We bring you unsafe count of projects, from the judiciary subsidy of intellectual properties. You are watching live coverage on cspan 3. I would like to welcome the senator. This is the fifth hearing of the subcommittee of this year. Senator, union team continue to be great partners moving forward. Im setting the stage on the focus on the hearing. Online shopping has expanding dramatically. 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 from ebay to amazon to find the brands they trust and prices they can afford. Counterfeiters unfortunately have moved online right alongside American Consumers. And their tools are becoming far more sophisticated. Counterfeiters are no longer selling fake handbags or watches on a street corner, or a flea market. New and modern online counterfeiting delivers products that look real, with listings featuring images that show the real product and fake reviews that make the knockoffs 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 of tricking consumers and spending their money on harmlessly fake products. As the cdp, warned earlier this year, fake goods can pose real dangers that for the health and safety of all americans at risk. Fake lithium batteries for example, batteries that power laptops, can explode or take fire. They caused 70 debts and 350,000 serious injuries. Counterfeiters are also targeting air wines, fake engine parts, demonstrated to increase the chances of a crash. Counterfeit escription drugs, so to consumers online, are best and effective and deadly to those who purchase them. If i bought a fake laptop at my local best buy on record, and it caught fire in my home, best buy would be liable for the harm to me and liable to the brand owner for chipping to trademark infringement. This framework for liability and so devises brickandmortar stores to thoroughly and proactively that the supply chains to keep counterfeit products out of consumers hands. That same counterfeit battery of online was met with a different library framework. The weight, for policing online counterfeit, principally on brands, not platforms. They have to plan a render game of walkable as they monitor of Online Marketplaces including counterfeit listings. They have a counterfeit problem and many have undertaken law efforts. But current efforts are neither effective nor sufficient because the problem hasnt gone away. It is dramatically increasing. That is why i was proud to reintroduce the shop s. A. F. E. Act last week with the senator, a bill that tries to balance the rights of brand owners and the obligations of Online Platforms to intercept and stop the sale of harmful counterfeit goods. The act opens platforms to liability if counterfeit goods affecting health and safety are sold on the platforms, the same brickand mortar retailers have been subject to for decades. It requires brand owners to provide proper forms and a critical point of contact so that platforms can implement and articulate so to keep them out of consumers hands. Quickly removing counterfeit listings, terminating repeat counterfeiters and requiring accurate images of the products sold. Products that follow best practices will have a safe harbor from liability. Platforms taking genuine and good faith efforts to Cleanup Sites and should enjoy a liability shield. The reintroduction must be came after a fair amount of work. In the last hearing in 2019 2021, highlighted the rising anti counterfeiting. It is not my anticipation that the bill introduced is perfect or final, part of the hearing, both who support and oppose us to welcome input both critiques and contacts in an effort to try to sharpen and shape the bill into Something Worthy of enactment. Since senator first introduced us, we heard from stakeholders would be affected by the bill. I appreciate the efforts and the work that we have done to make changes to the bill based on the feedback that weve received so far. And i look forward to work with a broad range of stakeholders as we move this for this year. With my Ranking Members cooperation, we assembled the panel today, with a diverse range of use, i will introduce the minimum. The meeting Ranking Member tillis. Thank you. Thank you so much for having, thank you for the series of bring hearings for strengthening electoral Property Rights and addressing many of the challenges that we have in front of us. We have a lot of things wrong with the intellectual property system. And when we talk about counterfeit goods, its the worst of both worlds. Somebodys ripping off intellectual property. They are doing in a way that is very dangerous. Which is why im very glad that we are having this hearing, and taking concrete steps to address the problem. I cannot get out of my mind, i mentioned the story before. I am an avid mountain biking. Its the reason i got into politics. Accidentally. I wanted the Mountain Bike trail. Next thing i know im in the statehouse. But in this very room, just a few years ago, i have a specialized product. People have dependent upon your background, chevy or ford. Im a specialized consumer. I say specialized helmet clearly counterfeit, under the weight of about 180 foot person, jumping the foot off the ground. Somebody was had two serious accidents and a specialist settlement, it was not what it was supposed to do. It cracked but it did not prevent me from getting a concussion or having any serious injuries. So, i think that is just one example of several examples that we hear about. We hear about them in airplane parts, you see this in children, toys, et cetera. There is no question with this problem. I think the bill that we are going to have a hearing on today is a just first step. It is never going to end. We have the same problem that we have with general intellectual property theft. It is following on the back of the rights holder to find out who is ripping off the intellectual property. If you tell us, we are taking it down. The model does not work. With the scale and the number of transactions. I wish that it could. It simply does not work. I hope this hearing could give them some more, could give us additional information, to get the stakeholders together, so that we can give up a reasonable compromise. We do know that there are some consequences that we want to avoid. And that is why we are going through a very thoughtful going through a very thoughtful i didnt know their consequences and thats why we are going to the thoughtful process that we go through today. I find it hard to believe senator koonce before you came down i think the witnesses and told him one of the reasons i like this subcommittee so much as you dont expect the witnesses to go after each of it because they are so far apart that the nature of our hearings are more about how you leave together a reasonable legislative effects that addresses some of the concerns that may exist on either side so in this hearing today i hope to get that productive feedback and i hope those who are out there to kill this bill need to understand i want you to table to make it better. If theres anyone out there that thinks they are going to slow this down they probably need to think again. If all of you are here to do and all youre doing is watching to figure out how you stop this effort you and you are not at the table we will put you on it so lets Work Together and recognize that Public Safety and the intellectual property and the challenges was to deal with and come together and work with us and senator i appreciate that you and i have worked together and i especially appreciate how free always senator hirono shows up to these subcommittees no matter what day its on. Senator thank you for your persistent interest in engaging in this topic. I appreciate the introduction and i want to briefly introduce their witness panel. We have talked about strategies for protecting American Families from unsafe counterfeit and the shop say fact week introduced their first flight ms. Is an adjunct director for education in Michigan StateUniversity Center for anticounterfeiting or Product Protection or a cap if im not mistaken. The professors written extensively in the glitches considering counterfeiting. Ngra next is steve lamarr, president of the american footwear association, also a delorean. A trade association, representing more than 1000 brands in the foot willing. Industries, at the top of the cbp seizure list. And lastly hear from that shears, the president of the computer and industry association. The trade association representing many different Significant Players but in particular Online Platforms and concluding well known and friendly my home use platforms like amazon and ebay. So, after i swear in the witnesses, each of you will have five minutes to provide an Opening Statement to the committee, then we will proceed to questioning, each senator having five minutes and i will expect you will take three rounds given lots of things that we need to talk about. Please stand. Raise your right hand and repeat after me. Do you swear and affirm that the testimony you are about to give before the committee will be the truth of the whole truth and nothing but the truth so help you god. Thank you. Let the record reflect the business. You may proceed with your Opening Statement. The members of the subcommittee, thank you for inviting me to testify in front of you today on the shop s. A. F. E. Act. Protecting families from counterfeit. I am representing my self, and the reviews are my own. My work at the center engage with over 500 organizations in brand protection professionals on trademark counterfeiting. As a loosely Multidisciplinary Research teams, education and outreach to examine these issues from an academic but practicals perspectives. Companies of all sizes, in particular, Small Businesses, and has exploded in the last decade. Counterfeiters find success by using another company or trademarks on a product or package without prior authorization to sell a fake or dangerous good. They rely on the goodwill of the brand to make the illicit profit. Counterfeiters are tied to other criminal activities such as online fraud and organized crime. Many owners struggle to get platforms to respond, and many find the lacrimal effect occurring with more postings taking their place. They do not have a dedicated Brand Protection Team or department or have limited resources to protect trademarks online. According to the multitude of visionary research, on e Commerce Platform, there must be a meeting in time and space, the counterfeiters posting, and the eCommerce Platform. The most effective way to disrupt this is to remove the factor proactively before they ever reach the medium time and place on the platform. Although the legal liability in the brickandmortar spaces provides contributor liability for Service Providers such as flea markets or malls, when they havent taken the steps to disrupt the sale of counterfeits to consumers, we do not find the same parallel. The current state of the law arrest primarily on the Second Circuit case. Which no says they need to act if they have specific knowledge of the counterfeit posting. There is no proactive requirement of counterfeit postings or monitoring of the platforms for counterfeit even though they have the most control over the platforms they created. Brand owners and brand protection Service Providers taking down counterfeit postings but they cannot get at the root of the issue and are constantly chasing postings online. They will give basic transparency, listen to the seller, and the online transactions. Results of the 17 country consumer, 66 of consumers surveyed bought counterfeit unintentionally. 13. 4 experiences the negative Health Effects after using the negative products. 60 of the surveyed bought products on social media prop forms. Additionally, the consumer is do not see a clear mechanism on what to do when they discover a counterfeit. These findings on the engagement, across the industries, even product lines. The number one challenge relates to sellers online. On a personal note, despite working in the skill, my impact is on counterfeit goods. My mother who is the 72yearold retired Public School teacher was informed that a vitamin that she ordered on ecommerce form that allows Third Party Sellers have been taking it for several months. She did get a refund. The communication from the platform was confusing and she was given the runaround by Corporate Executives until finally fired on the wedding day. That was the last straw. And, others, that the risks of thirdparty sellers of counterfeit and that was not limited to one platform or product. We want to address the evergrowing sale of counterfeit goods to the shop s. A. F. E. Act and the support and collaboration between academia and other stakeholders. I look forward to your questions. Thank you. Mr. Shapiro . Thank you. Thank you the steamed members of the committee to be here today. A quick overview of redwing. We are a Technology Company that is helping making the internet safer for both brands and consumers. Use Ai Technology to detect and remove hundreds, if not thousands of markets around the world. I began working 13 years ago while working at ebay, working with some of the Worlds Largest brands to combat this problem, which is obviously significant. In recent years, we have witnessed an unprecedented rise in e commerce, offering consumers convenience and variety like never before. This like everything brings life into life , both opportunities and challenges. 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 electronic goods. Counterfeiters do not discriminate when selling safe fake products. They can target any brand regardless of size. We are talking about everything from baby products, cosmetics, automotive, fashion, and even industrial commitment wind turbines. Even in the context of backtoschool shopping, students and parents are vulnerable to counterfeit electronics, backpacks, clothing, footwear, these are essential for these upcoming academic years. These products may not be harmful but rather extremely poor quality which takes hard earned money out of families because we have to rebind these products before the end of the academic year. As a testament, read point, we witnessed over 1000 increase in these detected incidences for the brands in which we represent over the year 2022 and 2021. For reference, read point serves over 1200 brands which rely on the platform to combat online fraud. They provide us with a vast amount of valuable information. Last year alone, we processed over 35 million links per day, and safeguarded over 2. 2 billion in potential revenue loss for the clients. The statistics underscore the depth and challenge before us. The sophistication of online scares continue to evolve with fraudsters harnessing technologies creating websites, mastering social engineering, and the battle against the ever adapting threats resembles the wellknown game of lacrimal. As we go into the complexities of digital age, it is crucial to consider the existing response of Online Platforms, marketplaces, brands, legislative action, and Third Party Providers like what point. Are all of us aligned . Are we collaborating well enough to combat this greater evil . After all, the target is in fact the criminals that are exploiting the marketplaces and the consumers. Many Commerce Platforms have been ramping up the anticounterfeiting initiatives and recently. Recently knocking off. Scammers are looking to get you bigger audiences to sell to. Yearoveryear rapid growth of ecommerce users has a unique opportunity for bad actors to expand the operations and further challenge combating counterfeits, as a persistence due to the adaptability and persistence of criminal organizations. Brands regardless of their size find it challenging to address all of the infringing images of the intellectual property. To effectively combat online counterfeits, brands must prioritize and must invest and implement a clear online brand protection strategy. Not having an online brand protection strategy today has a grave consequence for both its brand itself and its consumers. Particularly in the area of detection and enforcement. This can be made even more challenging based on the distribution decisions made by Companies Business teams. However, when it comes to the fight against counterfeits, in our opinion, is collaboration. This is not an issue that can be sold to one stakeholder. Is a shared responsibility and needs a united front of Third Party Providers and legislative action to ensure a secure e commerce environment, moderation and expertise. And our response is greater than some of the parts. Our hope is that the legal system will continue to hold sellers liable for the counterfeit sale online. As they do for brickandmortar retailers. And we welcome ongoing dialogue in the Brand Protection Committee on legislation. To find the best practices to tackle the online counterfeiting problem. Thank you mr. S