Sunday, 19 February 2017

Counterfait Parts, Where Copyright Means Copy-Is-Right Part 1

A fake purse is one thing; it breaks, you get a new one. But the disturbing reality that sets counterfeit bikes, parts and accessories apart is that, when you need them most, they may fail you catastrophically. And if they do, there is no one credible standing behind them.

Counterfeits of prestigious bike brands have a long history. But in the era of steel or aluminum frames, the deception was usually obvious even to an unskilled eye. The frames were usually substantially heavier than those they were imitating, the workmanship immediately obvious as inferior.

Counterfeiters generally are made up of two broad groups: factories that make illicit goods and vendors who sell them. Multiple industry sources told us that sometimes they are one and the same, but more often they’re separate entities. The factories churn out the fakes, and the sellers buy them to resell. The practice is mostly beyond the reach of Western law enforcement, with almost 90 per cent of seized goods coming from China and Hong Kong.

The Way They Sell

Complicating the issue is how counterfeit goods are sold, with the internet giving crooks an opportunity to proliferate that didn’t exist when counterfeit goods had to be sold in person. Some of the bolder counterfeiters sell direct on their own sites, like Greatkeen Bike and OEMCarbon. And fakes are still sold regularly on Amazon and eBay. But Love estimates that 95 per cent of the counterfeits he sees are on Asian marketplace sites like DHgate, or Ali Express and Taobao, which promise Western consumers direct access to Asian manufacturers, without the middleman.

“Alibaba alone is an umbrella with six or seven different platforms,” says Michele Provera, vice president of brand protection for Convey SRL, an Italian internet brand protection firm. “It has extremely evolved e-commerce and hundreds of millions of users a month.” Since Convey started working with Pinarello in 2013, the firm has taken down 45,000 listings for counterfeit goods (a listing can include multiple items). Wei Tang, who works on Andrew Love’s team as Specialized’s dedicated liaison to Alibaba Group sites, says that in the first seven months of 2015, he got more than $5 million in fake inventory delisted just from Alibaba websites. Specialized knocks down about $15 million a year total in counterfeit sales, across more than 80 platforms.

Candice Huang, a spokesperson for the Alibaba Group, said that it has more than 2000 staff devoted to fighting counterfeit on its sites, a problem that founder Jack Ma has called “a cancer”. And the cancer is proliferating, thanks to new dedicated shopping apps that are beyond the reach of most anti-counterfeit tools. Andrew Love (Specialized brand security and investigations.) predicts that the next frontier will be peer-to-peer sales on social media – Facebook, he says, recently rolled out a mobile payments processor. With sales hidden inside a dedicated app, and financial transactions routed out of plain sight, the entire counterfeit network could drop from view, but be as close as a couple of swipes on a smartphone screen.

The online malls do their best to police their listings but with so many moles it’s tough to whack them all. In a 2014 filing with the US Securities and Exchange Commission the Alibaba Group wrote: “Although we have adopted measures to verify the authenticity of products sold on our marketplaces and minimize potential infringement of third-party intellectual property rights through our intellectual property infringement complaint and take-down procedures, these measures may not always be successful.”

Alibaba removes 120 million suspect listings each year. The group’s online malls have seven million merchants offering 800 million items – ranging from cosmetics to swimwear, and from electronics to sunglasses. Of the 60,000 Dahon folding bikes for sale on Alibaba’s sites, half are fakes or infringe Dahon’s design rights. Taiwan-based Dahon spends more than $200,000 a year to combat counterfeiters.

In the fight against fakes, Love and outfits like Convey use a variety of tools. They work with law enforcement to seize shipments, they pursue financial trails and get counterfeit sellers’ PayPal and creditcard accounts shut down and funds seized, and they have high-level direct contacts with the marketplace sites themselves. But the benchmark tool is a form known as a takedown notice. Almost every major online marketplace has a version of it. The idea is simple: a brand can register its trademarks and other intellectual property rights with the site, then use the form to submit a takedown request. Since the intellectual property rights are already on file, the sites rely on an affirmation by the rights holder that it believes, in good faith, that the advertised item is a counterfeit.

Naturally, counterfeiters find ways to outsmart the system. Tools like these rely heavily on automated web-crawling software that uses a keyword search to flag listings as questionable. Algorithms can easily spot the fraudulent use of brand names, so merchants get around this by not listing them. Instead, they will place photos of, say, Pinarello frames next to listings that, to an algorithm, look as though they’re connected with plain carbon bikes. It’s up to brand owners – and trackers such as NetNames, MarkMonitor and Convey – to spot the use of photos. Some of the photo tracking can be done with image recognition software, but the fakers can obscure them enough to throw sniffers off the scent. Many of the photos have to be spotted, and flagged, manually. The fakers can post new listings, from newly named merchants, just as quickly as the offending ones can be taken down.

To be continued...

Bike AU, Autumn 2016
E-book "Faking It" by

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