When it comes to counterfeiters, I try to be the leach that
sucks their blood dry. Cease-and-desist letters are fine, DMCA
takedown letters are helpful, but if you really want to cause them
pain and stop them from infringing, you need to cut off their
lifeline: cash flow.
Most counterfeiters operate online and hide their identities
through a variety of privacy services, anonymous sites, false
information in WHOIS, changed locations, and different aliases. But
what they cannot do is provide false or out-of-date information to
their banks, credit card companies, or PayPal. Failure to provide
up-to-date and accurate bank and contact information to the payment
providers will prevent them from getting paid and curtail their
customers' use of credit cards and PayPal on their websites,
thereby cutting off their income stream. In short, if they want to
be paid, they have to be honest with their payment provider
companies.
The major credit card companies—Visa, MasterCard, American
Express, Discover Card, and PayPal—all have procedures in
place by which they will cut off counterfeiters, or at least
attempt to get their local branches to cut them off.
In June of 2011, the major payment processors mentioned above
entered into an agreement where they established best practices
designed to withdraw payment-processing services from websites
selling counterfeited or pirated goods.
Recently, Senator Patrick Leahy (D-Vermont), chair of the Senate
Committee on the Judiciary, wrote a letter to Visa and MasterCard asking
them to double down on their efforts to curtail counterfeiting when
it comes to cyberlockers, who have been hosting infringers.
During previous congressional hearings, a MasterCard executive
testified that "we prohibit and deplore the use of our systems
for all of the illegal activity, including copyright
infringement."
Using the payment processor's anti-counterfeiting systems can
ultimately be the most effective way of preventing infringements of
one's products. Sometimes, a cease-and-desist letter sent to
the right place will evoke an appropriate response. That is usually
the situation when dealing with entities that are counterfeiting on
an inadvertent basis. Most hard-core counterfeiters ignore
cease-and-desist letters, or provide lame excuses, or make up some
unbelievable denial and continue their activities either blatantly
or surreptitiously (by using another website or name). DMCA
takedown letters to Internet Service Providers are effective in the
United States; however, they are not universally recognized and are
voluntary in most countries.
When you identify an online infringement and go to the WHOIS
database to try to ascertain the owner of a website in order to
contact them, more likely than not you will be stymied because the
website operations are using privacy companies that shield the
actual owners' identities on WHOIS.
After getting the runaround and when all else fails, look to the
payment processors for help. When you review their procedures, they
make it clear they want to be the avenue of last resort, not the
first approach in the battle against counterfeiters. In their
anti-counterfeiting programs, they generally ask for proof that you
have done everything you possibly can to get the infringement to
stop, such as previously sending out cease-and-desist letters or
DMCA letters, and other efforts. They are the final roadblock
against counterfeiters, not the first or initial barriers.
Their policies and practices differ, but are similar. Visa
describes its policy as follows:
Illegal Transactions Prohibited
Visa voluntarily provides assistance to IP Owners to address e-commerce transactions involving IP infringing products. Upon receiving complete information and credible evidence directly from the IP Owner establishing that a merchant ("Merchant") is engaged in transactions involving the sale of infringing goods on the Internet using Visa-branded payment cards, Visa will attempt to identify and notify the Merchant's Acquiring Bank ("Acquirer"). The Acquirer will be asked to investigate the allegations of infringement and take any appropriate action, which may include, but is not limited to, directing the Merchant to cease selling infringing goods identified by the IP Owner or terminating the merchant account.
After providing all the required information, proof of
ownership and the infringing activities, Visa will identify the
merchant's bank, forward the IP owner's submission to them,
and instruct them to initiate an investigation into its merchant.
If the merchant does not agree to cease selling the goods at issue,
or if the merchant does not provide evidence that supports a
genuine issue regarding the lawfulness of the merchant's sale
of the goods at issue, the bank will be expected to terminate
processing Visa payments for the merchant. If the merchant provides
evidence that supports a genuine issue regarding the lawfulness of
the merchant's sale of the goods at issue, such written
evidence will be provided to the IP owner. If Visa determines that
there is a genuine dispute between the IP owner and the merchant
regarding the lawfulness of the merchant's sale of the goods at
issue, Visa will direct the IP owner to directly address its
concerns with the merchant and its bank.
PayPal is a particularly good venue to use for
blocking counterfeiters, because PayPal may be the sole processor
for all of the various credit cards. Rather than having to send
different notices to individual credit card companies, just contact
PayPal. By contacting PayPal and working with them, if they shut
down the counterfeiter's access to PayPal, that will
effectively shut down the counterfeiter's access for all credit
card companies at once, making it much easier and more effective
for someone attempting to turn off the cash flow spigot of an
infringer than by separately contacting each credit card
company.
Counterfeiters simply cannot exist without having access to payment processing companies, and knowing how to use their anti-counterfeiter procedures is an excellent tool in the never-ending whack-a-mole battle against infringement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.