EUIPO identifies emerging trend in selling counterfeits online

Website domain names formerly used by politicians, foreign embassies, and commercial businesses are being used by fraudsters to set up online shops that market and sell counterfeit and trademark-infringing goods, a large European study has discovered.

The widespread practice was revealed by the European Union Intellectual Property Office (EUIPO) in a report on online business models that infringe intellectual property rights.

This is a second report on the topic, building on research that was published by EUIPO in July 2016.

According to the new report, conmen are re-registering previously used website domain names to take advantage of the popularity of the names so as to attract traffic to new e-shops flogging counterfeit and trademark-infringing goods. Previously used domain names included public institutions, news and media websites, political and religious websites, famous people and fan clubs, and adult and dating websites.

The practice first came to light following research for the first report, which detected the presence of 566 previously used domain names under the Danish domain .dk that were systematically re-registered and linked to dodgy online stores. It was found that the prior use of the domain names was completely unrelated to the goods being marketed on the suspected e-shops.

EUIPO set out to discover if the practice identified in Denmark was also used in other European countries with mature e-commerce sectors. The second report focuses on the findings for Sweden, Germany, the United Kingdom and Spain.

“The findings are eye-opening and show that the practice identified in Denmark also exists in the four selected countries to an even higher degree than could have been expected,” said Antonio Campinos, EUIPO executive director. “Having analysed 40 case examples in detail, the research also seems to indicate that what on the surface seems like thousands of unrelated e-shops are likely to be one or a few businesses marketing suspected trademark-infringing goods to European consumers. This new report provides further evidence of the scale of the problem of commercial online intellectual property infringements and reinforces the case for cooperation at the EU level to bring it under control.”

The research, which involved an automated process where domain names passed through analytical modules to classify the website as suspect or not, found that Spain had the highest percentage of detected dodgy e-shops using a previously registered Spanish domain name, accounting for 81 per cent of all suspect online stores.

This was followed by Germany, with 80.2 per cent of trademark-infringing e-shops using German domain names that had been previously registered, Sweden (77.3 per cent) and the UK (71.1 per cent).

The UK, however, had the largest total number of detected e-shops suspected of infringing trademarks (14,182) and the largest total number of detected dodgy e-shops using previously registered domain names (10,081) compared with the other countries.

In total, the research detected 27,870 e-shops suspected of marketing trademark-infringing goods in Sweden, Germany, the UK and Spain and found that 21,001 of these e-shops (75.35 per cent) were detected using domain names that had previously been used to direct internet traffic to websites that have no relation to their prior use.

“Based on the research, it must be considered likely that the same also occurs in other European countries with well-developed e-commerce sectors,” the report says.

Meanwhile, a number of patterns were also identified. Shoes were the main product category being sold in 67.5 per cent of the suspected e-shops; 94.6 per cent of the detected suspected e-shops used the same specific e-commerce software; 40.78 per cent of the detected suspected e-shops in Sweden and the United Kingdom were registered through the same registrar; and 25.9 per cent of the suspected e-shops had the hosting provider located in Turkey, 19.3 per cent in the Netherlands, and 18.3 per cent in the US.

“Initially, the e-shops seem unrelated individual businesses. However, the analysis of the e-shops and the case studies have identified different commonalities regarding product categories and brands offered in the suspected e-shops in their website technology, as well as use of specific registrars and name servers, and in the countries of origin of the hosting provider,” the report says.

“Looking at the structure of the business practice and having analysed 40 case studies in detail, another result emerging from the research is that a high degree of affiliation between the e-shops is likely. The research seems to indicate that what on the surface seems like thousands of unrelated e-shops are likely to be one or a few businesses marketing trademark-infringing goods to European consumers.”

The report adds: “The findings of the report are interesting for the law enforcement community and internet intermediaries as well as trade mark holders and consumers, to understand the scale and the traits of this business model applied in a number of EU Member States.”