Gucci, Facebook File Joint Lawsuit in Counterfeit Fight
MILAN — Divide and conquer seems to be out of fashion these days.
In a first for the companies, Facebook and Gucci have teamed to jointly file a lawsuit in the United States District Court, Northern District of California, against an international online counterfeit business operator.
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The individual is being sued for breach of contract arising out of violations of Facebook and Instagram’s terms, and infringement of Gucci’s intellectual property rights, including trademark counterfeiting, and unfair competition.
According to the suit, the defendant has used multiple Facebook and Instagram accounts to evade the platform’s prior enforcement efforts and continue to promote her counterfeit business selling fake Gucci products.
In an effort to fight the proliferation of counterfeit goods being sold via social media platforms, Gucci and Facebook said in a joint statement that the lawsuit “is a natural next step in the progression of the collaboration, whereby the two players could combine their respective resources and expertise to hold those who abuse Facebook and Instagram by promoting counterfeits accountable, to clearly signal that such abuse will not be tolerated, and to make Facebook’s platforms safer for people and businesses to connect, share, buy and sell online.”
Licia Garotti, partner at Milan-based legal studio Gattai, Minoli, Agostinelli & Partners said “the pandemic, with the restrictions on shopping in brick-and- mortar stores has boosted the digitalization of brands’ business policies, speeding up e-commerce opportunities. This, however, also implied a further increase of online counterfeits and of fake profiles.”
Garotti believes “this initiative should be seen as Gucci and Facebook giving a strong signal, showing they are paying attention to the protection of intellectual property rights (including brands, trademarks and original design). While Facebook is not directly responsible for the content, it wants to be seen as taking action, avoiding being seen as negligent or an unsafe platform. And it has contractual power because the individual violated Facebook’s terms and conditions for the authorized use of the social network.”
Civil lawyer Laura Cereda said the suit is “a way to attract the attention of judges, setting a precedent, which remains crystallized. The world is changing and Gucci is highlighting something that is becoming increasingly important and that is increasingly difficult to oppose. Facebook is a visual window, and everything is faster — these individuals [counterfeiters] appear and disappear over and over again, they are hard to catch and difficult to prosecute, but the damage is done.”
Facebook, she continued, is not a physical window or market stall the police can shut down, so “this is a way to insert the law into a new reality. The power of Facebook and Instagram is infinite, so brands are finding new tools to create order and rules and are turning to the law to do so.”
Facebook and Instagram stated they “take intellectual property issues, and particularly issues around counterfeiting, seriously and their terms strictly prohibit IP infringement, including the sale or promotion of counterfeit products. Working and collaborating with brands like Gucci has helped Facebook and Instagram develop a robust IP protection program that includes, among other things, a global notice-and-takedown operation. In total, more than one million pieces of content were removed from Facebook and Instagram in the first half of 2020, based on thousands of reports of counterfeit content from brand owners, including Gucci.”
Gucci has long been engaged in strongly protecting its intellectual property both online and offline, throughout the pipeline, and collaborating with customs and other law enforcement agencies around the world to identify and combat illegal counterfeiting.
In 2020 alone Gucci’s actions resulted in four million online counterfeit product listings disabled, 4.1 million counterfeit products seized offline, and 45,000 websites, including social media, disabled.
In 2019, Gucci sued more than three dozen websites it accused of selling knockoff shoes, accessories and clothes, and of appropriating its brand name. The websites siphoned off customer traffic from Gucci and essentially operated as part of a black market network for fake designer products, according to the brand’s complaint filed in Florida federal court.
Gucci said in that suit that it spends “significant monetary resources” to ward off counterfeiters, and asked for millions in statutory damages at a rate of $2 million for each counterfeit item the websites sold.
Collaborations are increasingly seen as more profitable in the long term, rather than isolated actions. As reported, in February, Amazon and Salvatore Ferragamo SpA jointly filed two lawsuits against four individuals and three entities for counterfeiting Ferragamo products.
That lawsuit was filed in the U.S. District Court for the Western District of Washington and alleged the defendants conspired to use Ferragamo’s registered trademarks without authorization, offering the counterfeit products on Amazon, deceiving customers about the authenticity and origin of the products and the affiliation with the Florence-based brand. Amazon has filed a series of lawsuits against counterfeiters and previous lawsuits included those with Valentino, cosmetics brand KF Beauty, family travel accessory brand JL Childress and Yeti coolers.
Over the years Ferragamo has implemented a series of offline and online anticounterfeiting measures. In 2020, its online monitoring activities enabled the brand to intercept, block and remove three million illicit profiles from the main social media platforms worldwide and about 94,000 counterfeit products were blocked and removed from online auction sites. Ferragamo has also filed actions against hundreds of illegal websites through civil proceedings in New York federal court, and was recently awarded $2.8 million in damages.
In 2017, Kering’s decision to drop its long-standing legal battle against Alibaba Group and join forces with the Chinese web giant to stamp out the sale of fake goods was seen as setting a trend, as more and more luxury brands moved to sell their goods online on that platform.
The French luxury group agreed to dismiss the lawsuit filed in 2014 against Alibaba and Alipay, an Ant Financial subsidiary, in the U.S. district court in New York, cooperating “to protect intellectual property and take joint enforcement actions online and offline against infringers in order to provide the best consumer experience and a trusted environment,” the two companies said at the time. The decision led to setting up a joint task force with the aim of exchanging information and working with law enforcement bodies to take action against “infringers of Kering’s brands identified with Alibaba’s advanced technology capabilities.”
Luxury fakes is but one facet of the larger challenge of counterfeit operators on social media, extending to everything from fashion knockoffs to copycat lightning cables to phony banknotes.
Cybersecurity, social media researchers at Ghost Data Team have studied the counterfeiting risks on Instagram for fashion and luxury specifically. The firm outlined the growing risks in a 2016 report titled “Social media and luxury goods counterfeit: a growing concern for government, industry and consumers worldwide.”
Instagram was in earlier stages of its social commerce initiatives then, but already the team noted that roughly 20 percent of the posts about top fashion brands that it analyzed featured counterfeit or illicit products.
A follow-up report in 2019 revealed that “Instagram might have as many as 95 million bots posing as real accounts. And most fake accounts selling counterfeit merchandise usually upload a large quantity of posts every day, resulting in a chaotic and negative user experience.”
While its latest study in March 2021 was mainly focused on bogus Apple device accessories, the researchers’ criticism of Instagram and parent company, Facebook, has broader implications: “We believe Facebook is guilty of failing to adequately invest and protect American businesses and citizens around the world who use its platform,” they wrote.
The social media giant didn’t immediately respond to a WWD request for comment, but a spokesperson pushed back on the larger issue with reporters last month.
The tech company has put more resources into its global notice-and-takedown program, allowing it to take faster action, the spokesperson said, adding that “while there’s always more work to do, we now regularly respond to reports of counterfeit content within one day, and often within a matter of hours.”
How the latest Gucci lawsuit jibes with that remains to be seen. But in any case, the problem looks particularly resonant now, as Facebook continues to face criticisms of its ability — or inability — to deal with misinformation or disinformation on its own platforms. Accusations that it’s not doing enough to stem the tide of fake goods on its networks look like another dimension of these long-standing criticisms.
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