1(b) Developing and Emerging Trends
ANTI-COUNTERFEITING GROUP
E-commerce is having a significant impact on the availability of counterfeit merchandise at a retail level and certainly in physical markets, despite a significant reduction in quantity over the last few years.
While auction sites and other online sales platforms are still of concern, the main tool of the counterfeiter is social media, in particular Facebook. As evidenced in 2014, the ACG’s Facebook initiative, ‘Operation Watch’, identified the availability of over 30,000 individual images of counterfeit goods in just one day.
The number of social media sites now facilitating the sale of counterfeit merchandise has risen enormously during the reporting period, which poses an additional burden on rights owners and enforcement agencies alike.
What is the cost of IP crime?
IP crime brings about social, economic and reputational harm to the UK.
Op WATCH and work at UK markets shows that counterfeiters prey on the vulnerable and those less able to purchase genuine products by tempting them with an array of branded consumer goods. This activity undermines the genuine retail market, restricts the revenue to the UK Treasury and, in some cases in which unsafe counterfeit goods are sold, threatens the safety of the consumer.
A number of investigations undertaken by ACG members show clear links to organised crime, both within the sphere of IP itself and linked criminality, with profits from counterfeiting being re-distributed into other illegal activities such as drug supply and money laundering.
FEDERATION AGAINST COPYRIGHT THEFT (FACT)
FACT identifies developing and emerging trends through monitoring the percentage of cases that are attributed to its specific investigation categories. In the past 12 months FACT has seen a marked rise in the number of cases involving illegal access to subscription pay TV services, such as those offered by Sky, Virgin Media and BT Sport, through card sharing, also known as control-word sharing, and IPTV devices, the percentage of these cases increasing from 6% to over 18% of FACT investigations year on year.*
This increase is being driven predominantly by an insurgence of IPTV devices. Whereas both card-sharing and IPTV by-pass encryption to illegally access subscription pay TV services, IPTV devices do so far more simply and discreetly.
These devices do not involve any interaction with a valid service provider, requiring an Internet connection only, and, although not infringing of themselves, they can be readily pre-configured with certain software - Apps and add-ons - which allow them to identify illegal content and stream it directly to the end-user. The illegally streamed content can be from a wide variety of sources, including subscription TV channel feeds, content hosted illegally on cyberlockers, and content otherwise unavailable in the UK such as foreign channels and 3pm Premiership football matches.
These devices are readily available via online marketplaces, offering consumers pay TV services at a ‘one off’ low cost, with no monthly subscription. Providing access to all forms of audio-visual content - film, TV and sports content - FACT considers the proliferation of IPTV devices as a serious threat to the IP interests of all its members. Concerted action is being taken with all parties involved, including online marketplaces, whose platforms are being abused through the sale of illegal products, and law enforcement, to address this latest example of legitimate technological advances being used for illegal purposes.
*Year-on-year figure calculated comparing the 12-month period 1.4.13-31.3.14 to 1.4.14- 31.3.15.
PRS FOR MUSIC
The Anti-Piracy Unit (APU) has become aware of a significant increase in the number of websites and software offering stream-ripping services. These services interact typically, but not exclusively, with YouTube and extract audio files from the video. This is a developing trend to meet the demand of music consumers for access to content via mobile devices on the move. However, the ability to extract and temporarily store music is increasingly an ‘added value’ feature of subscription tier music streaming services. As consumers are moving away from download services and over to streaming services, these stream-ripping services are seriously undermining the subscription-based streaming model and the remuneration returned to rights holders.
1(c) Harm Caused
ELECTRICAL SAFETY FIRST CASE STUDY
Phoebe Farrelly, aged 29, London
I was taken in by a fake website that seemed to be retailing legitimate GHDs. I paid full price for them - what you would pay for a pair of GHD straighteners in a shop - and they seemed to work fine for the first 12 months or so. However, I did always think that they didn’t seem to get as hot as others I had used before. They started making a strange funny buzzing sound and after a couple of weeks started turning themselves on and off while I was using them. Finally, I was using them one morning and they began to spark. A loud bang sounded and a flame sprung out from where the cord connects to the straightener, very close to my face. I immediately dropped them and turned the power off at the wall, hoping I wasn’t going to be electrocuted. Thankfully I was ok but I have never used them since. I’m very lucky I wasn’t seriously injured! I’m now particularly careful when buying things online as I realise just how easy it is for scammers to trick you.
Phoebe was searching for hair straighteners online when she came across a website that seemed reputable, had good reviews and appeared to be retailing legitimate GHDs. Having paid full price for them, she used them for about a year without major problems, but experienced a terrifying situation one morning when they blew up in her hand and burst into flames while she was using them.
When she contacted GHD to report the problem they were very apologetic (despite the fake website being beyond their control) and said it had received several similar reports. The company asked Phoebe for lots of details about the product and even asked whether she would be happy to send it in so it could try to track down the illegal manufacturers. GHD also offered her a discount to purchase a new pair of its straighteners.
Counterfeit goods are not always easy to spot. Phoebe is now supporting Electrical Safety First’s campaign to encourage everyone to shop carefully; if undetected, fake goods can make their way into shops and onto market stalls, online and social media sites where shoppers are at risk of unwittingly picking up a dangerous product.
NATIONAL MARKETS GROUP
IP crime impacts on the wellbeing of the local community, including consumers, the retail sector and government. Economic losses to the legitimate retail trade harms the local and national economy, causes job losses and damages the reputation of the UK.
This was evident during a joint initiative between the NMG and Camden Trading Standards to tackle what had become a major problem area for the sale of counterfeit goods. The area housed five markets openly selling a range of counterfeit goods to visitors and local consumers. The activity, which undermined legitimate businesses in the area, also attracted other types of crime, such as pick-pocketing, supplying drugs and money laundering, and fostered an environment in which organised criminal gangs could flourish.
BPI
It is extremely difficult to value the losses resulting from online copyright infringement and it has recently proved more efficient to measure the value of criminal property being offered on any given website. This negates the criticism that every download is not a substitute for sale but reflects the value of the product being offered.
The judge in the Dancing Jesus trial (described in Section 1(a)) accepted that criminal property to a value exceeding £242 million was made available on the forum.
BPI suggest a recent study concluded, conservatively, that around $227 million in advertising revenue was given to copyright infringing sites in 2013.
