How Not To-Do A Watch List
A month ago the European Commission released its biennial cast of bad actors. The online spaces and physical marketplaces playing their part in intellectual property infringement. In the Commissions own words, putting “counterfeit and piracy hotspots in the spotlight”. The watch list has two stated aims:
- Encourage the bad actors to reduce the availability of IPR infringing products; and
- Raise consumer awareness on the negative impacts of counterfeiting and piracy.
Looking at the document its immediately apparent that raising consumer awareness is a secondary aim. By some distance. In substance and tone, it is clear rightsholders are the intended audience. An exercise in information sharing across brand owners, creative industries, IP protection vendors, trade associations, and any interested parties. The Commission acts as a facilitator of communications, a repository of pirate platforms, and ultimately a notorious markets list curator. The European counterpart to the US Trade Representative; the Commission doesn’t carry the international relations baggage of the USTR.
A formatted online version of both lists can be found here.
Baggage or not, the Commission’s list has the same fundamental issues, specifically in the realm of ecommerce:
- Lack of analysis
- Lack of transparency
Analysis
We described the problem back in 2019 discussing the US Notorious Markets List. The same applies here. The Watch Lists cast a wide net, the only submission restriction is geographical i.e. platforms submitted must be outside the jurisdiction. Although, creative US brand owners manoeuvred Amazon onto the Notorious Markets List as ‘Amazon’s foreign domains’. Indeed, the USTR asserts Amazon is a notorious market in Canada, the UK, Germany, France, and India; but absolutely not in the US. Aside from the geographical bar, rightsholders are free to submit physical marketplaces, illicit on pharmacies, pirate sites, torrent indexes, state-backed operations engaged in satellite piracy alongside the most recognisable ecommerce platforms in the world. As we have discussed previously:
“Mixing examples of criminality with legitimate online platforms within a single list inevitably leads to intra-cohort comparison – platforms will distinguish their behaviour from the worst offenders to demonstrate the injustice of their inclusion. In the words of Alibaba “The credibility of the Notorious Markets report depends on ensuring that the list differentiates between enterprises that were conceived to promote illicit trade and those that are legitimate marketplaces.”. However, the List does not differentiate platforms by type or purpose, bundling Taobao alongside beoutQ and The Pirate Bay. Neither does the List categories in terms of priority, unlike the Special 301 Report (focused on countries which “do not adequately or effectively protect and enforce intellectual property (IP) rights)”, which splits countries into either the ‘Watch List’ or ‘Priority Watch List’. As such, the credibility of the platform depends on careful evaluation of information provided during the public consultation and credible analysis contained in the report regarding each platform.”
Unlike the US List, the Commission does demarcate platforms by type. There are four broad groupings: online service providers facilitating copyright piracy, ecommerce platforms, illicit online pharmacies and facilitators, and physical marketplaces. The copyright piracy grouping is subdivided to include cyberlockers, BitTorrent, non-compliant hosting providers, IPTV services etc. This group then has social media platforms shoehorned in. Another peculiar choice is the complete lack of consideration of hosting platforms or social media platforms which facilitate counterfeiting. In our Digital Piracy Trends predictions we discussed the seemingly pervasive lack of awareness amongst rightsholders of counterfeits hosted on Shopify. Or Shopify webstores being abusively created to dropship knockoffs.
In part, the groupings are driven by the rightsholder submissions. If brands fail to submit hosting providers for facilitating counterfeiting, the Commission sees no reason for such a subgroup to exist. Here lies the issue – a lack of analysis. There were submissions including hosting platforms as facilitators of counterfeit webstores, but this issue wasn’t adequately picked up on. The wonderfully detailed UNIFAB (French trade association of brand owners) annex includes hosting providers, social media platforms, and messaging apps. The UNIFAB annex improves on another aspect absent from the EC and US lists – stating issues by priority level. UNIFAB’s submission includes a three-tiered system:
“-Priority 1: Black list
Very problematic market. Absence of effective measures, or even any measures at all. Raises tremendous concerns.
-Priority 2: Intermediate list.
Problematic market. Some measures may have been undertaken, but counterfeit still remains very visible.
Outside of that list, we created another category, for markets which may not deserve to be on the list per se, but still need to be monitored.” (emphasis in original)
Both the EC Watch List and US Notorious Markets List need to adopt this approach. There needs to be a clearer understanding of the issues submitted, logically categorised by type and priority.
Transparency
A far greater issue: transparency. Or better put, the complete lack of transparency throughout the process. From submissions to decision-making, the workings of the Watch List could do with being put in the spotlight. Regardless of the legal status of the Watch List, having the weight of the European Commission behind it comes with responsibilities. Responsibility should always be accompanied by transparency.
Yet, the Commission allows anonymous submissions, fails to provide adequate submissions guidance, and provides merely a vague methodology explaining the selection process. Hardly a beacon of transparency. Or credible research. Combined with the issues of analysis, these factors generate a scattergun approach to curation. The value of the Watch List is at risk if observers consider credibility to be compromised through poor decision-making. As a headline from Managing IP reads “Brand owners question EU counterfeit watch list credibility: Alibaba, Amazon and eBay escape list despite being the most frequently reported platforms by IP owners”.
Anonymity
Anonymous submissions must not be allowed unless there are compelling circumstances. There are no obvious justifications for accepting such submissions. Whilst some rightsholders may feel anxious not to include a platform they also have a commercial agreement with, they are able to lobby trade associations which often submit on behalf of rightsholders. For example, the UNIFAB list is a collection of platforms reported to UNIFAB by members. Rightsholders also have the option to leverage vendors they contract with. There was not a single anonymous entry falling outside of these options. None justifying anonymity due to concerns over operationally sensitive matters, nor any which could interfere with legal proceedings which could not be submitted through partner organisations. Furthermore, rightsholders often use partner organisations to double dip – report a platform in the name of the rightsholder and lobby a trade association / vendor to also report the platform. Thus boosting total referrals of the platform.
Also, submissions marked as anonymous have not been adequately redacted. There are plenty examples still displaying information which should be redacted – including personal identifying information of individuals submitting takedown notices. This is unacceptable from both the reporting organisations and the Commission.
Guidance
Submissions guidance should not be overly prescriptive, as to not exclude emerging issues, providing space for the list to evolve in step with digital piracy trends. Nor should any guidance be overly burdensome by requiring so much information in the submission only the largest rightsholders and trade associations would have time to draft a response. However, it is not too much to ask for submissions to be well-formatted, with platforms divided by category groupings, and a comment on priority level. Priority is currently handled by asking respondents to submit platforms in order of priority. Not ideal. Having distinct priority bands as per UNIFAB is needed. Any platform not covered by an existing grouping can be included in an ‘other’ section, with suggested new categories or subcategories being considered by the Commission during the curation process.
Selection
Section 2 of the Watch List is titled “Methodology” – however, there is no discernible methodology applied when reading the output in light of the input. As stated in the working staff document:
“The Commission services conducted a public consultation between 19 February and 1 June 2020. Its results form the basis of the Watch List.”
Other sources include the numerous reports published by EU organisations regarding intellectual property and web analytic data. Furthermore, the platforms are permitted to submit a defence, albeit before they see the claims against them. As stated in the working staff document:
“The contributions of other stakeholders such as e-commerce, social media platforms, providers of internet infrastructure services or associations of providers of technology products and services were also taken into account to select the marketplaces and operators in this Watch List, as they provided information on the measures they take to reduce the availability of counterfeit offers on their platforms.”
Both Alibaba and Amazon filed a submission to the Commission and were spared inclusion. Cloudflare too was controversially excluded seemingly on the basis of their own defensive submission. Yet eBay – another top reported platform not included – did not submit any information to the public consultation. Further muddying the waters is the inclusion of Mercado Libre – in many ways the Latin American equivalent to Alibaba, Amazon, and eBay. Mercado received fewer requests for inclusion than any of its international counterparts, but makes the list. Mercado offers rightsholders brand protection tools comparable to Amazon; that being worse than Alibaba but better than eBay. Mercado has also displayed an intent to further improve IPR protection measures with a revamped portal and a PR campaign designed to raise awareness of their efforts.
To be clear, whether any of the above platforms should be included is not the question at hand. Contrasting Mercado’s inclusion against Alibaba, Amazon, and eBay shines a spotlight on the deficiencies of the Watch List. There is no credible rationale to justify the inconsistency. A lack of methodology plus weak analysis has severely undermined the Commission’s second attempt at producing a counterfeit and piracy watch list.
What Can Be Done
By the third edition of the Watch List the Commission must:
- Publish guidance on how submissions are to be structured.
- Publish methodology and selection criteria from the outset of the public consultation.
- Add subcategories to ecommerce and illicit online pharmacies sections.
- Use priority bands, defined and enumerated.
- Convene a selection panel to work alongside the Commission in the curation process. The panel should draw from a range of expertise to assist the analysis.
- Prohibit anonymous submissions unless the respondent has a compelling reason to justify anonymity. Ensure anonymised submissions are adequately redacted.
With a few tweaks the European Commission will craft a powerful tool pushing for greater accountability and governance from online spaces and physical marketplaces.
