6 min

The Fight Against Cyber Counterfeiting: the Quest for Effectiveness [By Betul Iler, CEIS]

Cybercrime - July 12, 2016

Counterfeiting, which has traditionally been judged as a simple offence, currently represents a real challenge for states, citizens, the environment and, above all, an increasingly globalised economy. Indeed, it is very detrimental to companies, as it destroys the fruits of innovation; it may have a damaging effect on employment; and it causes significant harm to consumer health and safety, as it by nature fails to comply with safety standards. In addition, it is very detrimental to economic growth, and has a negative impact on government tax revenues and therefore on the operation of public services. Counterfeiting, as it takes increasingly varied twists and turns, is everybody’s business[1]. Moreover, the report “Trade in Counterfeit and Pirated Goods,” prepared jointly by the OECD[2] and the EUIPO[3] in April 2016 with a view to providing governments with a rigorous state of play and update on counterfeiting in the world, presents worrying figures: counterfeiting represents 2.5% of global trade, or a volume of trade assessed at $461 billion in 2013, and 5% of imports into the European Union, or a total of €85 billion[4].

The advent of the Internet, which is now the leading vehicle for distribution of counterfeit goods, has proven particularly detrimental to intellectual property rights and has made controlling the phenomenon even more difficult. It has fragmented counterfeiting and given rise to a proliferation and diversification of modi operandi in the service of counterfeiters. Moreover, the Internet has helped make counterfeiters invisible and hard to find. At the same time, it has made intercepting counterfeit goods difficult. The development of e-commerce platforms such as Amazon and eBay, and social networks such as Facebook and Twitter, has inevitably spread the phenomenon. However, acquiring counterfeit goods on the Internet has higher risks for consumers. Indeed, counterfeiters can steal their personal data, spam them, send them malware, wrongly debit their bank accounts and even usurp their identities. Furthermore, while most counterfeit trade is done over the Internet, a significant volume of trade is also done on darknets (private virtual networks) and the deep Web (invisible Web)[5]. The 2013 Silk Road case attested to this. This case involved a website hidden on the Deep Web. Access to this website was restricted to users of Tor, a decentralised network. The main characteristic of this network was its assurance of complete anonymity and an inability to trace payments[6]. According to the FBI, the Silk Road website was a huge online black market on which many unlawful goods, including counterfeit goods, narcotics and weapons were traded in very large quantities with Bitcoin. Counterfeiters used this virtual currency to be sure to maintain their anonymity and ensure trade confidentiality. The legal epilogue of this website was particularly brutal: the Silk Road website administrator was sentenced for conspiracy to drug trafficking, money laundering, counterfeit trafficking and various cybercrime offences[7].

Significant efforts have been made in terms of legislation, including the adoption in France of the law of 21 June 2004 known as the LCEN[8], the law of 12 June 2009 known as the HADOPI[9], the law of 14 March 2011 known as the LOPPSI 2[10] and, more recently, the law of 11 March 2014 strengthening the fight against counterfeiting[11]. However, a strong asymmetry persists between the scale of the consequences of counterfeiting and the means of suppressing it. The Unifab report “Counterfeiting & Terrorism”[12] expertly highlights the undeniable link between organised crime, terrorism and counterfeiting. Interpol secretary general Ronald K. Noble and French senator Richard Yung have repeatedly drawn attention to this relationship[13]. They have particularly emphasised that terrorist organisations’ preferential use of counterfeiting generates substantial unlawful profits, thereby allowing these organisations’ acts to proliferate. Thus it seems regrettable that the latest law strengthening the fight against counterfeiting, mentioned above, did not take into consideration this issue clearly alluded to by parliamentary representatives during discussions[14].

While total annihilation of this scourge seems somewhat illusory, some are trying after a fashion to propose revisions to modernise the current legal arsenal, especially in terms of digital affairs. The fight necessarily requires rights holders, police forces, magistrates, customs authorities and, above all, technical Internet intermediaries[15] to pool their efforts. Yet, according to Philippe Gosselin, a member of the French National Assembly, the current anticipated sanctions for technical Internet intermediaries, providing for a system of mitigated liability (i.e. a lack of general surveillance and searching for unlawful content), have not produced the desired result. Consequently, on 8 January 2016, Mr Gosselin presented an amendment to Paragraph 3 of Article 23 of the bill for a digital republic intended to involve online platforms more in the fight. It focused on establishing a “duty of care” for online platforms. The “duty of care” will lead online platforms to take “all reasonable, appropriate and proactive measures to protect consumers and intellectual property rights holders against the promotion, marketing and dissemination of counterfeit goods as defined in Articles L. 521-1, L. 615-1 and L. 716-1 of the French Intellectual Property Code.” This new obligation must be modelled on the existing duty of care in child pornography content, content advocating for or inciting terrorism, content inciting hatred, or even illegal online gambling content[16]. The French Secretary of State for Digital Affairs believes that this “duty of care” is only a reminder of the obligation of positive law to remove unlawful content provided for by Article 6 of the LCEN. However, rights holders are delighted with this amendment in that it involves better protection of and greater consideration for intellectual property rights in France. They also see it as a potential source of inspiration for future legislation adopted within a European framework[17]. On 3 May 2016, when the French Senate examined the bill, this amendment was adopted.

The new version of the bill for a digital republic was examined and adopted on 29 June 2016 by the Joint Committee of the French National Assembly and the French Senate, and has not yet been released. However, in the summary of the bill, Article 23 as adopted by the French Senate appears to have been maintained but modified by the Commission[18]. The question is whether the Joint Committee members chose to remove or simply modify the “duty of care” provided for by this article.

These legislative delays testify to one thing: reforms are difficult to carry out, and often in this regard a policy of “small steps” prevails. At the same time, counterfeiting networks seem to be better organised and more widespread with each passing day. Therefore, the changes in legislation on technical intermediaries under consideration seem to be headed in the right direction, even if the road to comprehensive reform still seems long.


[1] Unifab report, “Counterfeiting & Terrorism,” 2015, p. 2

[2] Organisation for Economic Co-operation and Development

[3] European Union Intellectual Property Office

[4] OECD and EUIPO report, “Trade in Counterfeit and Pirated Goods,” 2016, p. 11

[5] Unifab report, “Counterfeiting & Terrorism,” op. cit., p. 25

[6] M. QUEMENER, Criminalité économique et financière à l’ère numérique (Economic and Financial Crime in the Digital Era), Economica, 2015, p. 114

[7] S. ALMASEANU, “Le traitement pénal du Bitcoin et des autres monnaies virtuelles” (Criminal Treatment of Bitcoin and Other Virtual Currencies), Gaz. Pal., no. 242, 30 August 2014, p. 11

[8] Law no. 2004-575 of 21 June 2004 for trust in the digital economy

[9] Law no. 2009-669 of 12 June 2009 promoting the dissemination and protection of creation on the Internet

[10] Law no. 2011-267 of 14 March 2011 on guidelines and planning for the performance of internal security

[11] Law no. 2014-315 of 11 March 2014 strengthening the fight against counterfeiting

[12] Unifab report, “Counterfeiting & Terrorism,” op. cit., p. 2

[13] Ibid., p. 5

[14] https://www.senat.fr/leg/ppl12-866.html

[15] Including content hosts (search engines, social networks, e-commerce platforms, etc.) and Internet service providers (Free, Bouygues Telecom, SFR, etc.)

[16] Amendment CL367 presented to the French National Assembly by Mr Gosselin on 8 January 2016

[17] http://www.baldassari-avocats.com/actualite-Adoption-par-le-S%C3%A9nat-d%E2%80%99un-amendement-relatif-au-devoir-de-diligence-des-plateformes-Internet-dans-le-projet-de-loi-pour-une-R%C3%A9publique-Num%C3%A9rique-71

[18] http://www.lioneltardy.org/media/02/01/3748060420.JPG

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