I. Introduction
The Trump administration, addressing efforts to curb online counterfeiting, has called for heightened collaboration, at times suggesting providing private parties with technological resources to help combat online counterfeiting. At the same time, the administration has bemoaned the lack of accountability among online third-party intermediaries and called for “clean[ing] up this Wild West of counterfeiting and trafficking.”[1]

The president’s Memorandum on Combating Trafficking in Counterfeit and Pirated Goods (“Memo”), issued in April of this year, echoes both these approaches.[2] The Memo has called for an interagency report (“Report”) to be completed by November 2019. In preparation for this Report, the Department of Commerce subsequently issued a Comment Request soliciting feedback from online third-party intermediaries, among others.[3]

II. Blueprint for the Upcoming Report: Both Descriptive and Prescriptive
The Memo calls for a comprehensive analysis of all available data that may shed light on the issue of online counterfeiting. Moreover, it calls for the identification of any market forces that may be facilitating online counterfeiting, as well as an evaluation of foreign strategies—namely those in France and Canada—in combating similar issues.[4]

The prescriptive measures are a bit more amorphous. While one portion of the Memo calls for “enhanced enforcement actions,” other portions call for further collaboration at three levels: among governmental agencies; between the government and third parties; and among third parties themselves. More specifically, the Memo emphasizes “suggestions for increasing the use of effective technologies.”[5] The recently released Comment Request by the Department of Commerce confirms the administration’s interest in utilizing technology to mitigate online counterfeiting in that it specifically solicits further recommendations about how “effective technologies” could be deployed to curb online counterfeiting.[6]

The Comment Request illuminates some of the “best practices” the administration is considering, including an advance vetting of potential sellers/vendors; establishing a “prohibited items” list to bar such goods from being sold in the marketplace; and a number of notification regimes requiring third-party intermediaries to alert customers, and possibly other marketplaces, to any identified counterfeit goods.[7] While some third-party marketplaces have already begun to adopt sophisticated technological systems of their own to curb online counterfeiting, such proposals suggest more burdensome notice requirements, so as to create a solidified front among all online marketplaces.

III. Anticipated Effectiveness of Prospective Policies
Experts in the field note that an ad hoc approach towards online counterfeiting creates room for counterfeiters to evade disciplinary actions by jumping from platform to platform. Thus, proactive collaboration among online platforms appears necessary to ensure counterfeiters have nowhere to go. As Rebecca Mond, vice president of federal government affairs at The Toy Association, testified before Congress, “more must be done to prevent identified illicit sellers that have been taken down from reappearing on marketplaces selling the same products.”[8]

The law is currently in flux with respect to whether online platforms can be held liable for the selling of counterfeit goods on their sites, especially with respect to the question of whether a platform has an obligation to proactively monitor the situation as opposed to merely respond when notified about a counterfeit.[9] Courts have tried to assess the extent to which platforms participate in the selling of these counterfeit goods.[10] If the report calls for executive or congressional action to assist courts in labeling online platforms as active participants, this could subject platforms to trademark infringement liability upon a third-party sale of counterfeit goods.

IV. To Cajole to Threaten
The Report may call for the transformation of optional safeguards into mandatory protocols. Peter Navarro’s comments about the need for accountability suggests a heightened enforcement policy that penalizes online marketplaces for allowing the sale of counterfeit goods.[11] At the same time, the memo’s call for collaboration suggests cooperation. Only time will tell whether the latter actually undermines the former.

[1] The quotation is from Peter Navarro, Director of White House National Trade Council. See Deb Riechmann, Trump Signs Memorandum to Stem Counterfeit Goods Trafficking (Apr. 3, 2019), available at https://www.apnews.com/71d9d74bb31a4447b7a34446cf2410be.
[2] Presidential Memorandum on Combating Trafficking in Counterfeit and Pirated Goods, Sec. 2 (April 3, 2019)
[3] Comment Request on the Report on the State of Counterfeit and Pirated Goods Trafficking and Recommendations, 84 Fed. Reg. 132, 32861 (U.S. Dep’t of Commerce, July 10, 2019).
[4] Memo, Sec. 2(b)(ii).
[5] Memo, Sec. 2(b)(vii).
[6] See Comment Request, at 32863.
[7] Comment Request, at 32863.
[8] Testimony of Rebecca Mond, Vice President of Federal Government Affairs at The Toy Association, Before the U.S. House of Representatives, Committee on the Judiciary Subcommittee for Courts, Intellectual Property, and the Internet for the Hearing titled “Counterfeits and Cluttering: Emerging Threats to the Integrity of the Trademark System and the Impact on American Consumers and Businesses” (July 18, 2019).
[9] See Tiffany, Inc. v. eBay Inc., 600 F.3d 93, 103, n. 9 (2d Cir. 2010) (determining that despite having general knowledge about the counterfeit taking place, the online platform would have had to have more specific knowledge to constitute contributory trademark infringement); but see Oberdorf v. Amazon.com Inc, 2019 WL 2849153, at *10 (3d Cir. 2019) (discussing, albeit it in a strict products liability context, how an online market provider can be considered a seller).
[10] See Spy Optic, Inc. v. Alibaba.Com, Inc., 163 F. Supp.3d 755, 765 (C.D. Cal. 2015) (allowing the trier of fact to determine the extent to which an online platform’s use of metadata to group products on its website constitutes participation with the actual sale).
[11] Navarro has been quoted as saying: “Right now these third-party online marketplaces . . . together with the ecosystem that supports them . . . have essentially zero liability when it comes to these counterfeit goods. That simply has to stop.” See Clyde Hughes, Trump Signs Memo to Fight Counterfeit Products Online, United Press International (Apr. 3, 2019), available at https://www.upi.com/Top_News/US/2019/04/03/Trump-signs-memo-to-fight-counterfeit-products-online/7681554305512/.