Democracy. Next, on capitol hill policy advocates testify on ways to protect consumers from unsafe online counterfeit goods. The Senate Judiciary subcommittee hearing focused on the rapid growth of counterfeiting on ecommerce platform. This is about an hour and a half. [background noises] this will come to order like to thank our witnesses for participating today. I would also like to thank a Ranking Member tillis and his staff for working in a collaborative way to put this hearing together. I would like to welcome senator geraldo. This is our fifth hearing of the subcommittee this year. Center tillis you and your team continue to be great partners in moving forward. Just to set the stage more broadly on the focus of this hearing, Online Shopping has expanded your dramatic has exploded in recent years. Last year, sales exceeded 1 trillion for the first time as millions and millions of americans turn to Online Platforms for ebay to amazon to find the brands they trust at the prices they can afford but counterfeiters unfortunately have moved online alongside American Consumers. Their tools are becoming far more sophisticated. Counterfeiters are no longer selling fake handbags or watches on a Street Corner or a fleamarket. New modern online counterfeiting delivers products that look real with listings featuring images that show the real product and fake reviews that make the knockoff seem authentic. Online counterfeiting efforts are so successful according to one recent report two thirds of American Consumers surveyed had unknowingly bought a counterfeit product online last year. This is not just a matter tricking consumers into spending their money on harmon sleep Fake Products. The customs and Border Patrol earned fake goods can post real dangers with the health and safety of all americans at risk. Fake lithium batteries for example batteries that power laptops can explode or catch fire. They cause 70 deaths three and 50000 series injuries and one recent year alone but counterfeiters are also targeting and trying to sell fake while parts that have been demonstrated to increase the chances of a crash. Counterfeit prescription drugs sold to consumers online are best ineffective and at worse in some cases deadly to those who purchase them. If i unknowingly bought a fake laptop at my local best buy and have been caught fire in my home, best buy would be liable for the harm to me and for the brand owner for can ship it into braid mark infringement. This framework incentivizes brickandmortar stores to thoroughly and proactively that their supply chains to keep counterfeit products out of consumer hands. That same counterfeit battery bought online is both a different liability framework. Platforms dont have the same proactive obligations in fact they need not remove a listing until he brand owner tells the platform specifically the listing is counterfeit. The weight to the onus for placing online counterfeits is principally on brand not platforms. Under this structure brand owners have a Never Ending Game of a whack a mole as they monitor a multiplying number of Online Marketplaces for counterfeit listings. Platforms dont have a that hava counterfeit problem many have undertaken laudable anticounterfeiting efforts. Current efforts are neither effective nor sufficient because the problem is not gonna wait. In fact it dramatically increasing. I was proud to reintroduce the shop safety act last week with senator tillis. A bill that worked to try and balance the brand owners of Online Platform to intercept and stop the sale of the harmful counterfeit goods. The act opens platforms to liability of counterfeit goods affecting health and safety are sold on the platform the same liability brickandmortar retailers have been subject to for decades. It requires brand owners to provide platforms with notice of their trademark at a critical point of contact so platforms can proactively implement an articulated list of best practices to keep unsafe counterfeits off shopping carts. Better vetting before goods are listed quickly removing counterfeit listings, terminate repeat counterfeiters and requiring accurate images of the products sold. Platforms that follow best practices will have a safe harbor from liability platforms taking genuine good faith efforts to clean up their site should enjoy liability shield. A fair amount of work in our last Congress Hearings in both 2019 and 2021 have highlighted the rising anticounterfeiting. It is not my anticipation the bill introduced is perfect or final. Part of this hearing those who support and oppose this bill is to welcome and putt both critiques and complements and an effort to try to sharpen and shape the bill into Something Worthy of enactments. Senator tillis and i first introduced shop safely purred from stakeholders who would be impacted by the bill. I appreciate their efforts in the work weve done to make changes to the bill based on the feedback we have received so far. I look forward to continuing to work the broad range of stakeholders as we try to move the bill for this year. With might Ranking Members cooperation weve assembled a panel today with a diverse range of views i will introduce them in a moment but first let me turn to Ranking Member tillis by. Thank you for the series of great hearings on strengthening intellectual Property Rights and addressing the challenges we have a good with our intellectual property system. We have a lot of opportunities to make it even better. The best of both worlds number one some is ripping off intellectual property. Number two theyre doing in a way that could be very dangerous. Which is why im glad we are having this hearing and taking concrete steps to address the problem. I cannot get out of my mind i have mentioned the story before im an avid mountain biker. Its the reason i got into politics accidentally i wanted to be outed by chilled the next thing i dont want to state house. Just a few years ago i have specialized products people are dependent upon your background is, like chevy or ford. I may specialize consumer i saw a specialized helmet clearly counterfeit break under the weight of about 180footpounds person jumping a foot off the ground. But someone who has had two serious accidents specialized element that cracked but did not prevent me from getting a concussion having serious injuries we hear about them in automobile parts and airplane parts that they the official version may be safe the counter version very dangerous for theres no question with got to fix this problem. And i think the bill we are going to have the hearing on today is a good first step. Its never going to end. We have a lot of the same problems with general and in intellectual property theft. It is falling on the back of the holder to fido who is ripping off their intellectual property pretty what platform are they selling it on and if you tell us to take it down that model does not work. I wish that it could. But it simply does not work. Today i hope this hearing gives Additional Information stakeholders together. We can come up with a reasonable compromise. There are some consequences we want to avoid this over going to the thoughtful process i would not think the witnesses michael told them where the reasons we saw the subcommittee so much as we dont really expect the witnesses to go after each other because they are so far parts. The nature of our hearings are more about how you weave together a reasonable legislative fix that addresses some of the concerns that may exist on either side. In this hearing today we get that productive feedback. I hope those who are out there to kill this bill need to understand i want you out the table to make it better. If there is anyone out there who thanks theyre going to slow this down then they need to think again all youre doing that may put you on it. Lets Work Together recognize the Public Safety the intellectual property. Infringement challenges that we have to deal with and come together and work with us. I especially appreciate how frequently it senator hirono shows up for the subcommittee hearings. No matter what day it is on. Are both doing a great job think of a much bigger et cetera think if youre persistent interest and engagement on the topics of this hearing. I keep member tillis thank you. I appreciate the introduction on how briefly introduce our witness paddle we talk about strategies for protecting American Families for unsafe counterfeit products shop safety act we just introduced. Our first witness Adjunct Professor Center for anti counterfeiting on legal issues pertaining to counterfeit or ecommerce platforms we have Daniel Shapiro senior vp brand relationships that read point the Service Business that helps brand Police Counterfeit goods on Online Platforms and who i think had a memorable weekend, congratulations. Next we have steve at presidency of the American Apparel and footwear association. Also from delaware. Trade association of the aa fa representing more than 1000 brands of the footwear and apparel industries, industries the top of the cbp counterfeit seizure list. And last will hear from matt shares a present of the Computer Communications industry association. Trade association representing Online Platforms including a wellknown frequently my home use platforms like amazon and ebay. Welcome. After i swear in these witnesses each of you will have five minutes will take to it may be three rounds given lots of things we need to talk about. If you would please stand you up swear and affirm the chesaning about to give before this can be whole truth, nothing but the truth so help you god . Parts of the is been sworn and professor you may proceed with opening statement. Ask Ranking Member tillis thank you for inviting me too testify this afternoon on the shop safety act protecting families im representing myself at todays hearing the views expressed are my own put my remarks drawn the work ive heard organizations and professionals on trademark counterfeiting as well as leading Disciplinary Research teams, education and outreach to examine the issue from an academic at practical perspective. X National Economies companies of all sizes and vertically more than other company or brand owner trademark usually substandard or dangerous good. They rely on the goodwill reputation of that brand in order to make an illicit profit. Often counterfeiters are tied to other criminal activities such as online fraud and organized crime. Many trademark owners struggle to get from platforms to respond to knows takedown request or if they do it many find a walkable effect occurred with more postings taking their place. Particularly impact businesses with their own products who do not have dedicated Brand Protection Team or department have limited resources to commit to protecting the trademarks online. Greater multiDisciplinary Research in order for counterfeit to be sold to a consumer on an ecommerce platform there must be at meeting in time and space of the consumer current to the counterfeiter posting and through the ecommerce platform. The most effective way to disrupt this is to remove where the factors from the situation proactively before they ever reach that meeting in time and place in the platform. Although the legal liability in the brickandmortar space provides contributory liability for trademark counterfeiting of consumers in their space. We dont find the same parallel in the ecommerce space. The current state of lot rest primarily on the Second Circuit case. Ecommerce platform of the posting from a bradford not constructed knowledge. Monitoring of their own platform for counterfeit but they have created. Thus an imbalance involves the brand owners they cannot get at the root of the issued and are costly chasing, for postings online in the online transaction. Or as needed. Results of the sentencing country Consumer Survey we completed last month note that in our studies nearly 66 of u. S. Consumer surveyed but counterfeit unintentionally. 13. 4 x ranks negative Health Effects after using a counterfeit product. 15. 6 expense personal injury. 68 of those surveyed said they bought counterfeits on either ecommerce or social media platforms consumers do not see a clear mechanism what to do and they discover counterfeit. These findings reflect we know from our engagement the product line number one challenge root, fit online. Even my time is impacted by counterfeit goods. Just a few weeks ago in september my mother was a 72yearold retired Public School teacher third party thiry sellers with counterfeit taken for several months experiencing negative Health Effects. We are told conflicting messages she could dispose of it or even give it away or donated. My mother expresses reflective of what i have heard in regards to their consumers. And others. My recommendations but counterfeit goods by thirdparty sellers and Online Market markee of the shop safe act to support continued collaborations between academia and other stakeholders thanks and look forward to your question. Thank you mr. Shapiro projects thank you german codes and Ranking Member tillis. And esteemed members of the committee for inviting me too be here today. A quick overview, we are a Technology Company is helping make the internet safe for both brands and consumers. We as a i technology to detect and remove hundreds if not thousands of marketplaces around the world. I began working in this space 13 years ago some of the largest brands to combat this problem which is obviously significant. In recent years we have witnessed on precedent rise in ecommerce. Offering consumers convenience and variety like never before. This like everything into life and opportunities and challenges for this boom has attracted counterfeiters who exploit the platforms endangering consumer safety, tarnishing Brand Reputation and causing considerable economic loss. Contrary to popular belief online counterfeit is not restricted to luxury goods. Does not discriminate or get any brand regardless of their size we are talking about baby products, cosmetics, automotive, Industrial Equipment like Wind Turbines it counterfeit. In the context of backtoschool shopping students and parents are vulnerable these are essential for the upcoming academic year. They may not be harmful but rather extremely poor quality which takes hard earned money out of families because they have to re buy these products before the end of the academic year. As a testament to this, we witnessed over 1000 increase in the detected counterfeit incidents for the branson which we represent over the year 2022 versus 2021. Fortyeight reference read point today serves over 1002 at a herbranson who rely on our platm to combat online fraud. Which provide us with a vast amount of valuable information. Last year alone we processed over 35 million links per day and safeguard over twopoint to billion dollars in potential revenue loss the online scans continue to evolve with fraudsters harnessing technologies, creating websites, mastering social engineering of theever adapting threats resembs the well known game of whack a mole. As we delve into the complexities of counterfeiting the digital age its crucial to consider the existing response of Online Platforms, marketplaces, brands, legislative actions and even thirdparty providers like read point. Or all of us aligned . Are we collaborating well enough to combat this greater evil . After all the target here are exploiting both the market was in the consumers many ecommerce platforms have been ramping up the initiatives in recent years. In efforts to rid their sites of knockoffs. However it scammers are continually looking for bigger audiences to sell too. The rapid yearoveryear growth of ecommerce users has offered a unique opportunity for bad actors to expand their operations and further challenge of combating counterfeits as they persist to do to the adaptability and persistence of criminal organizations. Brands, regardless of their size, find it challenging to address all the infringing images of their intellectual property. Too effectively and implement a clear online brown protection strategy. Not having an online brand protection strategy today has grave consequences for both its brand itself and its consumers. Particularly in the area of detection enforcement this can be made more challenging based on the distribution decisions made by business. However when it comes the fight against counterfeits in our opinion the path forward is collaboration. Who cannot be so but one stakeholder its a shared responsibility needs a united front of industries marketplace thirdparty provider and the legislative action to ensure a secure ecommerce environment collaboration amplifies the resources and expertise for the counterfeit sale brickandmortar retailers. We welcome ongoing dialogue in the Protection Community and legislation defined counterfeiting problem. Cracks thank you mr. Sapir and cute chairman karen, nobody wants by its close shoes or accessories made by force labor duped into buying counterfeit fashion. Consider and pass. Members of afa invest millions to supply chains and boug