Etsy Introduces New IP Reporting Portal

Businesses regularly lose revenue because of inadequate online brand enforcement. At the same time, online marketplace consumers regularly purchase counterfeit products without ever knowing that they purchased a fake. Sales on online marketplaces have skyrocketed in the past decade and businesses see such marketplaces as a big opportunity to gain new worldwide customers and penetrate new marketplaces. As a downside, it is not uncommon to encounter products that are counterfeit and/or subject to piracy on these online platforms.

Online resellers from Amazon to Facebook have attempted to address the problem of fakes and "gray market goods" by setting up reporting mechanisms on their side. Because of its business model, the problem of inauthentic goods on Etsy is particularly troubling.

Etsy's new reporting portal allows owners of intellectual property (IP) to report listings that they suspect may violate their brand or other IP rights. As a first step, owners need to register their brands with Etsy and create a profile for future reference by filling in the information required on the portal. Etsy's portal includes a menu of enforceable assets: trademarks, patents, copyrights and also an "other" option. Required information includes an explanation whether the selected IP is registered or not. If it is registered, the owner must provide the registration number and where it was registered. Once all the information is provided, brand owners may report listings and if Etsy will consider such report to determine whether an offending listing is in accordance with its policies. Etsy may also inform the alleged infringer of the report, along with the name and email address of the reporting party. In compliance with the Digital Millennium Copyright Act (DMCA), Etsy accepts counter notices if the reporting party alleges copyright infringement.

As with other online retailers, Etsy hopes to simultaneously incentivize and foster loyalty with consumers and businesses to use its online marketplace platform. Businesses and entrepreneurs need these IP protection measures for leveraging their IP asset's value on the platform, and consumers will definitely have a more enhanced shopping experience. Potential infringers may be more cautious with their illegal selling schemes. Even so, it will remain necessary for businesses to track their reactions to these measures.

Developing an Online Brand Protection Strategy

A brand protection action plan is more than just reporting rights on online platforms; the outcome of such actions may not have the outcomes that brand owners expect. Protection of IP on online marketplace platforms becomes more effective when such activity is interconnected with other brand enforcement actions that will provide benefits, including evidentiary advantages in legal proceedings. These include patent protection; registration of brands, logos and slogans at the U.S. Patent and Trademark Office; registration of content and artwork at the U.S. Copyright Office; proper investigation of other actors in the distribution chain that contribute to the distribution of counterfeits; and well-crafted cease-and-desist and warning letters.

Enterprises, entrepreneurs and small businesses should take a proactive – and not reactive – approach regarding protection of their IP assets in online platforms. In this sense, it should be a permanent, long-term action plan of the business and not just a consequence of ongoing litigation. If registration of rights is done effectively and at the right time, prospective or ongoing civil and/or criminal litigation for enforcement of IP will likely be more effective.

The rise of new virtual worlds, cryptocurrencies, innovative technologies and non-fungible tokens (NFTs) are facilitating new ways for businesses to promote and sell products and services online. Etsy and other online marketplace leaders such as Rakuten (Japan), Mercado Libre (Latin America) and Amazon, are constantly trying to enhance their IP enforcement policies for treating current issues, as well as preparing for unforeseen new realities in e-commerce. Because of virtual reality, users are likely to have a more "live" experience with their buying and selling interactions.

Conclusion and Takeaways

For all of these reasons, the only constant remains change. The good news is that product innovation is fostered when online platforms have an adequate IP enforcement protection plan that protects the products being offered. As the business models of these online marketplaces change because of new e-commerce realities, content creators and brand owners need to use the tools made available and push for additional protections as the counterfeiters and criminals are adopting new methods almost as fast.

For more information and additional IP guidance in the brand enforcement on online marketplaces, contact the authors.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.