E-commerce: The threat of counterfeits and piracy


They distort the marketplace, lead to revenue loss, and undermine consumer safety. A robust policy is needed

E-commerce: The threat of counterfeits and piracy

E -commerce in India has seen phenomenal growth over the years — from $39 billion in 2017, it is projected to rise to $200 billion by 2026. This comes in the wake of deepening penetration of the Internet and mobile phones. There has been a steady expansion of online offerings — electronics, apparel, travel, movies, medicine, hotel reservations, books, matrimonial services, cosmetics, footwear, fashion accessories and groceries. The liberal Foreign Direct Investment (FDI) policy, where 100% business-to-business transactions are allowed, is also fuelling the growth of this market.

This growth, however, comes with challenges. Counterfeiting and pirated goods continue to distort the virtual marketplace. E-commerce sites are regularly being used as common platforms for the sale of counterfeit goods. Whether it is online or offline, the dangers are legitimate market loss and the occupation of economic space by unauthorised and grey market operators, causing loss of revenue to the government, loss of jobs, threat to consumer safety, and growth of organised crime.

While technology offers several solutions to authenticate the original product, the same technological tools, particularly artificial intelligence, help create clones. This makes it more difficult to distinguish between the original and the fake. Moreover, when e-commerce players and brand owners get embroiled in disputes, it is the counterfeiters who reap the benefits. What is needed is constant upgradation and innovation to stay ahead of the counterfeiters. Therefore, it is important that we have regulations for e-commerce.

E-commerce: The threat of counterfeits and piracy

A big step has been taken by the government in bringing in the draft e-commerce policy, which has indicated clear guidelines on the expectations from brand owners and e-commerce players. It is the first time that a government document has listed concrete steps for combating counterfeiting. It categorically states that the details of sellers should be made available on a marketplace website for all products, and that sellers must provide an undertaking to the platforms about the genuineness of their products. Also, trademark owners should be given the option to register with an e-commerce platform so that wherever a trademark product is uploaded for sale on the platform, it should notify the respective trademark owner. If the trademark owner desires, the e-commerce platform can only list or offer for sale any of the owner’s products only with prior permission. In case of a complaint, the matter should be brought to the notice of the trademark owner, the product withdrawn and the site blocked. Additionally, in case of a customer complaint of counterfeiting after the sale, compensation will be paid and financial disincentives imposed on the seller found dealing in counterfeit products.

Unlike the problem of physical piracy and counterfeiting, the piracy of content is easy and damaging. It is easy because the content of the original product is retransmitted and, therefore, there is no new creation, no infrastructure is required, no money is invested in creating content, and the same content of the same quality is made available to everyone for free.

Source: Hindustan Times  | Written by Narendra Sabharwal

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