The BCGuardian Blog – BCGuardian

Internet Intermediaries as an Effective Enforcement Tactic

A common enforcement tactic regarding websites offering copyright or trademark infringing content involves preparing a formal Cease and Desist notice to the site explaining that they are infringing and detailing the specific instances of infringement found on the site. This tactic can and does work in many cases. But what happens when that notice goes unanswered and the site continues to infringe? This is particularly true of sites operated by individuals in jurisdictions that may not respect the laws of the country in which the content owner operates and from which the notice is sent. It seems that litigation may be the only recourse.

But litigation is expensive, time consuming, and does not always result in the complete cessation of infringement. Fortunately, another tactic exists that rightsholders can use: Go after the intermediaries (or 3^rd parties) that are supporting the operation of the site. And by “go after” we mean send them notices that their customer is using their service(s) to infringe your rights, and request that they stop allowing this. Of course, successfully convincing intermediaries to cease doing business with a customer does not necessarily mean that customer can’t find other intermediaries. But the point is to make it as difficult as possible for recalcitrant operators of infringing websites to continue to infringe.

So, who are these intermediaries? An answer to that question will, no doubt, vary from site to site but, generally speaking, intermediaries include the following:

Hosting Providers

Websites are typically hosted by 3^rd parties whose business is built, in part, upon the revenue generated from the hosting services provided to their customers. Without some kind of hosting provider, websites would not be accessible to Internet users. Thus, hosting providers offer crucial services and serve as a single point of failure for website operators. That is, if they lose their host, they lose their ability to continue to infringe.

Payment Processors

Websites whose business model consists of selling pirated goods, such as infringing eBooks, movies, music, software and/or games, typically do so using some kind of payment processor. These comprise 3^rd parties who process payments on behalf of their customers’ ecommerce sites generally in exchange for a percentage of each transaction. Convincing them to cease doing business with the infringers removes an essential part of their business, i.e., the ability to collect payments for the sale of their infringing goods.

Search Engines

Websites commonly generate more revenue when they generate more traffic. And more traffic comes with increased visibility. Search engines have long been a vital resource for operators to increase the chances that users will visit their websites. This is also true for the operators of infringing websites. Fortunately, most of the well-established search engines will remove listings from their indexes when provided with sufficient evidence establishing that the listings lead to infringing content.

Advertising Providers

Generally, infringing websites generate their revenue in two distinct ways: By placing advertisements on their sites for which advertisers compensate them and/or by placing advertisements on 3^rd party sites seeking to drive traffic to their site. In either situation, 3^rd parties support the activity and are generally amenable to processing notices of infringement.

Domain Name Registrars

While domain name registrars truly count as 3^rd party intermediaries, their liability is somewhat limited when it comes to the content of websites. On the other hand, if there is a trademark dispute regarding a domain name, content owners may use the Uniform Domain-Name Dispute-Resolution Policy (commonly known as the UDRP) to force registrars to turn over the infringing domain name to the content owner. While this will not force the website itself offline, it will take away its domain name, which is a key ingredient in advertising, search engine optimization and, to an extent, payment processing.

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Challenges Bred by the Modern Model of Counterfeit Sales

Mike Candore

Gone are the days when the threat posed by counterfeit goods was confined to the reach of the street corner vendor. Infringing merchants today rely on an increasingly sophisticated patchwork of otherwise legitimate third-party intermediaries to promote and enable their unlawful activity. This modern online sales and distribution model presents three core challenges for rights owners to understand and navigate.

Challenge No. 1: Increased visibility enables pirate sites to compete directly with rights owners and legitimate distributors like never before.

Third-party services have made it easier than ever for infringing merchants to promote their illegitimate goods across some of the most trafficked websites and marketplaces on the web. These services enable bad actors to purchase and place advertisements for infringing products side-by-side with legitimate products and promote their listings to the top of search engine or online marketplace search results.

The lower cost structure associated with the sale of counterfeit products can make it difficult for rights owners to compete, as bad actors can commit larger bids to compete in online advertising while simultaneously offering lower product prices. In an environment where ad placement is granted to the highest bidder, infringing merchants can capture a disproportionate share of voice, increasing the threat of sales erosion and indirectly increasing rights owners’ advertising spend.

Challenge No. 2: Platforms and tools built around merchant anonymity enable bad actors to hide in plain sight, or worse, create the veneer of legitimacy.

Some marketplaces and platforms are built around merchant anonymity and even compound the challenge by offering supplemental services to promote or incentivize customers to buy from anonymous sellers. For independent pirate sites, the deployment of a complementary suite of third-party services can provide a polished customer experience with little-to-no development required on the part of the pirate site. Taken together, these services make it very difficult for a customer to understand from whom they are buying and may lead customers to believe they are purchasing legitimate goods. Along with the threat of sales erosion, this increases several other risks such as brand dilution and consumer product safety concerns.

Challenge No. 3: Barriers to re-entry are commonly low and subject to limited controls, enabling infringing merchants to reappear after enforcement or hedge enforcement by operating multiple outlets simultaneously.

The analogy of IP protection as a game of whack-a-mole may historically be associated with digital anti-piracy efforts, but as counterfeit hard goods are increasingly sold online, the parallels become apparent. With the proliferation of competing online intermediaries in the value chain, it has never been easier for bad actors to maintain a revolving door of service providers that will enable them to temporarily evade detection and enforcement.

More challenging is the intermediary which enables bad actors to hedge against enforcement by operating numerous outlets simultaneously or which does not perform due diligence during account creation, thereby allowing the same bad actor to create a new account following initial detection and enforcement. This challenge perpetuates Challenge Nos. 1 and 2 as it subverts effective and meaningful IP protection.

The news is not all bad, however. Many intermediaries are household names in online search, e-commerce, payment processing, and web hosting. Most are committed to the removal of infringing and illegal activity from their platforms and have stated policies for intellectual property infringement. Some have committed significant resources to the development and management of streamlined enforcement channels for rights owners. Learning how to leverage and integrate the tools made available to rights owners should be at the core of an effective brand and content protection program in today’s online ecosystem.

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Six Reasons to Register Your Copyrighted Content

Mike Candore

While copyright protection is established upon a work’s creation, registration of the work with the U.S. Copyright Office adds significant value for rights owners. Most advantages to registration stem from enhanced protection and recourse should the copyright be infringed, but there are also compelling business reasons in support of registration.

We outline the top six reasons to register a copyrighted work with the U.S. Copyright Office.

1. Registration Allows Rights Owners to bring Infringement Actions in Federal Court

The most valuable benefit of registration is the rights owner’s ability to bring an action to protect its copyrighted work from infringement. If the rights owner’s copyright is violated, it may seek recourse by filing litigation for copyright infringement in federal court only if the work has been registered with the U.S. Copyright Office.

2. Registration Grants Eligibility to be Awarded Statutory Damages and Attorneys’ Fees in an Infringement Proceeding

When timely registration is completed – within three months of a work’s publication – the rights owner may pursue statutory damages for infringement of its copyright. The option to pursue statutory damages relieves the burden of proving actual damages related to the infringement of the work, which is increasingly difficult to do in today’s complex digital economy for content.

The ability to leverage the possibility for large statutory damages may also position the rights owner favorably in pre-litigation settlement discussions or serve as an outright deterrent to infringement in the first instance.

What’s more, should the rights owner prevail on its claim of copyright infringement, it may seek remuneration for attorneys’ fees if the work is registered with the U.S. Copyright Office.

3. Registration Grants Presumption of Ownership and Validity

When a work is registered with the U.S. Copyright Office within five years of its publication, the registration certificate provides evidence of ownership of the underlying work and validity of its copyright. Should the rights owner seek to enforce its rights in court, the burden of proving ownership and validity in the absence of a copyright registration will often be significantly more difficult and costly.

4. Registration Establishes a Public Record of Ownership

A public record of ownership makes known the rights owner’s claim to its registered work and may also provide the means for interested parties to contact the rights owner to lawfully license content.

5. Registration Offers Additional Protection by U.S. Customs against Imported Counterfeits

Owners of a registered copyright may submit notice of the registration to U.S. Customs and Border Protection in order to receive increased scrutiny during screening of goods imported into the U.S. This is of particular value to owners of content distributed across a physical medium with a known susceptibility to counterfeiting, such as printed books, CDs, and DVDs.

6. Registration Demonstrates Commitment to the Protection of Creative Expression, Scholarly Endeavor, and Technological Progress

Whether a visual work of art, a recorded album, a written work of fiction or non-fiction, or innovative software or technology, a rights owner that commits to the registration of its copyrighted works demonstrates its commitment to the protection of intellectual property.

For publishers of content, a demonstrable commitment to the protection of intellectual property may contribute to competitive advantage in signing artists, authors, and other producers of content. This is particularly true in royalty-bearing situations where copyright infringement erodes value from not only the publisher, but also from the content creator.

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Rights owners should develop a copyright registration strategy that weighs the benefits to copyright registration with the internal and external costs of registration. Where the content is actively monetized or represents an asset with expected future cashflows, the scales should tip heavily in favor of registration.

BCGuardian has significant experience developing and implementing registration strategies and programs for rights owners. Contact us to find out more about how we may be able to help protect your content through fully managed copyright registration programs.