Embattled Etsy bites back on counterfeit issue

The chief executive of online retailer Etsy has insisted the company takes a "balanced approach" to the problem of counterfeit sales.

Chad Dickerson told investors on a conference call that Etsy follows industry best practices and in fact has been accused of being "too aggressive" in taking down sellers' listings suspected of intellectual property infringement.

Dickerson - who has been at the helm of the craft-focused marketplace since 2011 having previously been its chief technology officer - said the firm was recently awarded four out of five stars by the Electronic Frontier Foundation for its IP practices.

It dropped one star for not publishing a transparency report, something that Etsy is working on and will rectify in the coming months.

Etsy is facing class action lawsuit brought by investors who claim the company has not been fully open about the extent of IP-infringing material on its platform and want recompense for a decline in its shares.

The company's stock is currently trading at a little over $15, having been as high as $30 when Etsy was first listed on the Nasdaq back in April. Analyst Gil Luria at Wedbush Morgan suggested recently that around 5 per cent of off items on Etsy might be fake and increased enforcement action might affect its revenues in future.

One of the main problems for Etsy is that many of its vendors are selling arts-and-crafts items they have made themselves as well as vintage items. It can be difficult to draw a line between listings that are "fan art" and mention a brand - which can enhance a brand's reputation - and flagrant copies that could be considered IP-infringing and damaging.

"Someone on the outside looking at our site lacks the context and the background information to determine what is infringing and what's not," said Dickerson, who points out that brand-owners themselves differ in their approach to fan art.

He said the company has a dedicated legal support team that responds to and handles takedown requests, and works closely with brand owners and sellers. The company terminates the accounts of repeat offenders, uses technology to stop them returning once banned.

"We strive for a balanced approach that takes into account the interest of our sellers and the IP owners and that we believe is working," he said.