UKIPO unveils report highlighting influence of social media influencers (also) on the purchase of counterfeits

 Last week, the UK Intellectual Property Office (UKIPO) released an intriguing report measuring and analyzing (apparently for the first time) the influence that social media influencers exert on consumers also when it comes to purchasing counterfeits.


This kind of research is timely, also considering – among other things – recent initiatives in which brand owners and Amazon joined forces to bring judicial proceedings – now settled out of court – in the USA against influencers over the advertising, promotion and facilitation of sale of counterfeits on the latter’s platform through the influencers’ own accounts on Instagram, Facebook, and TikTok, as well as their own websites.

The findings

The UKIPO’s findings are based on a quantitative survey of 1,000 female (studies suggest that influencer marketing is “highly gendered”) consumers in the UK, aged 16 to 60 and who use social media at least once per week.

In addition, the notion of ‘counterfeit’ was taken to refer to “items that look identical to a genuine product with or without the official branding/logo, but are not made by the brand and may be of lower quality, for example, a handbag of identical design to a “Chanel” with or without the Chanel logo.”

While the majority (70%) of those who have knowingly purchased a counterfeit (17% of the surveyed consumers) are aged 16 to 33, 13% of the surveyed persons have their purchasing behaviour relating to counterfeits influenced by social media endorsements and 10% are prompted to buy counterfeits by social media endorsements. The most popular product categories for counterfeit shopping are fashion, accessories, jewellery, and beauty.

There are 4 main reasons why younger consumers tend to follow influencers’ recommendations more than older consumers: 
  • Younger adults would be more susceptible to the influence of trusted others; 
  • They would be less likely to perceive the risks associated with buying counterfeits; 
  • They would tend to have a higher risk appetite; and 
  • They would be more likely to construct rationalizations which justify the purchasing behaviour. 
In relation to the latter, the report concludes that influencers play a key role in constructing rationalizations that neutralize “any residual concerns about personal risks, broader societal harms and perceptions of deviance”.

The empirical angle

As stated, the UKIPO report makes for a timely addition to the growing body of literature, case law, and policy initiatives relating to online consumption behaviours and IP.

If we consider at the outset the reasons why consumers access and purchase unlawful content/products, there are several of them. Before presenting such reasons, however, it is important to differentiate between objects that infringe patents and design rights and objects that infringe copyrights and trade mark rights.

In relation to the former, studies suggest that consumers tend to be indifferent about or unaware of the infringing nature of such products, all this implying that the demand for these items is likely to be supported by the same reasons as the demand for non-infringing ones. In relation to the latter, instead, it is important to focus in particular on the secondary market, where consumers knowingly choose to purchase an infringing product, rather than on the primary market, where consumers are deceived and believe that their purchase is of a lawful object. In such secondary market, three main factors have been identified as driving the demand for counterfeits and pirated content:
  • The characteristics of such products/content, including the price and quality thereof;
  • The individual consumer, including their economic situation and/or concerns regarding the purchase and consumption of counterfeits and pirated content;
  • The institutional environment in which the demander operates, eg, the risk of discovery in jurisdictions where penalties for demanders exist, or the availability and ease of acquisition of counterfeit and pirated products.
The drivers identified above have been confirmed in several studies, including in relation to online piracy. With particular regard to the driver consisting of the individual consumer and their economic situation, empirical evidence suggests that online piracy correlates remarkably strongly with a lack of purchasing power. The same appears to be true, at least in certain cases, for the purchase of counterfeits.

The UKIPO report confirms, with particular regard to the impact of influencer marketing, the main findings described above.

If you wish to find out who they are, click here
The legal angle

While solutions that might be employed against influencers that advertise and promote the sale of unlawful products may be available under advertising law and regulation, consumer protection, and – at least in certain situations – unfair competition, the current IP framework in Europe also provides tools that might be relied upon.

For example, the EU trade mark framework specifically refers the unauthorized use of a trade mark in advertising (Articles 9(3)(e) EUTMR and 10(3)(e) EUTMD) and the unauthorized offering of goods carrying a trade mark (Articles 9(3)(b) EUTMR and 10(3)(b) EUTMD) as prima facie infringing.

Similarly, the EU design framework refers to the unauthorized offering of products in which the design is incorporated or to which it is applied as a potential infringement (Articles 19(1) CDR and 12(1) Design Directive).

Turning to copyright, formally one could still distinguish between (EU-harmonized) primary/direct and (non-harmonized) secondary/indirect/accessory liability. Nevertheless, taking into account the progressive and expansive construction of inter alia the right of communication to the public under Article 3 of the InfoSoc Directive by the Court of Justice of the European Union (CJEU), an argument could be plausibly made that an influencer promoting the sale of copyright-infringing products could be performing themselves an act of communication to the public. Similarly, it could be argued that – at least in certain situations – an influencer also performs an act of distribution under Article 4 of the InfoSoc Directive when promoting the sale of copyright-infringing content: in Dimensione Direct Sales [here], for example, the CJEU held that the advertising for sale of infringing products (in that case: designer furniture) falls within the scope of application of Article 4, and that is so irrespective of whether there has been any actual distribution of the infringing products themselves.

The policy discourse

Finally, it is also worth recalling that in Europe an increasing pressure is being put on online platforms to do more to tackle the making available/sale of infringing content/products.

While historically internet intermediaries have been, at certain conditions, eligible for the application of the Ecommerce Directive’s safe harbours (see inter alia the still seminal CJEU 2011 L’Oréal decision), this has not prevented the development of voluntary measures aimed at establishing a cooperation between them and rightholders. Voluntary codes of conduct for internet service providers have been also adopted in several EU Member States. Furthermore, over the past few years, the European Commission unveiled a Memorandum of Understanding on the sale of counterfeits on the internet and a number of soft law instruments.

More recently, the EU legislature adopted the DSM Directive, whose Article 17 is premised on the direct responsibility of certain internet platforms for the making available of user-uploaded copyright content and the unavailability of the Ecommerce Directive’s hosting safe harbour for such platforms in relation to activities falling within the scope of application of that provision.

More or less in parallel with such policy and legislative developments, the CJEU has also ruled on the direct copyright liability of internet platforms at certain conditions (Ziggo [here], YouTube/Cyando [here]). Currently, a case (Louboutin) is pending before the Court, in which the key issue is whether Amazon could be held directly liable for trade mark infringement over its fulfilment program.

Finally, towards the end of last year, the European Commission unveiled its proposal for a Digital Services Act (DSA), which has now progressed to the Council and the European Parliament and is expected to be adopted sometime next year, further to the conclusion of trilogue negotiations. One of the key provisions is the ‘Good Samaritan’ clause, which seeks to encourage internet intermediaries to take proactive measures without the risk of losing the safe harbour protection.

Conclusion

In conclusion: influencers, beware!

[Originally published on The IPKat on 27 December 2022]

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