Brand Protection/Investigations, Specialized Bicycles, ,
CFE, PCI, former Head of Brand Protection for GoPro, currently manages global brand protection programs and investigations for the Brand Security Group
Everyone lives online these days: our customers, and also counterfeiters. So let’s talk about management of brand protection online enforcement programs brands can retain, and how to handle the myriad of 3rd-party marketplaces that are appearing.
One of the biggest outsourced costs in intellectual property and brand protection programs is the use of “Single Global Resources” to manage your online brand enforcement programs. There are advantages and disadvantages, but in my experience Single Global Resources are never quite as efficient, or cost-effective, as a program managed in-house, utilizing local or regional resources.
What is a Single Global Resource?
Companies often believe that if they hire a firm that covers the world that they are getting the best deal and true global coverage. I find that this is generally not true. There is a way to work not only smarter but cheaper.
A Single Global Resource is a provider who covers all regions. It can be an international law firm or a global brand protection provider. Usually these firms offer a series of online tools, dashboards, and listing aggregators focused on identifying counterfeit or grey market product. The key advantage is that they offer an easy to use system for issuing bulk and high-volume takedown demands on ecommerce sites, app stores, and social media platforms. These providers work great in established markets, especially the U.S. and EU/EEA.
Agreed. I jokingly divide the world into the “well-lit ecommerce malls” and then there is the rest of it.
Right. That leaves a lot of the world where a Single Global Resource provider generally doesn’t work as well. In fact, that leaves most of your growth areas, from a U.S. company standpoint, with spotty coverage at best. Let’s take the example that your product line is expanding into Russia. But this could easily be Argentina or China for that matter.
With the single resource, you may have coverage. You may be able to get some items removed from online marketplace Yandex, even some takedowns of domains or online shops that are hosted on Western-friendly ISPs. But for the most part, your compliance percentage will be low. With the Single Global Resource model, you are sending a canned response within your provider’s tool, or a standard letter from a big international law firm. Some providers are better than others, and may even have localization for, say, Russia, while others contract out, at an added cost, which becomes part of the price for the tool or additional billable hours. With the five global providers I have had experience with, the compliance percentage was in the low 20-percent rate and rarely effective. This compliance rate was consistent across the board whether the provider was a brand protection company or an international law firm.
I agree with the compliance rate, though my challenges are more in Southeast Asia and LATAM (Latin America) rather than Russia, but in your experience, do those smaller marketplaces listen to anyone? What is the best and most time-effective strategy?
While I do recommend using a global brand protection provider to identify problem areas, I do not recommend using contracted analyst hours or paying law-firm billable hours to enforce locally in emerging or low cost markets. These providers bill a flat rate for any action, usually independent of where geographically it takes place. If you are a U.S. or EU-based company, it means you pay the same rate for the same action in the EU as you would in Russia or other emerging markets. Local providers generally have a cost structure commensurate with their overhead in the country or market where they are based.
Let’s talk practically about what you just said.
Let’s say you sent a canned takedown notice to an online seller you believe is selling gray-market goods using your intellectual property. The notice comes from a foreign law firm or big provider not based in Russia, or even directly from your company. The offending online seller knows the actual chances of escalation are minimal, so they do not comply with the removal demand. This happens with a majority of the takedowns, so your compliance percentage remains abysmal.
The same situation handled with an in-country resource: the takedown notice comes from a local firm, in local language, and with intimate knowledge of the local laws and regulations. Your compliance percentage shoots up to double, triple or even higher. The threat you are conveying is that if you are willing to employ local resources that they recognize, you are probably willing to escalate, and that escalation will come on the offender’s home turf.
Exactly, I use a network of our employees around the world for a direct approach in the local language, as well as their knowledge of local laws, Customs, etc. The approach by a local company rep has been very effective. Formality works in some countries, informality in others. Someone nearby and speaking the same language is the key.
Without disclosing the client company, using this model in Russia, the takedowns went from the hundreds in volume with a low compliance rate to the tens of thousands of takedowns for the exact same cost with the local provider. As an added bonus, the compliance also occurred at a faster pace. Days instead of weeks.
Is there a downside? I use a pretty low-rent version of this, and have employees with often other responsibilities do this as well. So I don’t have their entire focus on the task. But as we have organization-wide support for anti-counterfeiting, I can usually make enough of a ruckus for them to make the contacts and get the job done.
Well, as I mentioned, there is a bit of increased risk. You will have to have another firm with a Letter of Authorization or Power of Attorney on file. You will also have to have more hands on the management of escalations. With the increased volume, you could have an increase in litigation. This is why having a dedicated manager or team for this function is essential. In my experience, the added possible litigation costs are more than offset by the increase in volume of takedowns, and by providing a cleaner sales channel leading to increased revenues in that market.
You touch on something important—TIME. You have to choose where and when you spend your time. Is it worth it? So what other countries has your approach worked in?
I have had similar experiences with other problem areas in South America and Asia supplementing with local providers. There are other advantages and disadvantages to this model, but those are for other follow-up columns. I haven’t named provider company firms, and I won’t bash anyone by name. If you are interested, I will share with whom I have had great success with locally in hard-to-enforce upon areas.
Thanks for providing this perspective. Happy hunting!
THE BRAND PROTECTION PROFESSIONAL | JUNE 2017 | VOLUME 2 NUMBER 2
COPYRIGHT 2017 MICHIGAN STATE UNIVERSITY BOARD OF TRUSTEES