Senator Chris Coons Chairs Judiciary IP Subcommittee Hearing on Protecting Families and Shoppers From Counterfeit Goods Sold Online
A hearing entitled “Back to School with the SHOP SAFE Act: Protecting Our Families from Unsafe Online Counterfeits,” explored legislation that would combat counterfeit goods sold on e-commerce platforms and protect shoppers and consumers. U.S. Senator and Chair of the Senate Judiciary Subcommittee on Intellectual Property Chris Coons chaired the hearing yesterday to highlight the rise of harmful counterfeit items sold online. He says the tools counterfeiters are using are becoming far more sophisticated…
He adds that online counterfeiting efforts are so successful that two-thirds of American consumers surveyed had unknowingly bought a fake product online last year, according to one report. Senator Coons also mentioned the Customs and Border Patrol warnings of how fake goods can also pose real dangers as well—putting the health and safety of all Americans at risk.
Senator Coons this week chaired a Judiciary IP Subcommittee hearing on protecting families and shoppers from counterfeit goods sold online. Senator coons says the issue isn’t just a matter of tricking consumers into spending their money on harmlessly fake products. As the CBP — the Customs and Border Patrol — warned earlier this year, fake goods can pose real dangers that put the health and safety of all Americans at risk….
Senator Coons also mentioned counterfeit prescription drugs sold to consumers online that are at best ineffective and at worst –in some cases deadly to those who purchase them. The purpose of the hearing was to explore legislation that would combat counterfeit goods sold on e-commerce platforms. You’ll find more information at thetalkofdelmarva.com.
Additional Information from the Office of U.S. Senator Chris Coons:
U.S. Senator and Chair of the Senate Judiciary Subcommittee on Intellectual Property Chris Coons (D-Del.) chaired a hearing yesterday to highlight the rise of harmful counterfeits sold online.
The hearing, entitled “Back to School with the SHOP SAFE Act: Protecting Our Families from Unsafe Online Counterfeits,” explored legislation that would combat counterfeit goods sold on e-commerce platforms and protect shoppers and consumers. Senator Coons and Subcommittee Ranking Member Thom Tillis (R-N.C.) introduced the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce (SHOP SAFE) Act to protect consumers from harmful counterfeit products that are sold online. The SHOP SAFE Act would reduce the availability of harmful counterfeit products online by incentivizing platforms to engage in best practices for vetting sellers and goods and stopping repeat counterfeit sellers.
As Chair of the Senate Judiciary Committee’s Intellectual Property Subcommittee, Senator Coons has long advocated for protecting U.S. intellectual property rights and the American consumer from counterfeit goods and making U.S. IP law more reliable, effective, and predictable. In July, Senators Coons and Chuck Grassley (R-Iowa) introduced a bipartisan resolution recognizing the month of August as National Anti-Counterfeiting and Consumer Education and Awareness Month and highlighting the importance of the roles of trademarks in the American economy and in protecting consumer safety. In the same month, Senator Coons held a hearing on oversight of the U.S. Patent and Trademark Office (USPTO) to ensure U.S. intellectual property laws are being enforced predictably and effectively by, among other things, exploring the actions the USPTO is taking to combat sales of counterfeit goods.
Senator Chris Coons (full transcript): This hearing will come to order. I’d like to thank our witnesses for participating today. I’d also like to thank Ranking Member [Thom] Tillis [R-N.C.] and his staff for working in a collaborative way to put this hearing together, and I’d like to welcome Senator [Mazie] Hirono [D-Hawaii]. This is our fifth hearing of the IP Subcommittee of this year, and Senator Tillis, you and your team continue to be great partners in moving forward.
Just to set the stage more broadly on the focus of this hearing: Online shopping has expanded dramatically — has exploded in recent years. Last year, U.S. e-commerce sales exceeded a trillion dollars for the first time, as millions and millions of Americans turned to online platforms, from eBay to Amazon, to find the brands they trusted at prices they could afford. Counterfeiters, unfortunately, have moved online right alongside American consumers, and their tools are becoming far more sophisticated. Counterfeiters are no longer selling fake handbags or watches on a street corner or a flea market. New, modern, online counterfeiting delivers products that look real, with listings featuring images that show the real product and fake reviews that make their knockoffs seem authentic. Online counterfeiting efforts are so successful that according to one recent report, two-thirds of American consumers surveyed had unknowingly bought a counterfeit product online last year.
This isn’t just a matter of tricking consumers into spending their money on harmlessly fake products. As the CBP — the Customs and Border Patrol — warned earlier this year, fake goods can pose real dangers that put the health and safety of all Americans at risk. Fake lithium batteries, for example, batteries that power laptops, can explode or catch fire. They caused 70 deaths and 350,000 serious injuries in one recent year alone. Counterfeiters are also targeting airlines, trying to sell fake engine parts that have demonstrated to increase the chances of a crash, and counterfeit prescription drugs sold to consumers online are at best ineffective, and at worst, in some cases, deadly to those who purchase them.
Now, if I unknowingly bought a fake laptop at my local Best Buy up on Concord Pike, and it then caught fire in my home, Best Buy would be liable for the harm to me and liable to the brand owner for contributing to trademark infringement. This framework for liability incentivizes brick-and-mortar stores to thoroughly and proactively vet their supply chains to keep counterfeit products out of consumers’ hands. That same counterfeit battery bought online is met with a different liability framework. Platforms don’t have the same proactive obligations. In fact, they need not remove a listing until a brand owner tells the platform specifically that the listing is counterfeit. The weight — the onus — for policing online counterfeits is principally on brands, not platforms. Under this structure, brand owners have to play a never-ending game of whac-a-mole as they monitor a multiplying number of online marketplaces for counterfeit listings.
Platforms know they have a counterfeit problem, and many have undertaken laudable anti-counterfeiting efforts, but current efforts are neither effective nor sufficient, because the problem hasn’t gone away. In fact, it is dramatically increasing. That’s why I was proud to reintroduce the SHOP SAFE Act last week with Senator Tillis, a bill that works to try and balance the rights of brand owners and the obligations of online platforms to intercept and stop the sale of harmful counterfeit goods. The act opens platforms to liability if counterfeit goods affecting health and safety are sold on the platforms, the same liability brick-and-mortar retailers have been subject to for decades. It requires brand owners to provide platforms with notice of their trademarks and a critical point of contact, so platforms can proactively implement an articulated list of best practices to keep unsafe counterfeits out of consumers’ online shopping carts. Those best practices include better vetting before goods are listed, quickly removing counterfeit listings, terminating repeat counterfeiters, and requiring accurate images of the products sold. Platforms that follow best practices will have a safe harbor from liability; in other words, platforms making genuine and good-faith efforts to clean up their sites have, and should enjoy, a liability shield.
Our reintroduction last week came after a fair amount of work in the last Congress — hearings, in both 2019 and 2021, that highlighted the rise in anti-counterfeiting. It is not my anticipation that the bill introduced is perfect or final, and part of this hearing from those who both support and oppose this bill is to welcome input — both critiques and compliments — in an effort to try and sharpen and shape the bill into something worthy of enactment. Since Senator Tillis and I first introduced SHOP SAFE, we’ve heard from stakeholders who would be impacted by the bill. I appreciate their efforts and the work we’ve done to make changes to the bill based on the feedback we’ve received so far, and I look forward to continuing to work with a broad range of stakeholders as we try to move this bill forward this year.
