Combatting counterfeits in the online marketplace

Trade in counterfeit products is a global menace that continues to thrive in many jurisdictions despite numerous measures that have been put in place to curb it. Kenya is no exception.

Between October 2019 and February 2020, the Anti-Counterfeit Authority (ACA), in partnership with TradeMark East Africa (TMEA) and the Department for International Development (DFID), commissioned the first national baseline survey on the extent of counterfeiting and illicit trade in Kenya.

The survey revealed that in 2018 alone, the government lost up to Sh102.99 billion due to counterfeiting and illicit trade in the country. Between 2016 and 2018, over 7,000 jobs were lost in Kenya due to illicit trade, with counterfeiting reported to account for 32.59 percent of the jobs lost.

While there is no doubt regarding the devastating impact of trade in counterfeits, new trade channels have over the years emerged and in respect of which traders of counterfeit goods are thronging.

Online and e-commerce marketplaces are the newest avenues for this proscribed trade, which is not only vibrant but also becoming difficult to combat.

Aside from the fact that the regulatory and enforcement regimes have not been designed to sufficiently prevail within the online marketplaces, these emerging platforms present a myriad of other practical challenges.

The Anti-Counterfeit Act, 2008, the principal legislation that prohibits trade in counterfeit products, has some provisions restricting trade in counterfeits within online marketplaces.

The Act creates various offences pertaining to counterfeit goods, including a bar on exposing or exhibiting of any counterfeit goods for purposes of trade. This is precisely the offence that traders in counterfeit products commit when they display or exhibit counterfeits on the online platforms.

Other regulatory developments such as the publication of Anti-Counterfeit (Recordation) Regulations, 2021, establishment of the Multi-Agency Team on Illicit Trade in 2018, and the unveiling of the National Illicit Trade Observatory (NITO) in 2020, as well as the launch globally of the International Trade Association (INTA) recommendations on the Sale of Counterfeits on the Internet have not been effective in combatting the trade of counterfeits online.

However, statutory provisions on legal enforcement of anti-counterfeiting measures in e-commerce are not robust and are practically non-existent.

Quite regrettably, such enforcement has been relegated as a preserve of brand and intellectual property rights owners whose products are at risk of being counterfeited.

Identifying the seller or the exhibitor of the products, tracing culpability for purposes of an action, identifying a physical location for purposes of enforcements through raids are just some of the key issues that are more difficult to address in a virtual trading platform.

The Internet provides a very wide reach to the online traders in counterfeit who are generally anonymous and have a huge volume of listings across multiple e-commerce platforms.

This further makes it difficult for rights holders and enforcement agencies to identify all the counterfeit listings and the relevant traders and move against their infringements.

Faced with similar problems several other countries have taken steps towards addressing this new reality.

The European Union has in place a Memorandum of Understanding (MoU) on the Sale of Counterfeit Goods on the Internet, initially concluded in 2011 and later revised in 2016.

China and India are both taking positive legislative and policy actions to counter the surge in counterfeits online through proposed amendments to e-commerce law and the preparation of the draft e-commerce policy respectively.

The key measures established and proposals put forward in these jurisdictions include: defined linkages to both individual sellers as well as proprietors of the online marketplace for purposes of transparency and culpability, placement of extra burden on proprietors of online marketplaces to identify individual sellers on their platforms and verify the genuineness of their products, potential revocation of online business licences in the event of non-compliance, and particularly harsher punishments for repeat and serious violators.

Kenya can adopt and refine its anti-counterfeit framework within the context of its reality and practical considerations.

Foremost, Kenya should develop a policy addressing the various issues in the e-commerce ecosystem, including regulatory issues and the need to stimulate the domestic digital economy. This policy framework should take into account needs and expectations of all stakeholders and set strategies to achieve the government’s vision.

Secondly, enforcement personnel at the various enforcement agencies need to be properly sensitised and adequately trained in the detection and enforcement of measures addressing online trade in counterfeits.

This objective can only be achieved with cooperation from the various e-commerce platforms and brands who bring onboard their technical expertise to distinguish original products from counterfeits and provide support by sharing information on the sellers and their relevant distribution channels.

Third, an inter-agency approach should be formulated to bolster the mandate of the ACA especially with regards to enforcement in the online space.

We are continuously living in a new reality and marketplaces are no longer purely physical. As trading activities increasingly shift online, so do the devastating effects of trade in counterfeits.

All legal, administrative and enforcement frameworks established over the years to deal with this challenge in the physical marketplace will soon mean little if they are not adapted to effectively function with respect to the online marketplace.

The advent and uptake of online trading in Kenya is not a new phenomenon and has been with us for a while. Reform is urgently required and quite frankly, it is long overdue.

Ndung’u is an advocate of the High Court of Kenya. Godofa is a lawyer