On October 24, 2017, the European Union Intellectual Property Office (EUIPO), through the European Observatory on Infringements of Intellectual Property Rights, released the second phase of a study on ‘online business models infringing intellectual property rights’ (IPR). The study was commissioned in 2015, and was divided into two phases:
- Phase 1, a qualitative study aimed at providing an overview of the different business models used to infringe IPR online; and
- Phase 2, a quantitative study, where one or more important specific business models and strategies would be researched in detail.
Phase 1 was released on the EUIPO website on July 12, 2016, and can be found on its website here. Phase 1 focused solely on a study carried out in Denmark that focused on a detected pattern of a specific use of the domain name system (DNS) taking place on the Danish country code top-level domain (ccTLD) .dk was identified. The aim of this study was to analyze patterns behind the way different e-shops were set up online. The study found that e-shops suspected of marketing infringing goods were set up using domain names that had been previously used online. When these domain names were available for re-registration, the infringing entities would systematically re-register the name and set up their online store. The results of this study indicated that infringers were likely conducting the same re-registration tactics in other European countries. Based on this conclusion, the EUIPO commenced Phase 2, which focused on four European countries with large e-commerce sectors: 1) Sweden; 2) Germany; 3) the United Kingdom; and 4) Spain.
The research conducted showed that the same pattern previously found in Denmark also occurred in Sweden, Germany, the United Kingdom, and Spain. Out of 27,870 e-shops that were suspected of marketing trademark-infringing goods in these four countries, 21,001 of these shops (75.35%) were detected using domain names that had previously been used to direct Internet traffic to websites that had no relation to their prior use. Nonetheless, the research also seems to indicate that what on the surface seems like thousands of unrelated e-shops are likely to be one or only a few businesses marketing suspected trademark-infringing goods. Some other conclusions of the study include:
- product category: shoes are the product category mainly affected in 67.5% of the suspected e-shops and clothes are the product category mainly affected in 20.64%;
- software used: 94.6% of the detected suspected e-shops used the same specific e-commerce software;
- registrars: 40.78 % of the detected suspected e-shops in Sweden and the United Kingdom were registered through the same registrar.
The findings of this study do not include any policy recommendation but are rather aimed at providing material to the law enforcement community and Internet intermediaries, as well as trademark holders and consumers, in order to understand the scale and traits of this business model.
The full report can be found here.