November 8, 2020

Mr. Daniel Lee Assistant U.S. Trade Representative for Innovation and Intellectual Property (Acting) Office of the United States Trade Representative 600 17th Street NW Washington, D.C. 20508

RE: 2020 Special 301 Out-of-Cycle Review of Notorious Markets Docket Number: USTR-2020-0035 Submitted electronically at: www.regulations.gov

Dear Mr. Lee:

On behalf of the member companies of the American Apparel & Footwear Association (AAFA), we appreciate this opportunity to submit comments to the United States Trade Representative (USTR) as part of its 2020 Special 301 Out-of-Cycle Review of Notorious Markets. We applaud USTR’s unwavering commitment to the protection of American intellectual property rights.

AAFA is the national trade association representing apparel, footwear, travel goods, and other sewn products companies, and their suppliers, which compete in the global market. Representing more than 1,000 world famous name brands, AAFA is the trusted public policy and political voice of the apparel and footwear industry, its management and shareholders, its nearly four million U.S. workers, and its contribution of more than $400 billion in annual U.S. sales.

AAFA’s Brand Protection Council (BPC) vigorously pursues brand protection efforts, with a focus on the global war against counterfeit apparel, footwear, accessories, and other supplier products. This committee has focused its attention on the proliferation of counterfeit goods found on online platforms and in physical markets. The recommendations and issues identified in this submission come directly from input provided by the BPC. Our comments also reflect AAFA’s engagement with certain online marketplaces on behalf of our members.

It is fitting that the issue focus for the 2020 Notorious Markets List is on e-commerce platforms and other third-party intermediaries that facilitate the importation of counterfeit and pirated goods into the United States. Online counterfeiting continues to be a growing issue for AAFA members, and the COVID-19 pandemic has only exacerbated this problem. The pandemic has disrupted supply chains worldwide and forced physical stores and markets to close, drastically driving consumer traffic to online channels. While we embrace the growth of e-commerce, unfortunately, counterfeiters have as well, taking advantage of these circumstances globally and flocking to sell their fake goods online. They have also targeted consumers with phishing and fraud schemes. As a result, AAFA members have reported massive spikes in illicit activity occurring on online marketplaces during the first half of 2020. Now more than ever, it is critical for online marketplaces

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to take the necessary steps to prevent their platforms from being misused, and, more importantly, to protect consumers from unwittingly being sold fake products during a global health crisis.

While this report is important to publicize progress and weaknesses in the efforts that marketplaces make to fight counterfeits, and has become an essential tool in the fight against illicit goods by pressuring companies to significantly improve their mitigation efforts, it is clear that we need legislation to ultimately address the problem. The online landscape is clearly shifting. Marketplaces must have accountability to create pressure to effectively address the issue of counterfeit goods sold on their platforms. Legislation pending before Congress would help in two important respects. First, it would establish clear and binding legal obligations to proactively prevent the online sale of counterfeits. There is room to establish balanced standards and factors to evaluate and assign legal liability when appropriate. Second, it would increase requirements to provide consumers with transparency about who they are purchasing from online. We firmly believe that such an approach will increase certainty and create stronger partnerships in the shared fight against online counterfeiting and piracy. It is time to take these necessary steps to protect American consumers and American businesses from the many harms of counterfeit sales. We encourage USTR to continue to monitor developments in this space, and, where appropriate, to engage in relevant policy discussions on this important issue.

Recommendations to be included in the Notorious Markets List are drawn from the extensive feedback from a broad swath of AAFA members who have regular and continuous experience enforcing their brands’ intellectual property. We generally include those entities where we believe there are insufficient efforts to block and/or remove counterfeiters and/or where the markets are actively encouraging illicit activity. Throughout the year, and in the weeks leading up to this cycle, we work closely with our members to identify concerns. Where possible, we look to mitigate those concerns directly with marketplaces and have developed robust engagements—including several mentioned below—with platforms. It is our hope that all these tools—direct engagement with selected marketplaces that want to cooperate, inclusion on the Notorious Markets List, and legislative solutions—will ensure that criminals have significantly fewer opportunities to sell counterfeits.

Online Markets The interests of AAFA members are directly and adversely impacted by the sale of counterfeit goods through online third-party marketplaces. Because of the anonymity of online shopping and the inability to physically inspect goods before purchasing, combined with the trusted reputation of many online marketplaces, many consumers are deceived into purchasing counterfeits when they have a good-faith belief that they are purchasing genuine products.

Although it is impossible to identify the country of manufacture of every infringing product identified online, U.S. Government data indicates that the overwhelming majority of counterfeits sold globally originates overseas, in particular in China, and AAFA members reasonably assume that sales through U.S. platforms reflect similar trends. As we emphasized in our submission last year, we encourage USTR to include U.S.-based and U.S.-owned markets as part of this process. In the 2019 List, USTR acknowledged that while it did not request submissions on U.S.-based e- commerce platforms and online third-party marketplaces, the Administration has been looking at their role following the issuance in April 2019 of a Presidential Memorandum addressing trafficking in counterfeit and pirated goods. AAFA appreciates this acknowledgement and hopes USTR will broaden the scope of the review process this year given the significant role that domestic marketplaces have played in facilitating the sale of counterfeit goods, especially during the COVID-19 pandemic. Accordingly, AAFA has included several U.S.-based and U.S.-owned online markets in our submission this year.

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With the rise in purchasing online through social media channels, which has exploded during the pandemic, our members have also witnessed a flood of counterfeits and fraudulent advertising on many of these platforms as well. Immediate action must be taken to stop this deluge of counterfeits and fraudulent advertising, which we detail below.

The success of online marketplace brand protection programs must be measured by an across- the-board system that works for all brands, regardless of size. Such a system must focus primarily on preventing the listing of counterfeit products and then providing an expeditious and efficient back-up notice-and-takedown system. The preventative system must evolve and “learn from” experience gained through preventative and reactive activity.

AAFA recommends the below online markets to USTR for its 2020 Notorious Markets List. We have separated our online recommendations into two categories: (1) U.S.-based and U.S.-owned online markets and (2) Foreign online markets.

U.S. Based and U.S. Owned Online Markets

I. .COM, INC. AAFA has had regular dialogue with Amazon representatives over the last two years to address the numerous and ongoing brand protection concerns of our members. We have also facilitated numerous opportunities for members to engage directly with Amazon, including monthly conference calls and in-person meetings. This increased engagement has been helpful and has created a useful dialogue to enable individual companies to resolve specific problems and a forum to address larger issues shared by many brands. Many brands, however, continue to experience difficulties and have not yet seen consistent improvements expected to result from such dialogue.

Some member brands have seen improvements in the level of attention, response times, and number of resources devoted to understanding and addressing the serious counterfeiting issues still present across the Amazon ecosystem. While we welcome the progress Amazon has made to date, we believe more needs to be done to ensure sustained, irreversible progress in the fight against counterfeits on Amazon’s marketplaces, particularly in the COVID-era where the rise of counterfeiting has more than matched the rise of e-commerce globally. As one member explains: “Amazon is getting better, but they define low expectations and begrudging incrementalism. We think they could be doing a lot more.”

In 2018 and 2019, AAFA recommended Amazon’s foreign marketplace extensions—specifically amazon.ca, amazon.co.uk, amazon.de, amazon.fr, and amazon.in—for inclusion on the Notorious Markets List. In 2019, Amazon’s foreign domains were designated as Notorious Markets by USTR.

This year, members report that problems persist on these foreign domains. One AAFA member explains: “On Amazon, all the European marketplaces (UK, Germany, Spain, France, and Italy) are flooded with large scale sellers of counterfeit, print on demand goods, selling under made up brand names, that are shipped from China. We frequently report these listings but do not find Amazon quashes the sellers.” AAFA members continue to find and submit requests to remove counterfeit products on the marketplaces owned by Amazon around the world. This includes its U.S. platform, which facilitates imports of counterfeit products into the United States.

AAFA believes a recommendation for Amazon—including both its U.S. and foreign domains— should be included in the 2020 Notorious Markets List for four reasons: (1) Volume of counterfeits

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available across Amazon; (2) Insufficient seller vetting process; (3) Repeat offenders on the platform; and (4) Challenges with Amazon’s brand protection systems.

1. Volume of Counterfeits Available Across Amazon Despite increasing efforts by Amazon to target counterfeit sales and collaborate with rights holders, AAFA members report that a significant volume of counterfeit goods continues to be available across Amazon’s marketplaces.

Of particular concern, member brands have also observed several instances where a counterfeit was designated as an “Amazon Choice” product. The “Amazon Choice” badge is said to be given to highly rated, well-priced products based on algorithms and other tools. Brands are deeply worried that this badge could be steering consumers away from authentic and safe products available for sale on the platform, and, more importantly, acting as an implicit endorsement of illicit and inferior products on Amazon’s marketplaces.

Below are data figures AAFA members provided to illustrate the size and scope of counterfeit and infringing listings available on Amazon’s marketplaces: • One brand removed approximately 120,000 Amazon Standard Identification Numbers (ASINs) from Amazon year-to-date (YTD). • Another brand removed almost four times more counterfeit and infringing ASINs from Amazon in the first three quarters of 2020 than it removed in all of 2019. • One brand reported a significant increase in the number of counterfeit and infringing ASINs from Amazon over the course of 2020; it reported removing more than double the amount of infringing ASINs in the first three quarters of 2020, compared to all of 2019. • Another brand reported a concerning increase in the number of counterfeit and infringing ASINs found on Amazon during the second and third quarters of 2020. Whereas this brand did not previously have outside resources in place to assist with removing infringing listings, it was forced to add additional resources, to address these issues. • Another brand reported a 2:1 increase in the number of counterfeit and infringing ASINs found on Amazon during the first three quarters of 2020. • One brand reported a 25% increase in the number of counterfeit and infringing ASINs found on Amazon in the first three quarters of 2020, compared to 2019 in total.

While these figures do point to success some members are having in removing counterfeits, they also reveal a disturbingly high level of counterfeit products on Amazon in the first place.

2. Insufficient Seller Vetting Process Online marketplaces must be proactive in their approach to combat intellectual property theft and misuse. As part of this process, marketplaces should have a robust seller vetting process in place. AAFA members are not confident that Amazon has sufficient measures in place for seller vetting.

This is perhaps the biggest area where improvements can be made to address the problems reported on Amazon. A more effective vetting system will limit the presence of counterfeits on the platform, thereby rending the takedown systems less important. Not only would this expose less consumers to counterfeits on Amazon marketplaces (ensuring they are more likely to buy legitimate product), but it would also reduce costs that brands have to incur to police the platform.

Further, strong anti-counterfeiting measures on other platforms, combined with relatively weaker vetting systems on Amazon, make Amazon ripe for exploitation by counterfeiters who have been chased away from other online venues.

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Amazon has told brands that prospective third-party sellers go through enhanced vetting before being allowed to sell on the platform. Despite this vetting process, and the improvements in this process that Amazon has reported to members, counterfeiters are still able to successfully make their way onto the platform, as noted above, in significant, and growing, quantities. Members believe that more advanced technological measures can be put in place by Amazon to vet its sellers. Moreover, this process should apply not only to prospective sellers, but retroactively to individuals and entities already conducting business on the platform.

According to one member: “There needs to be an overhaul of the seller vetting process and recognition by Amazon that this process is insufficient, especially if Amazon and its CCU [Counterfeit Crimes Unit] want to truly be seen as investigative partners with brand owners.” Another member echoes this perspective, emphasizing that “seller vetting” is used loosely by Amazon and that there needs to be increased measures and transparency in those methods because it is far too easy for counterfeiters to sell fakes on Amazon’s platforms.

3. Repeat Offenders on the Platform AAFA members reported numerous instances of repeat offenders on an Amazon platform being allowed to continue selling counterfeit and infringing products. Infringers whose listings were removed often reappear to sell more infringing products—sometimes the very same items that were the subject of the prior removal.

Over the last year, members have identified numerous sellers of high-quality counterfeit goods on Amazon. The below examples from five different brand members paint a vivid picture: • “Amazon will often only block an individual ASIN rather than a seller or brand. For example, if we catch a seller 5 times offering for sale counterfeit products, Amazon will typically only block that seller from selling that exact style of product. As we have thousands of models and SKUs, this is not helpful.” • “We identified a prolific seller of counterfeit products last year. We repeatedly made test purchases and reported the seller to Amazon. We were not told what the seller disclosed as part of the appeal process; however, they were repeatedly allowed to continue selling on the platform. In this time frame, consumers were able to continue purchasing counterfeit products, we were potentially losing legitimate sales, plus we had to incur substantial investigative and test purchase costs.” • “On average, we have to make between 3-6 test purchases before Amazon will block the seller. In this time, consumers are able to continue purchasing counterfeit goods.” • “We identified a counterfeit seller who was able to repeatedly open up new accounts when one was shut down. It was very clear that the seller was the same due to the same returns/shipping address. We tried to notify Amazon of this, but they allowed the seller to keep setting up new accounts.” • “On various occasions, third-party sellers have been able to pose as our brand and submit notification retractions to terminate the delisting process for counterfeit product, signaling that the verification procedures to prevent this unscrupulous activity appear insufficient.”

Counterfeiters are clearly finding ways to return to the platform once they have been removed. Amazon must provide a clear seller termination process to address recidivism and, more importantly, enforce an effective policy for preventing repeat infringers, including the aforementioned vetting and permanent termination of a seller (and all related accounts and listings).

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4. Challenges with Amazon’s Brand Protection Systems There are still major challenges to Amazon’s basic brand protection systems and general intellectual property policies that continue to frustrate brand owners. While many of the items below would not trigger a nomination to the Notorious Markets List, their persistence, combined with the items above, include significant opportunities to match Amazon’s stated commitments to fight counterfeits with the reality on the platform.

a. Lack of Transparency AAFA members report that there is a general lack of transparency when it comes to how Amazon’s brand protection programs operate, why certain action was taken, or what details Amazon can share with rights holders. Below are examples from five different member brands: • “Amazon provides little visibility into what improvements it implements based on notifications and information submitted by brand owners. Many of our notifications are similar in nature (indicating easy-to-spot commonalities) and the target listings could easily be prevented if Amazon incorporates information from successful de-listings into preventive mechanisms. It does not appear this is being done, or at least not done effectively. If this is being done, there needs to be greater transparency into how Amazon improves preventive measures.” • “Rejected notifications often lack clarity and fail to adequately explain why action was not taken.” • “When we report a seller, they have the right to appeal, and often produce invoices/authorization letters etc. Amazon will not share these documents with us, and we suspect they are often fake.” • “Unless we are co-litigating, Amazon is reluctant to share detailed sales history with brands for the purpose of a lawsuit.” • “Amazon has recently started displaying the sellers’ Operating Business Name and address on the seller pages. However, this doesn’t include a contact name, phone number or email address. Amazon also won’t share information with us regarding entities and sellers that are linked to each other.”

It is also worth noting that Amazon recently announced the formation of its Counterfeit Crimes Unit (CCU). We were pleased to see this development. AAFA members would like to see measurable key performance indicators (KPIs) from the CCU and additional transparency related to the strategies and objectives of this unit.

b. Confusing Platform Features AAFA members also emphasize that certain features on Amazon make it difficult for brands themselves to navigate, and more importantly, for consumers to decipher who they are buying product from. Below are examples from four brands:

• “It is extremely challenging for rights holders to locate and identify counterfeit goods being sold due to the way the Amazon ASINs work – individual sellers and companies are often not required to use their own images.” • “Brand Registry continues to remain very difficult for brand owners to navigate.” • “There is still inconsistency in the review process for information submitted through Amazon’s Report a Violation tool.” • “Fulfilled by Amazon (FBA) processes mean that even when consumers choose to purchase from a particular seller, the item may be fulfilled by a different seller.”

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It cannot be stressed enough that Amazon is a leader in the retail space and a key sales channel for many of AAFA’s members. The prevalence of counterfeits on Amazon’s platform goes beyond simple lost sales or reputational damage to Amazon or the brands whose identities have been stolen. Rather, it is also about protecting unsuspecting consumers from the harms posed by counterfeit products. We hope this can be a unifying message that allows us to continue our important work with Amazon going forward. It is with this in mind that AAFA—on behalf of the more than 1,000 brands and every man, woman, and child around the globe that wears clothing and shoes—stress the importance of dedicated, expansive, and transparent progress in Amazon’s fight against counterfeits. We look forward to continued progress in working with Amazon on these issues.

II. , INC. The line between e-commerce and social media platforms has recently blurred, giving way to an explosion of social commerce. This trend has certainly had positive benefits, especially for members that have been able to broaden their reach to consumers across the globe. At the same time, it has also exposed unsuspecting social media users to an ever-growing network of criminals using these channels to fuel the sale of counterfeits, especially during the COVID-19 pandemic.

Many of the issues that brands face on social media platforms are similar to the ones that exist on online third-party marketplaces. Unlike traditional online marketplaces, however, it is generally harder for brands to see the enforcement landscape on social media due to privacy regulations and the fact that activity on these channels can occur via private accounts and groups.

Just last year, USTR identified a growing concern about the proliferation of counterfeits facilitated by social media platforms in its review process. Social media channels are an important, and growing, part of our everyday lives. But just as with third-party marketplaces, they are increasingly exposing Americans to counterfeits in rapidly expanding numbers. We welcome increased scrutiny in this area.

Facebook, Inc. is an American social media conglomerate based in Menlo Park, California. While Facebook is headquartered in California, users in the European Union and the United Kingdom contract with Facebook’s Irish subsidiary “Facebook Ireland Limited.” Facebook also owns Instagram, a photo and video sharing social networking service.

AAFA believes a recommendation for Facebook, Inc.—including the Facebook and Instagram platforms—should be included in the 2020 Notorious Markets List for three reasons: (1) Volume of counterfeits available across Facebook and Instagram; (2) Lack of effective intellectual property tools; and (3) Increase in fraudulent ads.

1. Volume of Counterfeits Available on Facebook and Instagram AAFA brands report that a significant volume of counterfeit goods is being offered to consumers via a range of different methods on Facebook’s platform—targeted sponsored ads, personal pages and profiles, Facebook Marketplace, Facebook and Instagram shops, dedicated sales pages and profiles, and private and secret groups. Each of these channels provide a unique challenge to our member brands, as described below.

a. Facebook AAFA members report a huge, and growing, volume of takedowns for counterfeit and infringing products on Facebook via public posts, Facebook accounts, and listings on Facebook Marketplace. Brands are also grappling with removing content from hidden links on private

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groups, some of which have group members in the tens of thousands that are specifically organized to facilitate the sale of counterfeit products.

The following data figures, provided by AAFA members, help illustrate the size and scope of counterfeit and infringing listings available on Facebook: • One brand removed approximately 40,000 posts on Facebook year-to-date (YTD). • One brand removed 1.5x more counterfeit and infringing posts on Facebook in the first three quarters of 2020 than it removed in all of 2019. • In 2020, one brand detected over 3,700 profiles on Facebook infringing on its trademark rights. Of those 3,700 profiles, more than 3,500 were selling counterfeit goods. • One removed approximately 48,000 posts on Facebook YTD. • One brand submitted over 26,000 links containing infringing content to Facebook YTD.

Members further report that monitoring on the platform is complicated, given that many of these Facebook profiles do not openly use brand names in their promoted posts. Instead, these posts include generic terms in conjunction with images of easily recognizable fashion logos.

b. Instagram Instagram also sees the same issue of accounts specifically set up to sell counterfeit goods. Facebook, Inc. appears to take no restrictive action against accounts that are specifically created to sell counterfeits, with names like “replicas_deutschland01” and “top.quality.replicas,” which should act as red flags as to their infringing content. Multiple preventative suggestions are declined by Facebook due to prioritization of “free speech”—for example, blocking specific hashtags such as #counterfeit or #designerreplica.

The following data figures, provided by AAFA members, help illustrate the size and scope of counterfeit and infringing listings available on Instagram: • One member removed 3 times more counterfeit and infringing posts and ads on Instagram in the first three quarters of 2020 than it has removed in all of 2019. • One brand detected over 200 accounts linked to Instagram accounts selling counterfeit products year-to-date (YTD). • One brand reported approximately 19,000 URLs containing infringing content to Instagram YTD. • One brand reported that it detected over 600 Instagram accounts infringing on its trademark rights this year alone. Of those accounts, over 20 were promoting counterfeit websites. According to this brand: “This may seem low, but it is probably the most damaging to us economically as it targets consumers that would normally shop with us. When assessing this issue, one should also consider that Facebook is not giving us any appropriate tools to detect this account. We therefore have no visibility on what is actually going on.” • On any given month, one brand reported that Facebook and Instagram takedowns represent between 90 and 99% of all social media takedowns for counterfeit goods.

Instagram is also a major source of fraudulent advertisements, abusing brand names and likeness to defraud consumers. The issue of fraudulent advertising will be discussed below.

Additionally, AAFA members point to the Facebook-owned encrypted messaging platform WhatsApp as a conduit for the sale of counterfeit goods. Often, counterfeiters will include a WhatsApp number in their listings or directly connect their Facebook pages or Instagram accounts

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to WhatsApp. Members report that the new mobile shopping experience on Facebook Shops encourages sellers to create e-shops and conduct transactions via WhatsApp.

One brand reported that it has detected more than 250 WhatsApp numbers linked to Instagram accounts selling counterfeit products this year. Often, WhatsApp is reluctant to disable accounts, even if those accounts are directly linked to illicit activity. Some brands have reported that they have successfully had accounts disabled, but results have been inconsistent.

There must be a standardized system in place across all Facebook subsidiaries to address profiles and accounts affiliated with the sale of counterfeit and infringing goods.

2. Lack of Effective Intellectual Property Tools AAFA members feel that there are poor tools to support searching for counterfeit and infringing listings on Facebook and Instagram, with most describing the process of locating infringing content with words such as “impossible” or “very difficult.”

In general, brands feel that both Facebook’s proactive (i.e., vetting) and reactive enforcement measures could be strengthened. Brand owners report that there is a lack of visibility on the proactive measures being taken to address the sale of counterfeits. Even after brands have reported a violation or infringement of their trademark rights, they do not receive many details.

Despite entering into commercial relationships with users, Facebook does not appear to have a robust seller vetting process or verification process in place. Sellers on the platform are not required to display their contact information or sales history. Members report that Facebook is generally unwilling to share seller details without a subpoena or court order.

3. Increase in Fraudulent Ads In July 2020, AAFA and the Transnational Alliance to Combat Illicit Trade (TRACIT) jointly published a report, Fraudulent Advertising Online: Emerging Risks and Consumer Fraud. The report focused on the increase of fraudulent advertisements on social platforms that are driving consumers to buy counterfeits. More importantly, the report exposed systemic weaknesses in online advertising supply chains that are enabling counterfeiters to take advantage of social media platforms to defraud innocent consumers. Consumers should have a safe and secure shopping experience like they experience in brick-and-mortar locations. This means defending against the sale of counterfeits that consumers may find on their own as well as defending against the fraudulent advertising that lures consumers to illegal websites that often sell counterfeits.

The issue of fraudulent advertising has affected our member brands, with many of them seeing significant spikes during the pandemic. Below are comments from five brands: • “The fraudulent ads and accounts that run through Facebook’s sites have harmed hundreds if not thousands of our customers who have given over their credit card information, have been charged, and never got anything. Criminals use Facebook and Instagram with such a negative impact largely because they can use Facebook’s tools to target our customers so effectively.” • “We’ve gotten hundreds of calls into customer service about this issue, so it’s a big deal for real customers. Without these social advertisements, people would never encounter these domains, so getting Facebook to deal with this would really address it at the critical point.” • “We’ve seen a consistent increase in the number of sponsored ads offering ads offering counterfeits since February jumping from around 70 ads to nearly 500 in September. This

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is around a 600% increase in the number of ads. We’re also frequently reporting the same images and type of ads repeatedly.” • “Our brand has noticed an uptick in ads for infringing goods appearing on Facebook and Instagram during the pandemic. They are often for websites that are scam sites and that do not fulfill actual product.”

Facebook’s Commerce & Ads IP Tool allows brands to search in ads, Marketplace posts and group sale posts and to report any content that they identify as infringing their intellectual property rights. However, members believe that the tool is somewhat limited in its current form. One member emphasizes: “The tool doesn’t allow a brand like us to reasonably monitor the platform to protect our customers against infringement and fraud.” Members explain that the Commerce & Ads IP Tool could be strengthened if it provided brands with more visibility into fraudulent ads across the platform, such as: • How many fraudulent ads a brand has reported over time? • How long it took until the reported ads came down? • How long were the reported ads running for (on average)? • How many accounts has Facebook disabled because of brand reporting? • How many impressions did a reported ad receive while it was active? • How many people clicked through to the fraudulent site? o Does Facebook have the ability to notify users if they’ve clicked through to a site that they subsequently take down as fraudulent? Could Facebook provide a warning to those users?

Overall, AAFA members report that Facebook is open to engaging with rights owners directly on issues and other topics relating to intellectual property infringement. AAFA has also had a regular dialogue with Facebook on the issues our members are facing. Since July 2020, AAFA has had regular virtual meetings with Facebook representatives on the issue of fraudulent advertising. Those conversations are ongoing, and it is our hope that Facebook’s advertiser verification systems will strengthen as a result.

As we have emphasized before, engagement with platforms is certainly an important component of addressing brand protection issues. However, engagement only goes so far when there are prevalent issues on a platform. Facebook needs to demonstrate the commitment to the resources and leadership necessary to make their intellectual property tools transparent, and most importantly, effective.

Foreign Online Markets I. a. REDBUBBLE Redbubble is an online marketplace for print-on-demand products based on user-submitted artwork. Redbubble is headquartered in Melbourne, Australia and also has offices in Berlin, Germany and San Francisco, California.

AAFA members report that there is a significant quantity of counterfeit goods for sale on Redbubble. The platform facilitates drop-shipping of counterfeit print-to-order items. Moreover, Redbubble allows sellers to superimpose rights holders’ trademarks onto stock imagery to advertise print-to-order items.

Brands report that virtually anyone can register for an account and upload infringing designs across various product categories. Redbubble has started to undertake some monitoring following

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legal action in Australia; however, they have not kept up any brand protection efforts and continue to pose as a significant problem for brand owners. It does not appear that any proactive work is being done to prevent the sale of counterfeit goods.

II. CENTRAL AND EASTERN EUROPE (POLAND, RUSSIA, UKRAINE) a. ALLEGRO Allegro is a Polish e-commerce platform. AAFA members report that there is a large counterfeit issue on Allegro. Proactive measures on the platform are almost non-existent. In five years, one brand reported that it has seen only one proactive outreach from Allegro. AAFA members report that any additional information provided to aid in proactive enforcement seems to be of no use.

b. AVITO.RU Avito.ru is the most popular classifieds website in Russia. A significant number of counterfeit listings are available for sale on the platform. AAFA members report that they see a significant number of takedowns annually. However, results are inconsistent, communication is poor, and there is an overall lack of transparency.

c. BIGL.UA AND PROM.UA Bigl.ua and Prom.ua are Ukrainian marketplaces owned by the EVO Company Group. There are a vast number of counterfeits available for sale, including items described as “copy” or “replica."

There are very poor takedown policies and procedures in place on both marketplaces. Members report a ban on online enforcement vendors using technology to scrape these sites, therefore requiring rights holders to manually search and report infringing content.

All efforts to contact Bigl.ua and Prom.ua, both directly and through service providers, usually fail regardless of whether the outreach has been made in English or Ukrainian. The platforms are noncompliant and have no proactive monitoring or takedown measures in place. Moreover, results are generally inconsistent or not reported back to brand owners.

d. VK VK continues to be the biggest issue in Russia in terms of sales of counterfeits. VK has previously been identified as a Notorious Market by USTR. A high number of listings have been removed from the VK Marketplace. On the social media section of VK, brands have seen a significant volume of personal posts linking to fakes, private groups explicitly for the sale of counterfeit goods, and fake profiles purporting to be official brand accounts.

III. CHINA a. WECHAT (TENCENT INC.) WeChat is a Chinese multi-purpose messaging, social media and mobile payment app developed by Tencent, Inc. Last year, AAFA recommended WeChat as a Notorious Market. In the 2019 List, USTR noted “…right holders have expressed increasing concerns with a growing trend of counterfeit products being offered for sale on ecommerce features related to large platforms, such as WeChat.”

WeChat remains problematic given that it is also serves as a messaging app, counterfeiters knowingly use the platform to hide behind privacy regulations. Restrictions against users are minimal and unlikely to serve as a deterrent to infringement. AAFA members continue to report that it is difficult to identify and report content on WeChat. The app has a reporting tool by which users can submit “tips” to brands if they believe they have discovered IP infringement. However, this reporting tool is often abused, and completely unrelated or useless content is reported.

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Tencent claims to be proactive in its approach to counterfeiting and infringement on the platform but does not share brand specific details associated with proactive claims. Overall, the lack of transparency and real information sharing continues to be a problem for brands.

IV. a. BUKALAPAK Bukalapak is one of the largest Indonesian e-commerce companies. AAFA recommended Bukalapak to USTR for its 2018 and 2019 Notorious Markets List. Bukalapak continues to be identified by USTR as a Notorious Market.

High volumes of counterfeits can still be found on the platform. So far in 2020, one brand has already completed over 4,500 enforcement actions on Bukalapak. Takedown is slow after reporting and brands often do not receive confirmation upon removal. Repeat offenders are rampant on Bukalapak and there seem to be no proactive measures to stop them. Poor communication with brands continues to be a major issue.

b. TOKOPEDIA AAFA recommended Tokopedia as a Notorious Market in 2019. There have been no improvements on the platform. A vast number of counterfeit goods still remain available for sale, including overt counterfeit items described as “copy” or “replica.” This year, one brand has already completed approximately 4,000 enforcement actions on Tokopedia. The platform has very poor takedown policies and procedures that yield inconsistent results. Brands are often left waiting months for counterfeit listings to be removed. It appears no proactive work is being done to prevent the sale of counterfeit goods on the platform.

c. CAROUSELL Carousell is an online and mobile e-commerce platform based in . The platform was included in USTR’s 2019 List. Members report that significant problems persist on Carousell. Takedown processes on the platform are unclear, with inconsistent results. Repeat offenders are common on the platform and no proactive measures are taken to terminate the accounts of repeat offenders. Overall, communication with brand owners is poor.

d. Last year, AAFA recommended Shopee platforms—specifically shopee.com.my, shopee.ph, shopee.co.th, shopee.vn, shopee.tw, and shopee.co.id—to the Notorious Markets List. Shopee was included in the 2019 List.

The Shopee group of platforms remains one of the most prolific online sources for counterfeit products. Members report that the overall volume of counterfeit products listed for sale, particularly in and the , remains unacceptably high. In fact, one brand reports that approximately 40% of all of its takedown notifications were submitted to a Shopee platform. It does not appear that any proactive work is being done by the platform to address this issue.

There are inconsistent policies in each region a Shopee platform operates. Decentralized processes between countries impacts effectiveness and results in inconsistent takedown times. Members also report that the platform lacks processes to control repeat infringers. They have observed numerous instances where sellers whose listings were removed are able to quickly repost products to the Shopee marketplaces.

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Physical Markets AAFA members emphasize that 2020 has not been a typical year in terms of offline enforcement due to COVID-19. In just the past few months, members report that they have seen many of the same physical markets re-open, but with far fewer sellers and far less foot traffic. As the year goes on, markets geared towards “locals” are coming back stronger. However, physical markets that are dependent on tourists have been hit hard. Due to pandemic-related restrictions imposed on law enforcement, as well as on private investigators, enforcement in many of these marketplaces has been extremely limited.

AAFA recommends the below physical markets to USTR for its 2020 Notorious Markets List. These markets are categorized by country.

I. Wholesale Market Located Opposite Dhaka College (Bangladesh) AAFA members report that the wholesale market located opposite Dhaka College is one of the biggest counterfeit markets in Bangladesh, with a huge volume of counterfeit goods being sold and no enforcement activities taking place.

II. Rua 25 de Março (Brazil) Sao Paulo’s Rua 25 de Março has been designated as a Notorious Market. Counterfeiting activities continue at this location. Despite several actions that have taken place this year against malls, members still report that there is still a significant counterfeit issue in this area.

III. Stock Bazaar Ilianci and Sunday Market Dimitrovgrad (Bulgaria) Stock Bazaar Ilianci is located in Sofia. Sunday Market Dimitrovgrad is located in Dimitrovgrad. Because of the COVID-19 pandemic, the markets and shops were closed for several months in 2020. Brands have seen no seizures of counterfeit branded goods in these markets. They believe that the reason for this may be that the Turkish-Bulgarian border was closed to cars and most counterfeit goods offered in Dimitrovgrad enter from Turkey. However, brands have seen many customs seizures with significant quantities of counterfeit goods coming from Turkey to Europe with trucks through the border point at Kapitan Andreevo.

IV. Tank Road (India) Tank Road in Delhi is a street full of wholesale shops selling fake goods. This market has been designated as a Notorious Market in years past. Despite occasional enforcement actions, which are expensive to initiate, Tank Road remains a hotspot for fake fashion goods.

V. Wolka Kosowska Markets (Poland) Wolka Kosowska Markets are in a village outside of Warsaw. This is a well-known location for wholesale counterfeit goods, and it includes several markets and warehouses. One brand contributed to almost 20 raids this year, acting with both the Polish police and Polish Customs.

VI. Dragonul Rosu Commercial Center (Romania) The Dragonul Rosu Commercial Center remains one of the most important locations for the sale of counterfeit goods in Romania. This location has more than 4,000 stalls. Most of the products sold in this complex come from China. According to information from authorities, many of the counterfeit products sold offline in Romania come from this commercial center. Due to COVID- 19, fewer seizures have taken place at this location this year. However, in previous years, many successful police raids have taken place at Dragonul Rosu Commercial Center in previous years.

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VII. Sadovod, Dubrovka, Moscow Mall, Lira (Russia) In Moscow, there are three major markets which are known to supply counterfeit goods. These markets are: • Sadovod Market, on the 14th kilometre of the MKAD ringroad (2019 Notorious Market) • Dubrovka at Building 3, 13 Sharikopodshipnikovaya Street • Moscow Mall at Building 6, 1 Tikhoretskij Avenue

The market Lira in Pyatigorsk (Stavropol region) is also known for selling fakes. Occasionally the Stavropol Police will take action in the market, but brands have yet to see any long-term effects.

VIII. Grand Bazaar (Turkey) The Grand Bazaar has been designated by USTR as a Notorious Market in years past. Brands report that the scale of the counterfeit problem at this location remains significant. Moreover, there is little to no action from the Turkish authorities. Members also report significant numbers of stores selling counterfeits in the Merter and Laleli districts of Istanbul.

IX. Ninh Hiep Market and Saigon Square Plaza (Vietnam) Ninh Hiep Market on the outskirts of Hanoi has been long known as the manufacturing and trading hotspot of counterfeit fashion items. Various types of goods are available at the market—not just finished products, but also labels, materials, and accessories at cheap prices. Ninh Hiep Market remains the big supplier of counterfeit goods to many of the retailers in Hanoi and neighboring provinces. Vietnamese authorities have been aware of the illicit activity at this market for some time and have taken several actions against sellers over the years. However, this activity usually continues regardless of actions from authorities or brand owners.

Saigon Square Plaza is a shopping complex in the center of Ho Chi Minh City known for selling counterfeit fashion items. This location hosts thousands of kiosks under one roof. Authorities in Ho Chi Minh City have conducted several raid actions in Saigon Square Plaza over the years to seize counterfeit products. In addition to strict legal actions and administrative sanctions, the Vietnamese authorities have also conducted educational workshops for landlords, retailers, and consumers in 2019. While this is a positive development, members report the prevalence of counterfeit goods for sale.

Stolen intellectual property costs our members billions in lost sales, damage to brand reputation, and substantial legal expenses. Ultimately, these costs lead to U.S. job losses and higher costs for U.S. consumers.

I look forward to continuing this dialogue to protect American ingenuity and competitiveness abroad. Please contact Christina Mitropoulos, AAFA’s Manager, Brand Protection & Manufacturing Initiatives, via [email protected] if you have any additional questions.

Sincerely,

Stephen Lamar President and CEO AAFA

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