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Earlier this month, the Office of the US Trade Representative issued its annual “Notorious Markets List for Counterfeiting and Piracy” that identifies websites, physical markets, and online marketplaces that facilitate or turn a “blind eye” to counterfeiting activities and piracy. Thankfully for US-based marketplaces like Amazon or Walmart, the report does not include any US-based or hosted websites on the list. The worst perpetrators of pirated content and counterfeit distribution are based largely in China and eastern Europe (Russia, Bulgaria, Poland). In addition to several key takeaways, the report includes a deeper look into the adverse impacts on workers involved in the manufacture of counterfeit goods which include substandard and unsafe working conditions, forced labor, use of child labor, human trafficking and other worker civil rights violations. Here are some of the takeaways from the report:

Positive Developments. Governments around the world are undertaking greater anti-counterfeiting enforcement efforts, including more inspections, arrests, and seizures. Efforts by law enforcement agencies in the UAE, Brazil, and the Philippines were called out favorably for their aggressive anti-counterfeiting operations. Governments were also praised for cracking down on pirate streaming services and resellers of internet-protocol television (IPTV) applications that enable illicit streaming of movies, television, music, and sporting events. The report also praised the EU and the US, for performing studies and publishing reports on piracy and the detrimental impacts to consumers as well as to individuals involved in these criminal enterprises.

Complicated Ecosystems. The report explains that online counterfeiting and piracy operations involve a complex ecosystem of domain name registries and registrars, web hosting companies, reverse proxy providers, advertisers, social media platforms, payment processors, and search engines. Each component of the ecosystem must play a role in reducing criminal activities which, according to the report, cost the US economy an estimated $29.2 billion (related to piracy alone). The report noted a new entrant into the ecosystem, social eCommerce applications and platforms (social media platforms with integrated eCommerce) such as WeChat and Pinduoduo that often lack the anti-counterfeiting policies, processes, and reporting tools. Reducing counterfeit goods across the Internet must be an ecosystem-wide goal.

Worst of the Worst. When it comes to the sale and distribution of counterfeit goods and pirated content, the most egregious perpetrators are doing business from China and Russia. Of the 42 businesses identified as online “notorious markets,” nearly 40% are based in either Russia or China with the remaining perpetrators operating out of the Middle East and western Europe. These illegal online marketplaces use “bullet-proof” webhosting service providers (companies that ignore takedown requests and refuse to cooperate with authorities) and reverse proxy servers that can mask the actual location of the host servers. Some of the most popular and well-known notorious markets include:

  • AliExpress (owned by the Alibaba Group in China)
  • Baidu (China)
  • DHGate (China)
  • Popcorn Time (Denmark)
  • Rapidgator (Russia)
  • RutRacker (Russia)
  • TaoBao (also owned by the Alibaba Group in China)
  • ThePirateBay (unknown)
  • WeChat (China)

Physical Market Disruptions. The sale and distribution of counterfeit and pirated goods on online is growing, but physical markets continue to enable substantial illicit commerce. This past year, due to the COVID-19 pandemic, government restrictions on tourism resulted in some closures of physical markets known for openly selling counterfeit goods, particularly in southeast Asia. However, the problem persists because of spotty enforcement and seizure practices and a lack of enhanced or severe criminal penalties for individuals arrested for trafficking in counterfeit products.

While the report recognizes that notable efforts to address the widespread availability of counterfeit and pirated goods in some online and physical markets has occurred, it also notes that online sellers have also increased their efforts to evade anti-counterfeiting processes and systems. Consumers should be wary of doing business on any marketplace or website listed on the notorious markets list and legitimate sellers should also think twice about doing business with these platforms that regularly ignore takedown requests or refuse to cooperate with law enforcement agencies.