EU Recommends Actions to Combat Counterfeiting

The European Commission has adopted a recommendation to combat offline and online counterfeiting and enhance intellectual property rights (IPR) enforcement.

The recommendation 1, also known as the EU toolbox against counterfeiting, aims to foster collaboration between rights holders, service providers, and law enforcement, while encouraging best practices and the use of modern tools and technologies.

The toolkit focuses on five key areas: more effective cooperation between stakeholders, stronger IPR enforcement, increasing the use of modern technology to protect IPRs, raising IPR awareness, and developing IP protection tools for small and medium-sized enterprises (SMEs).

Some key actions proposed in the recommendation include:

  • Designating a single point of contact for IPR enforcement matters.
  • Adapting procedures to tackle new counterfeiting practices, such as mirror websites.
  • Empowering market surveillance authorities to detect and combat counterfeiting.
  • Reassessing and potentially increasing sanctions on serious IP crimes.
  • Promoting faster, cheaper, and more eco-friendly storage and disposal of counterfeit products.
  • Adapting IPR practices to AI and virtual worlds, using blockchain for supply chain traceability and content recognition systems for detecting counterfeit and pirated goods.
  • Integrating IP content into national training and education curricula, especially for law enforcement and business studies.

Emphasis on AI and blockchain

The recommendation dedicates an entire chapter to ‘making the most of new technologies to fight IP-infringing activities’, where the emphasis is clearly on digital technologies, especially AI and blockchain.

Specifically, the recommendation encourages rights holders and providers of intermediary services to: 

  • Adopt EU-wide solutions for advanced tracing systems (such as the digital product passport and tokenisation solutions – either blockchain-based or other) to track packages through the value chain and facilitate data-sharing.
  • Make use of technologies like data-analysis methods, automated content-recognition systems, and machine-learning algorithms to detect counterfeits.

In addition, member states are also encouraged to use AI systems to combat counterfeiting, enhance enforcement measures, and improve IPR application services.

As far as the recommendation is concerned, AI systems such as automated content-recognition systems and machine-learning algorithms have the potential to become key technologies in the fight against IP-infringing activities, whereas distributed ledger technology (including blockchain) are well-suited to increase supply chain traceability and transparency.

No mention of physical security

When it comes to using physical security features on products, however, the recommendation is less direct. In fact it doesn’t make any direct reference to physical features at all. Instead it refers rights holders to resources such as the EU Intellectual Property Office’s ‘Anti-Counterfeiting and Anti-Piracy Technology Guide ’2, which provides a comprehensive overview of both physical and digital security features, explaining what they are, how they work, and how they are used.

Unfortunately, the dismissive stance of the recommendation with regard to the use of physical security features could, down the road, lead to a situation where a multitude of purely digital anti-counterfeiting technologies emerge on different products.

The problem is, digital features alone are susceptible to acts of fraud such as the cloning of barcodes, where it is very difficult to differentiate genuine from clone when no physical authentication features are present. (On this subject, see also our postage stamp counterfeiting article on page X, which provides a good example of how a combined digital/physical solution remains the most effective way to authenticate products and documents.) 

Next steps

Going forward, the Commission, together with the EU Intellectual Property Office, will assess the effects of the recommendation within three years of its adoption. They will then decide whether additional measures are needed at EU level, in view of technological developments, as well as in view of the outcome of an ongoing enforcement study.

It will be interesting to see whether the security gap concerns raised in this article will be validated by the findings of the three-year assessment.

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