Online counterfeit goods market worth £800M

‘E-fencing’, the sale of counterfeit and illegal goods via online auction sites, is on the increase according to new research from global legal services organisation, DLA Piper. Figures compiled by DLA Piper and online intellectual property infringement specialists, ComSec International(i), show that the estimated value of counterfeit goods passing through online shopping sites in the UK each year totals £800m – double the amount over the last 3 years.

For every £100 spent at online auction sites, the research reveals an estimated £5 is spent on counterfeit items. The sorts of products most at risk of infringement and typically removed from online sites include fashion and cosmetic items, consumer electronics, motor equipment and sports goods. In addition to fake brands and trademark infringements, the research also warns online auction sites are a second home for ‘grey market’ trading, in particular the sale of imported manufactured goods at highly inflated prices.

The growth in online shopping, in particular internet auction sites, means that counterfeiters now have more direct and discreet channels to reach consumers. Many fraudulent sellers can earn as much as £20,000 a month trading bootlegged or counterfeit goods with some UK sellers topping the million mark in annualised earnings.

Simon Levine, joint global head of DLA Piper’s technology, media and commercial group commented, ″Counterfeit goods dilute the value of brands, undermine the integrity of auction sites and ultimately cost the UK economy millions of pounds in lost income. But this is not just about protecting brand owners – it’s for the consumer’s benefit also. If you invest your trust and money in a brand you want to know you’re getting the real thing, whether that’s make up and cosmetics or domestic appliances and children’s toys.
Buyers most certainly need to beware – you may think you are getting a bargain, but you could be funding organised crime or buying faulty or dangerous goods in the process.″

“Equally, this is not just a problem for the auction sites to address alone. Consumers need to report illegal or counterfeit trading and copyright owners need to work together with their legal representatives to take more active steps to police their brands online.”

Over the last 2 years ComSec International has recovered its clients £25 million in stolen or counterfeit goods, but it fears its efforts only reveal a fraction of the overall problem.

James Ramm, Director, ComSec International added “E-fencing poses a significant threat to brands and is a false economy for buyers. We use the very latest software to track the infringement of brands online scanning both image and text descriptions, but our data is still only the tip of the iceberg - the full extent of counterfeit trading online may never be known and will continue to thrive unless consumers and brands alike, as well as the sites in question, take action against illegal traders.”
ENDS

For further information:
Tom Pearson, Firefly Communications, Tel: 0207 386 1568 or email
dlapiperteam@fireflycomms.com

Nick Bell, Media Relations, DLA Piper, Tel: +44 (0)20 7153 7127 or email nick.bell@dlapiper.com

About the research:

(i) All estimates are based on data retrieved from ComSec International’s bespoke Watchdog software programme, an internet and online auction house monitoring tool which protects brands and products from online counterfeit sales. The system constantly monitors online auction sites for key terms specified by a given client and then determines whether they fall foul of parameters established in conjunction with that client. Should an item fall outside of what is deemed to be acceptable, the system will inform the site that this item needs to be removed. Analysis is conducted on specified targets only rather than on a brand or product-wide basis.

Notes to editors:

1. DLA Piper is the largest global legal services organisation in the world with over 3,700 lawyers across 64 offices and 25 countries. From its offices across Asia, Europe, the Middle East and the United States, legal and business advisers provide a range of services to local, regional and international businesses.

2. The Technology, Media & Commercial group (TMC) is made up of specialist information technology, telecommunications, publishing and media, sport, intellectual property and commercial lawyers. The group has an unrivalled understanding of the converging TMC sectors and offers a unique, global full-service capability. With over 130 partners and over 270 lawyers worldwide, the group is recognised by legal directories and industry members as one of the leading groups of its kind globally. In 2007, the group was awarded 'TMT/IP' team of the year at the prestigious British Legal Awards.

3. For further information about our organisation and services, please visit our website: www.dlapiper.com

4. ComSec International Ltd provides discreet, professional and cost effective security and investigative solutions for companies, institutions, governments and private individuals. Using its bespoke investigative technology it can automatically search, monitor, retrieve and report on all relevant online and offline sources, suspicious and unethical activities carried out by specified targets. Other services include corporate security, litigation support, fraud risk management and surveillance and protection. For further information please visit the website: http://www.comsec-international.com/index.asp

Published on: 12:00AM on 4th July 2008