The immense popularity of social media and marketplaces, especially for certain industries such as fashion or cosmetic products, means that most of trademark infringements and breaches on the Internet occur on social media like Instagram and marketplaces like Amazon, eBay or AliExpress.
Both of these, along with the effects of the pandemic, have been two of the biggest catalysts for the huge growth of e-commerce, with sales in 2019 reaching $3.5 trillion and forecast to reach $4.9 trillion by 2021. 2019 figures are expected to double by 2023. Regarding sales through marketplaces, these already accounted for more than 58% of total online sales that year, in a context where more than 40% of consumers believe that the products sold on these platforms are original products.
It is clear, therefore, that, for trademark owners, social media -whether they have become marketplaces or not-, as well as platforms such as Amazon, eBay or AliExpress, are an important showcase to advertise and sell products online. But it is also where a significant number of counterfeits and trademark breaches take place.
By virtue of Law 17/2001, of December 7, on Trademarks (hereinafter, TL), the registration of a trademark confers on its owner an exclusive right over it. In this way, it empowers them by prohibiting any third party its use without their consent in the course of trade, not only of that exact trademark, but also of any sign identical or similar to it in cases where there is risk of confusion on the part of the public, like when it is used in similar products or services.
For this reason, the most common case scenario in relation to online trademark breaches is that of a third party who pretends to look like a trademark owner on different social media, using variants or mere reproductions of their denominative trademarks, like its user name and/or figurative trademarks such as a profile photo, publishing content that is sometimes misleading regarding the origin of the products and/or services, and other times even offensive content. How to act in this situation?
First of all, we must be able to detect them. In the immense space of the Internet, firms such as PONS IP have technology as their ally: we have tools to detect and eliminate counterfeits and misuse on the Internet in real time. Thanks to big data processes, we are able to identify this information through machine learning techniques, together with cybersecurity analysts that analyze and classify this information. We also have agreements with marketplaces, social media and Google to have their support and quickly eliminate it. Through Google’s TCRP (Trusted Copyright Removal Program), infringing URLs can be deindexed in minutes as long as we can prove exclusive rights.
If the circumstances and the territory in question so require, taking the case to court is also a valid way to deal with this type of breach. In these cases, first of all, the strategy to be followed by PONS IP is usually to try to solve the matter out of court by contacting the platforms themselves. On the other hand, depending on each case, an extrajudicial injunction is sent in parallel to demand the cease and desist in the unauthorized use of the client’s trademark as a previous step to the possibility of taking the case to Court.
If the extrajudicial procedure is ineffective and the requested party ignores the letter received or refuses to comply with the required conditions, the relevant actions are initiated, which usually take the form of a trademark infringement filing. This is without prejudice to the possible need to consider legislation on Unfair Competition and image rights, where appropriate, and to assess whether, in addition, the specific infringement can be subsumed under any of its provisions.
In judicial proceedings, the sanctions to which the alleged infringers are exposed are contained in art. 41 of the TL, namely: cessation and future prohibition, removal, publication of the sentence -when circumstances of the infringement so advise- and, of course, indemnity, for which they can be sentenced to compensate the owner of the registered trademark for damages and losses.
Regarding the calculation of the indemnity, it is carried out in accordance with art. 43 of the TL, with the most commonly used criteria for its determination being the profits obtained by the infringer -i.e., the sales or turnover minus cost or expenses for production or distribution- or the hypothetical royalty: the price that the infringer would have had to pay the owner for the granting of a license. For cases where it is difficult to determine an economic compensation, the Law provides, as a sort of minimum indemnity, 1% of the turnover of the infringer in relation to the products or services with trademarks that have been illegally used.
In addition, once the infringement has been declared, the Law provides for the imposition of a coercive indemnity to the infringer in a minimum amount of 600 euros for each day that elapses until the infringement effectively ends.
In short, just as it is essential to register a trademark in order to enjoy exclusive rights, it is even more important to be able to monitor and enforce these rights so that they are not used without the owner’s consent, thus avoiding dilution, reputational risk or loss of profits. With the help of technology and sufficient legal resources, the importance of being able to defend trademarks’ intangible assets in an increasingly less “tangible” economy is becoming more and more evident.
Carmen González Candela, Trademark manager at PONS IP
Claudia Oleaga Maguregui, Legal Department Lawyer at PONS IP