European Commission Introduces Its Inaugural IP “Watch List”

Echoing the United States’ Special 301 Report on alleged inadequacy of trading partners’ protection of US intellectual property rights, the European Commission has released its first ever Counterfeit and Piracy Watch List, which exposes rogue cyberlockers, stream-ripping sites as well as peer-to-peer and BitTorrent indexing sites among the threats to the EU’s legitimate intellectual property-driven businesses.

The Commission’s list, which is similar to the so-called Special 301 report from the United States Trade Representative, names websites and physical marketplaces outside the European Union that reportedly engage in, facilitate or benefit from substantial counterfeiting and piracy. The Commission stated that these activities “undermine intellectual property rights of EU companies and creators, harm businesses and jobs and risk consumers’ health and safety.”

The Watch List focuses on four business areas: websites providing copyright-protected content, e-commerce platforms, online pharmacies, and physical marketplaces. The Watch List, which was compiled from various reports from law enforcement agencies and from stakeholder consultations, aims at “encouraging the operators of these marketplaces, local enforcement authorities and governments to take action to crack down on intellectual property abuse,” said the Commission.

“Intellectual property infringements are a scourge on the European economy, decreasing investment and government revenues, and killing jobs in our creative and innovative industries,” explained Commissioner for Trade Cecilia Malmström in a statement. “This Counterfeit and Piracy Watch List is part of our broader effort to ensure that European companies can operate on a level playing field when trading outside the EU’s borders, and that EU consumers are safe.”

The Commission said the Watch List is a tool to fight against IP theft, which was highlighted in a recent study undertaken by the Organisation for European Cooperation and Development (OECD) and the European Union Intellectual Property Office (EUIPO). The study showed that international trade in counterfeit and pirated goods represented up to 2.5 percent of world trade, or as much as EUR 338 billion. According to the report, in the EU alone, counterfeit and pirated goods amounted to up to 5 percent of imports or as much as EUR 85 billion.

The Watch List includes several chapters specific to online marketplaces offering access to infringing content (cyberlockers, stream-ripping sites, linking or referrer sites, peer-to-peer and BitTorrent indexing sites, unlicensed pay for download sites, websites for piracy applications, hosting providers and ad-networks), e-commerce platforms, online service providers facilitating the sales of medicines and physical marketplaces.

The Watch List singled out rogue cyberlockers such as Rapidgator.net, Uploaded.net and 11 Openload, among others.

“Stakeholders reported that cyberlockers are harmful, also because they often make available pre-release content, which has negative effects on the revenue of creative industries,” the Commission wrote in the report. “The music and film industry reported that the listed cyberlockers had received notices to take down content and that many were also sent cease and desist letters, but they had not reacted and had not removed the content.”

The report’s section on e-commerce platforms is a follow-up to the Commission’s “Recommendation on measures to effectively tackle illegal content online” published on 1 March 2018, which outlined certain principles and safeguards in tackling illegal content online. The Watch List focuses on platforms that are run by “rogue merchants as a marketplace to deceive online shopper” such as Bukalapak in Indonesia, the EVO Company Group’s platforms, active from Russia, Ukraine, Belarus and Kazakhstan, Lazada in Thailand or Naver in South Korea, as well as China-based Xxjcy.com and China-Telecom.

The Watch List’s section on pharmaceutical material documents the e-commerce sites providing availability to unlicensed medicine. The EUIPO study found that the economic cost of IPR infringement for the EU pharmaceutical sector is up to 4 percent of legitimate sales of medicines (about EUR 10,2 billion).

“According to the European pharmaceutical industry, the typical rogue network model includes customer service call centres, back-end merchant accounts with acquiring banks and a medicine distribution system,” states the report.

Networks listed in the report include: CJSC Registrar R01, a domain name registrar that reportedly serves many rogue internet pharmacies such as EVA Pharmacy and PharmCash; EPIK Inc., a domain name registrar used by illicit online pharmacies, such as RxProfits network; and ZhuHai NaiSiNiKe Information Technology which provides domain name registration services to PharmaWeb.

On the topic of stream-ripping sites, the Commission said they allow users to download audio and audiovisual content from online streaming platforms such as H2converter.com or Downvids.net. The report noted that “stream-rippers are causing significant losses for the music, film and television industry by having a negative impact on income from legal streaming services and sales from the legal download services. The users of stream-ripping services can download protected content free-of-charge, which reduces any further need to stream content from legal services. According to the music and film industry, stream-ripping is currently the most prominent form of piracy globally.”

The project is part of the European Commission’s Single Market Strategy and was part of a series of initiatives announced in November 2017 by Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth Investment and Competitiveness, and Commissioner Elżbieta Bieńkowska in charge of Internal Market, Industry, Entrepreneurship and SMEs. The goal was to step up the EU’s fight against counterfeiting and piracy through the so-called ‘follow the money’ approach and ensure “an equally high level of legal protection and a predictable judicial framework across the EU.”

The Commission proposed then to “reinforce cooperation programmes with third countries” (China, South-East Asia, Latin America) and create a watch-list of markets that are reported to engage in, or facilitate, substantial IPR infringement.

Following up on the publication of the Watch List, the Commission said its services will use the Watch List “to continue the cooperation with EU’s trading partners in the framework of IPR Dialogues and working groups.” These working groups serve exchange information hubs on multilateral and bilateral IPR enforcement-related issues.

The Commission said it will also use the Watch List as part of its technical  IP Key cooperation programmes with China, Southeast Asia and Latin America, which were launched in 2017.

And the Commission services will “monitor the measures and actions taken by the local authorities in relation to the listed marketplaces as well as the measures and actions taken by the operators and marketplace owners to curb IPR infringements.”

The Watch List will be updated regularly by the Commission services.

Industry Applause

The inclusion of stream-ripping sites among the inaugural Watch List was welcomed by the International Federation of the Phonographic Industry.

“The Commission’s Counterfeit and Piracy Watch List offers important and practical guidance for policymakers, law enforcement and international corporations, when identifying and dealing with websites that infringe intellectual property rights,” said IFPI CEO Frances Moore. “The list helps to raise awareness of several sites exploiting music content and particularly highlights the continued existence of so-called ‘stream ripping’ sites that make unauthorised permanent copies of streamed content, predominantly from YouTube.”

The full report can be found here [pdf]: http://trade.ec.europa.eu/doclib/docs/2018/december/tradoc_157564.pdf

 

Image Credits: Lukasz Kobus