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Accepted Manuscript Version of a Research Commissioned by the Intellectual Property Office Research Archive Citation for published version: Dennis Collopy and Tim Drye, ‘Share and Share Alike: The challenges from social media for Intellectual Property Rights’, Intellectual Property Office, 4 September 2017. Link to published version: https://www.gov.uk/government/publications/share-and- share-alike Document Version: This is the Accepted Manuscript version of a research commissioned by the Intellectual Property Office. The version in the University of Hertfordshire Research Archive may differ from the final published version. Copyright and Reuse: © Crown Copyright. This manuscript version is distributed under the terms of the Open Government Licence. To view this licence, visit http://www.nationalarchives.gov.uk/doc/open-government- licence/version/3/ Enquiries If you believe this document infringes copyright, please contact the Research & Scholarly Communications Team at [email protected] ‘Share and Share Alike’ The Challenges from Social Media for Intellectual Property Rights Contents Pages Main Report 1. Executive Summary 2. Background and Objectives 2.1.Background 2.2.Aims and Objectives 3. Methodology and Research Structure 1. Methodology 2. Research Structure 4. Research Outcomes Phase 1 4.1.Scale of Infringement 4.2.Impact of Infringement 4.3.Characteristics of Infringement 4.4.Opportunities for IP 5. Research Outcomes Phase 2 Consumer Data 6. Research Outcomes Phase 3 Assessing the harm of purchasing counterfeit products using social media 7. Summary Conclusions and Recommendations 8. Appendices 8.1. Industry Survey Responses. 8.2 Enforcement Agency Survey Responses. 8.3 Technology Firms’ Survey Responses. 8.4 Consumer Tracker and Survey Results and Analysis 8.5 Other Economic Models and Approaches 8.6 Bibliography 8.7 Survey questionnaires 1 1. Executive Summary 1.1 Motivation for the study The reliance on social media has increased in recent years, with the British Popula- tion Survey showing that over 50% of consumers used social media in 2015. Whilst social media has allowed creative content businesses to be able to engage directly with their audience on a commercial and non-commercial basis, there are chal- lenges. Social media provides an avenue and route for would be consumers to be di- verted to on-line sites selling infringing content, and evidence from Trading Stand- ards indicates that social media sites were the second most common ‘location’ for in- vestigations into counterfeiting. It is clear therefore, that the impact of social media on Intellectual Property (IP) has grown, as information and websites on counterfeit goods are accessed and shared; yet there is little, if any, research or dependable data on this issue. Against this backdrop, the Intellectual Property Office (IPO), re- sponsible for supporting and understanding IP Enforcement, has wanted to gain an accurate picture on the impact that social media is having on IP rights holders and consumers of IP. 1.2 Objectives The main objectives of this research were: • to assess the role that social media plays in the sale and distribution of coun- terfeited and pirated physical goods from six representative sectors: alcohol, cigarettes, clothing, footwear, perfume and watches.; • to estimate recent levels of counterfeiting within the UK; • to understand the extent to which this is moving online; and • to gauge how it is helped to do so by online social media platforms. The study specifically aimed to assess the scale, impact and characteristics of in- fringements, as well as opportunities for IP infringement. 1.3 Method The project was divided into three distinct phases: Phase 1: Review of literature, government and industry data This phase involved a review of literature; the collation of recent industry and govern- ment seizure statistics; interviews with key representatives from industry and govern- ment enforcement agencies; structured surveys with executives from the six key sec- tors identified as being most impacted by social media; and finally interviews with the three main social media platforms: Google, Twitter and Facebook. Phase 2: Tracker method and consumer survey 2 a) Tracker An online tracker of 12 products, two from six chosen sectors (alcohol, cigarettes, clothing, footwear, perfume and watches), followed links to determine and assess what proportion were directed towards either legitimate or infringing resources. The team designed and developed monitoring tools to locate, track and trace the possible infringement of physical items on Facebook, Twitter and Google. b) Consumer survey A 3,000-respondent online survey, complemented by an offline survey focused on the proportion of social media-triggered purchases ‘at risk’ of being infringing. The survey identified the proportion of those actively engaging with social media; and asked whether their last purchase had been prompted by a recommendation on social media and how confident they were that the purchase was legitimate. Phase 3: Assessing the harm of purchasing counterfeit products using social media. The industry surveys were designed to: • look at the levels of harm from social media-facilitated counterfeiting; • assess the damage to high and mid-range products; • examine the direct and indirect damage from counterfeiting to industry, gov- ernment and consumers; and • assess the impact of social media and online platforms on the reputations of the brand owners; As part of this work we also considered the models available for estimating the im- pact of social media on counterfeiting, particularly in relation to complicit and de- ceived consumers who typically purchase obvious and non-obvious copies respec- tively. 1.4 Research Findings Phase 1 Research Outcomes The literature review, and responses to our survey questionnaires from industry, gov- ernment enforcement agencies and technology firms, was focused on assessing the scale, impact and characteristics of infringements, as well as opportunities for IP in- fringement. Scale of Infringement • There were many claims, from industry and government agencies, about the role that social media plays in facilitating IPR infringement. The scale and nature of the infringement was not clear from the responses we received from industry. • The current scaleable official data is based on seizures. This, combined with the lack of industry data and unverifiable claims, make it difficult to assess the current scale of infringement in general. • Limited research has been undertaken to assess the scale of infringement and monitor trends, with the key research in this area are the EUIPO’s sectoral re- ports and the OECD-EUIPO report. • The social media platforms provided data on levels of IPR infringement identified on their platforms in 2015; notably Twitter’s data indicated a significant decline in claims for trademark infringement in the second half of 2015, whilst Google ar- gued only a small percentage of ‘bad actors’ misused their services. Facebook 3 data showed a clear increase in government data requests, although this was not broken down into the types of requests in the research period. Impact of Infringement • Industry and enforcement agency responses indicated varying impact across the different sectors, with some firms blaming the rise of social media for an increase in levels of counterfeiting and damage to their business. Despite data from FACT1, no firm surveyed was able or willing to quantify the actual costs to their business. We attribute this lack of data to industry’s reluctance to share confiden- tial financial information. We also recognise that major brands are commercially conflicted in their (often defensive) engagement with social media. • The main focus for infringement, according to industry and government agencies, is the proliferation of closed groups (i.e. invite-only groups, created on social me- dia platforms). The social media platforms resist enforcement agencies and in- dustry bodies’ pressure to adopt more proactive policies for combating infringe- ment. This reactive-only policy towards IPR infringement has created a climate of distrust and suspicion between the platforms and rights holders, something made worse by what industry considers to be the platforms’ cumbersome takedown pol- icies. • The social media firms counter this view by pointing to what in their view is a frag- mented UK IPR system, which is part of an even more complex system across 150 other countries. Characteristics of Infringement • Despite claims from industry and government agencies about the flagrancy with which IP-infringing content is placed on social media, only one, FACT, provided us with actual examples to highlight the characteristics of infringement. • Private enforcement agencies detailed how counterfeiters can copy near-identical images from legitimate sites to deceive consumers, pricing these products close to the authentic article. However, such infringing activity takes place across a myriad of online platforms, not just on social media. • The increasingly sophisticated tactics adopted by counterfeiters in online com- merce encompass auction houses, b-2-b marketplaces, social media and, ac- cording to some, their link with traffic diversion from official websites. • We are aware that the use of VPN and the dark net2 means that much of the cur- rent online illicit activity is beyond oversight and reach. On social media plat- forms, the increased use of spambots and links to various payment sources off- site makes it harder than ever to control the full scope of illicit activity. Opportunities for IPR • There
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