Illegal Products

The regulation on a single market for digital services or digital services act  proposed by the European Commission in 2020 would extend the scope of potential violations for spreading illegal content to include illegal products.Though not yet clearly defined, these products would likely fall into two categories: goods that infringe intellectual property rights, such as counterfeit and pirated articles; and dangerous or non-legally compliant goods, such as endangered species or explosives.

To date, online trade in these areas has been managed through a process of “self-regulation” similar to the ones that already govern Internet activities in problem places such as hate speech and the fight against terrorism. As regards illegal goods, two multistakeholder agreements sit at the centre of the system:

• Memorandum of understanding on the sale of counterfeit goods on the Internet (MoU) is a voluntary, industry-wide agreement negotiated under the auspices of the European Commission and signed by major online platforms, goods manufacturers and industry associations in 2010. It sets out a “notice and takedown” regime for illegal content, as well as a system for monitoring compliance and the overall success of the system. In 2016, the MoU was amended with a set of key performance indicators.
• The product safety pledge on the voluntary commitment of online marketplaces with respect to the safety of non-food consumer products sold online by third party sellers was also negotiated under auspices of the European Commission and endorsed by several leading online merchants, including Alibaba Group Holding Inc and Amazon.com. In it, signatories vow to “take specific actions with respect to the safety of non-food consumer products sold online by third parties on their marketplaces” and to respond quickly to reports of unsafe or illegal goods. Companies are to set up single points of contact to review and respond to complaints. And the whole system is accompanied by the rapid alert system for non-food products (RAPEX), a web portal managed by the European Commission where consumers and manufacturers can post complaints across borders in an open, immediately accessible format. 

There is also a well-developed legal infrastructure for dealing with trade in illegal products, including the general product safety directive (2001), the regulation concerning the export and import of hazardous chemicals (2012), the directive on combating terrorism (2017) and the convention on international trade in endangered species of wild fauna and flora (CITES).

But despite this plethora of initiatives, there is still no standard definition for what does or does not constitute a “counterfeit” or “pirated” good in the EU. The regulation on customs enforcement of intellectual property rights (IPRs) infringements, for one, defines counterfeit goods as goods that infringe on trademark or geographical indications. But in other agreements to which the EU is signatory and which the EU routinely uses as a basis for its own rulemaking, such as the World Trade Organisation agreement on trade-related aspects of intellectual property rights (TRIPS), counterfeit goods are defined as goods that infringe on trademarks only. The Organisation for Economic Cooperation and Development and the European Union Intellectual Property Office have an even broader definition. In Trends in Trade in Counterfeit and Pirated Goods, the OECD and EUIPO include in the definition of counterfeit “goods that infringe trademarks, design rights or patents.”