microsoft's copyright and trademark rights, but also for the Court and its processes.

Considering the factors present in this case, and in light of relevant case law (i.e. the cited Louis Vuitton and Microsoft cases), it was concluded that the damages awarded needed to be sufficiently high to deter defendants from future infringements. The amount set in this case was $10,000 for each infringement, which added up to $150,000 for the 15 infringements. ����������

Punitive Damages:

The fact that defendants' businesses had been dissolved did not stop the court from awarding punitive damages. According to sections 242 and 243 of the Business Corporation Act, the action against the defendant can be continued as if the corporation had not been dissolved. Thus, any property that would have been available to satisfy the judgment had the corporation not been dissolved remains available.

Due to the fact that the defendants demonstrated bad faith, Microsoft was awarded punitive damages amounting to $50,000 against all the defendants pursuant to .

Permanent Injunction:

Microsoft obtained a permanent injunction against all the defendants because the evidence advanced by Microsoft was suggestive of a continuing pattern of infringement.

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In a recent French court case, Paris-based L'Oréal failed to win a claim against eBay that the online auctioneer should be liable for the trademark infringements committed by their users and was profiting from the sales of counterfeit goods. Thousands of L'Oréal-branded cosmetic and beauty products are listed for sale on eBay on a daily basis. The world's largest cosmetics and beauty company claimed that eBay had not made reasonable measures to stop users from selling counterfeit goods through its website. They argued that the model of surveillance utilized by eBay - only investigating suspicious goods or sellers after they have been posted for auction - was insufficient. The model used by Priceminister, a French competitor to eBay's service, was argued to be more responsible and effective as it does all of its screening before items are posted online. By virtue of taking commission from each sale, eBay was thus profiting from sales of counterfeited goods.

EBay insisted that it was merely a trading platform and had no direct involvement with the sales. EBay stated that they dedicate several thousand staff members and spend millions of dollars a year on worldwide efforts to prevent the sale of counterfeit goods through their service. As a result, eBay claimed that of the 2.7 billion auction listings hosted globally in 2008, only 0.15 percent of the listings were identified as potentially counterfeit.

The French courts on May 13, 2009 cleared eBay from liability, stating that eBay had fulfilled its obligation in good faith and had done its due diligence to prevent counterfeit goods being sold through its site. The French High Court has given the two parties until May 25, 2009 to resolve their differences through mediation.

L'Oréal had filed similar lawsuits against eBay in 2007 in four other European countries - Belgium, Germany, Spain and the UK. Decisions favouring eBay were similarly made in the and Belgium. However, the German court ruled in L'Oréal's favour and at the time of writing, the ruling in Spain is still pending.

Although three of the five countries have so far ruled in favour of eBay, eBay's with lawsuit decisions on this issue has been rather fragmented. On June 30, 2008, the Tribunal de Commerce in France held that eBay was liable to LVMH Möet Hennessy Louis Vuitton for facilitating the sale of counterfeit goods on its site. The Tribunal ordered eBay to pay US$61.3 million in compensation to LVMH for allowing the sale of counterfeit goods trademarked by Louis Vuitton and Christian Dior (LVMH). The Tribunal agreed with LVMH's argument that eBay's efforts to prevent the sale of counterfeit goods were insufficient and amounted to negligence. EBay is set to appeal the decision.

In a similar case in June 2008, the French courts found eBay liable to Hermès for trademark infringements via sales of counterfeit goods. The decision cost eBay €35,000 in damages and additional remedies.

In the month following these rulings, a U.S. court held that eBay was not liable to Tiffany & Co. for the sales of counterfeit jewellery on its website. The court ruled eBay had done enough to reasonably police its auctions for counterfeit products and the removal of such products upon notification. The court also stated that Tiffany had not spent enough time or effort in aligning with eBay to combat the problem.

The series of lawsuits against eBay showcases the fragmented state of the law concerning the sale of counterfeit goods and internet commerce. In light of these recent decisions and pending appeals, the future of eBay's liability for counterfeit goods around the world is still uncertain. With the increase of internet commerce, intellectual property owners have undergone increasing strife in their efforts to protect and enforce their rights and have increasingly sought legal remedy from internet commerce hosts. As the world's largest online auctioneer service, eBay is taking the brunt of these lawsuits, but the decisions will certainly set the precedent for the rest of the internet commerce providers.

As economies around the world continue to suffer, it is predicted that the global trade in counterfeit goods (e.g. medicines, cigarettes, branded apparel, and pirated media) will increase to nearly US$1 , up from $800 billion in 2007. Security experts suggest that trade in counterfeit goods has already exceeded the global narcotics trade (US$400 billion a year) and may be funding terrorist groups around the world as they are considered high profit and low-risk. As eBay and other internet commerce services may be seen to increase security risks as an indirect consequence of counterfeit sales, they may see unfriendly developments in the courts and in public policy in the near future.

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