by Stuart Fuller (CentralNic)
The last decade has seen the Intellectual Property space change significantly. Technology has no doubt been an enormous catalyst for change, making all of our lives easier but it has also been responsible for the growing dark shadow of cyber threats and is now the compelling reason why brand holders face ever increasing resourcing issues, looking for the most cost-effective ways to protect their revenues, reputation and customers in the digital world.
The threat of IP abuse from third party domain name registrations, trademark abuse, passing off and sustained and often vitriolic abuse on social media, not to mention good old-fashion counterfeiting is all too pervasive today. In a report commissioned by NetNames in 2016, the online counterfeit market was estimated to be $1.7tn, more than the total GDP of Russia, Australia and oil-rich Saudi Arabia.
Often, the prime reason that organisations cite for why they have no brand protection strategy in place is that they simply don’t know where to begin. The ever-increasing threat of cyberattacks, such as the widespread damage caused by the Mirai bot in October 2016, seems to have now been forgotten by many. However, it is now a case of when, not if, a brand will fall victim to intellectual property infringements. Next May new GDPR rules will be introduced to all organisations within the European Union and will have a huge impact on data protection requirements which will see the realms of cyber security and intellectual property protection converge even faster.
In this series of articles, we will explore the issues facing brand holders today and what strategies they can adopt to mitigate the risks to their revenues and reputation. First up we look at the whether a detection and enforcement programme based on a moral strategy is effective and how a brand holder can implement it successfully.
On a recent work trip to the US, I was talking to an IP attorney who represented a major publishing house. We were discussing the issues facing authors today. Being an author myself, I had recently discovered some of my content appearing without my permission on websites I had no knowledge of. Trying to stop copies of manuscripts appearing in unauthorised places online is a common problem, especially when it is "leaked", prior to its official publication date. "I bet Dickens never had to face such issues" I commented. But I was wrong.
Counterfeiting is a problem rooted in history. Such was the magnitude of the problem for Charles Dickens that, in January 1842, he set sail for America to try to address the problem of pirated copies of his books being sold on the stalls of cities across the country. He was welcomed like a major celebrity when he arrived, which he actually was, but his pleas to those selling his work fell on deaf ears. Unfortunately, at the time, the law was not his friend. As a foreigner, his work could not be copyrighted in the US. Therefore, anyone could reproduce his work and sell it for profit. The irony of his trip was that, as he became more famous in the US, the demand for his work increased. A demand for which the counterfeiters of his work were only too happy to meet.
Arguably, Dickens had the last laugh a few years later though, returning to complete an extensive lecture tour to sold out audiences who were motivated to listen to the great man himself after reading the pirated material.
Fortunately, trademark protection and regulation has moved on significantly. Today, Dickens would have no issue protecting his work legally in Alabama, Arkansas and Alaska. However for a brand holder it is important to know on the first steps they need to take in creating a brand protection strategy.
It is inconceivable for an organisation to wage war on every potential intellectual property infringement that exists. The right approach for one company may be completely unsuitable for another. Often brand protection strategies are based on the available resources, industry sector and appetite to eradicate threats to the brand. The key to devising and implementing the right strategy is to understand which infringements can be removed based on the resources you have available. It is just as important to understand which are simply unattainable, unless additional resources are made available. In other words, identify the low-hanging fruit and assess the cost of picking them off.
The approach taken by some brand holders has been to concentrate their resources on educating their customers. In effect, recruiting their loyalist fans to be their eyes and ears online. By building a network of informal brand ambassadors who help find and report IP infringements, they build strong bonds of trust and user engagement. In turn, these loyal customers feel more valued because they see the benefit they are delivering back to the brand in which they are invested.
The key to making this approach successful for both parties is to make it easy for the customer to report the infringements and more importantly, to actually take action when the advocates provide the information on abuse.
The first step in creating a moral strategy is to educate the advocates in how to recognise intellectual property infringement. In the case of Dickens, he might have stood up in front of his “fans” and explained the dangers of buying a counterfeit product such as potentially poisonous ink, incomplete chapters and poor binding. Dickens could have also pointed out that buying an unauthorised copy would deny him of royalties and make him less motivated to write any more.
The users of any product or service need to understand the distinctions between real and fake, right and wrong. For instance, illustrating the difference between genuine and counterfeit drugs could save lives at one end of the spectrum and be the difference between a firm deciding to continue with costly ground-breaking research at the other end. The moral strategy focuses on motivating customers not through reason, but through emotion. By making it clear what might happen if people use counterfeit products and, more importantly, what a positive difference the customer might make by reporting nefarious activity, a brand holder is forming an emotional bond with their advocates.
This approach is used successfully today by a number of large brands. Canon has a whole section on its website dedicated to the reasons why consumers should avoid buying counterfeit branded ‘Canon’ products. In addition, it provides useful advice on how to spot a fake, how to report a counterfeit and, finally, a section on the success the brand has had in eliminating counterfeits. If the brand wants to encourage advocates then they need to show how successful other’s actions have been.
One brand that dominates our lives more than most is Apple. The California-based tech giant has revolutionized the way we engage with each other and the connected world as a whole, whilst the brand itself has become synonymous with the term ‘cool’. With great success comes high levels of intellectual property abuse – counterfeiters will go to extraordinary lengths to try to mimic the brand and grab a slice of the action. This means Apple has to fight a constant war against counterfeiters. This occurs predominantly in the low-cost accessory space, such as charging leads and adaptors. Whilst Apple has a dedicated section of its website to identifying counterfeit items, it doesn’t give the consumer any channel to report potential infringements or websites that appear to be selling fake items. On one hand, you want to get your brand advocates working for you but on the other you need to have the resources to act on what they are telling you. For a brand like Apple, resourcing the efforts needed to effectively respond to these requests could lead to their costs rising significantly, which may end up be passed onto the consumer.
Finally, one global brand who has very successfully deployed this approach to intellectual property infringement detection is the Australian shoe manufacturer, Ugg. Ugg Boots have become synonymous with a particular style and accepted into our everyday lexicon in a similar way to Wellington Boots, Barbour and Crocs. The boots, first manufactured in Australia in 1933, have been a global success, today exported to almost every global market and sold at a premium price, which makes the company a huge target for counterfeiters. In the three-year period from 2011 to 2014, over a million counterfeit Ugg products were seized globally, whilst the brand took action against 60,000 websites selling counterfeit products. Interestingly, the brand received over 80,000 emails from customers regarding potential counterfeit items in that period – a truly staggering number that demonstrates the moral strategy in full effect.
It should be noted of course that this approach may not work for every organisation. Aspirational brands tend to attract advocates more than “service” brands, those that form part of our everyday life. It would be inconceivable to expect, for instance, an engineering firm who manufacture components for heavy industry to apply this approach successfully.
A motivated army of customers can deliver significant benefits to a brand’s revenues and reputation, making up for any lack of material resources or available budget. It is the most cost-effective intellectual property protection strategy that an organization can implement but is often overlooked. Many brands seem to feel that by admitting there are counterfeit products ‘out there’, it undermines the value of its brand. Conversely, by following a strategy of education and advocate inclusion, brands can show a responsible side and should be applauded for their approach.