ICCE position paper on the Digital Services Act

The Imaging Consumables Coalition of Europe, Middle East and Africa (ICCE)[1] was formed in 1997 as a direct response to the increase in counterfeit imaging consumables across the regions of Europe, Middle East and Africa. Imaging consumables include such products as​ toners, ink cartridges and ribbons.

Initially created as an industry association with a focus on education, lobbying, information exchange and awareness, it has since developed to include coordinating the role of receiving and processing intelligence information on counterfeiters, initiating joint industry raids and enforcement activities and helping its members to target counterfeiters through the criminal and civil courts. The imaging consumables industry is currently threatened by a €1.6 billion market in counterfeit imaging supplies which are often dangerous, environmentally unfriendly and which cheat consumers of the quality they are entitled to expect from branded consumables. More than 100,000 direct and indirect jobs in Europe depend on the imaging supplies industry and as counterfeiters use economic volatility and low price to increase their customer base, those jobs are increasingly under threat.

Given ICCE objectives and scope of activities, the upcoming European Commission’s Digital Services Act (DSA) is of particular importance to ICCE members and the many consumers that they serve as it provides the opportunity to enhance consumer protection by requiring intermediaries to take appropriate and immediate action to remove online counterfeit imaging supplies. The sale of counterfeit imaging supplies online damages not only manufacturers of imaging products, such as ICCE members and their suppliers, but the many legitimate businesses throughout the EU which sell genuine imaging supplies in the course of trade, their end user consumers and their trust in the online environment. ICCE would like to respectfully share its perspective on different solutions that may be considered as part of this new framework.

Introducing a due diligence principle applying to all intermediaries

The harm caused by certain illegal activities, such as fraud and selling counterfeits[2], greatly undermines the online environment and negatively affects consumers’ confidence in online purchasing. It also removes the trust consumers have in brands[3]. Rights holders currently bear all the costs of checking for counterfeit products being offered for sale online. On the other hand, intermediaries and/or Internet Service Providers (ISPs), or the platforms they support, are allowed to generate revenues from the placement of an advertisement, clicking on the ads by end users and/or the sale of the illegal products, until, and if, illegal activities are identified by the rights holders or other interested third parties.

Reinforcing the current regulatory framework in relation to how ISPs tackle the illegal offering for sale and sale of counterfeit imaging supplies in the online environment would help create a fairer balance of costs and responsibilities between intermediaries and rights holders. In this spirit, ICCE calls for the DSA to introduce a new legal obligation on all intermediaries to deploy appropriate and proportionate measures to (i) prevent or substantially reduce the offering for sale and sale of counterfeit products online; and (ii) reduce fraudulent activities utilizing ISP services. These particular crimes are so detrimental and damaging to business and consumer confidence in the European online environment that ICCE calls indeed for a new and specific legal obligation on ISPs to take action to stop or reduce the proliferation and prevalence of these illegal activities utilising their infrastructure.

Once notified, intermediaries are the only ones with the technical ability to prevent counterfeited goods from reaching and endangering consumers. Similarly, they are the only ones who can implement measures to prevent repeated online infringements. Such a legal obligation needs to be binding and horizontal. Unless all players are required to be due diligent to ensure a safer online environment, we will continue to see the problem moving from one place to the next, giving an unfair competitive advantage to less virtuous companies. Our proposal would entail both proactive and staydown measures, the latter intended to prevent illicit content from reappearing after having been taken down.

The detailed mechanisms of such measures should be reasonable and formulated in collaboration by all relevant players in this debate.

Some stakeholders have called for the adoption of a Good Samaritan protection in the new framework allowing platforms to do proactive monitoring without losing the benefit of their liability exemption. ICCE members see neither evidence (via existing court rules) nor sound legal basis that could substantiate the comment that the current framework deters ISPs to implement proactive measures to find and remove illegal content beyond what is required by law. Of course, ICCE members understand the argument that the implementation of proactive measures by ISPs may indeed result in obtaining “actual knowledge” of illegal activities or illegal information, in addition to the knowledge which may be obtained through notifications from rights holders or consumers. ISPs can rely on the defence to liability provided by the e-Commerce Directive (ECD) though, unless they fail to take action expeditiously to remove the illegal activities. If they do not, this could lead to the loss of the liability exemption but this is arguably a proportionate cost for doing business as an ISP. If the ISP acts expeditiously to remove or to disable access to the illegal information or content in question, the ISP continues to benefit from the liability exemption.

As previously highlighted, ISPs continue to generate revenues from the placement of an advertisement, clicking on the ads by end users and/or the sale of the illegal products until and if they are notified by rights holders or other interested third parties. ICCE would like to raise attention to this additional element which is intrinsic to online sales of counterfeits and calls for it to be given appropriate consideration in the upcoming debate on the DSA.

A level playing field

The DSA provides an opportunity to clarify that what is illegal offline should be illegal online and to strive to make ISPs rights and responsibilities clearer.

It is often the case that online intermediaries enable certain traders to sell products that do not meet EU health and safety requirements. ICCE members, for example, have experienced the issue of a counterfeit cartridge containing petroleum being sold online. If used, such cartridge would cause a consumer’s printer to explode with potentially severe consequences for the health and safety of the consumer.

While Original Equipment Manufacturers (OEMs) have to meet EU health and safety requirements in order to place products on the EU market, certain traders selling dubious consumable products online are able to operate with impunity. In addition, customs authorities are often unable to verify, as they are frequently overloaded, under-resourced and do not necessarily have the expertise to check if safety requirements are met. ICCE urges the Commission to assess through the DSA what measures the ISPs could take to ensure that products sold online in the EU market meet the relevant EU safety regulations. Such measures should be workable.

Furthermore, while OEMs pay all import duties and other value added taxes or retail sale taxes in the EU when they trade online, some of these traders based outside the EU may not comply with applicable import duties in the EU. This creates a competitive advantage for such traders while they may be selling products which do not meet EU legal requirements and/or which are illegal. This undermines legitimate businesses in Europe which comply with all EU requirements and puts jobs of European citizens at risk.

Right to bring action in the country of infringement

In line with the Commission’s objective to further the development of the EU internal market and reflecting recent case law developments, ICCE believes that, with respect to trade marks, rights holders and consumers should be entitled to bring infringement actions against third parties before any Member State court within which the consumer to whom advertising and those offers for sale are directed is located, notwithstanding that the third party took decisions and steps in another Member State to bring about that electronic display (see ECJ decision C-172/18 AMS Neve Ltd).

Recent case law developments recognise the need for rights holders to be able to seek redress against sellers in the country in which an advertisement was electronically displayed. In cases where the trader cannot be identified, then it stands to reason that a consumer should be able to seek redress against the intermediary which enables the trader in its activities in the country in which the consumer is based. 

Notification and takedown processes

In relation to the removal of illegal content, ICCE is of the view that ISPs should be able to provide a certain service level to sophisticated rights holders, such as ICCE members, provided there is sufficient evidence in their notices. Such notices should receive a considerate response and be dealt with within 48 hours. This would give notifiers confidence that their notices will be expeditiously considered and acted upon.

Know Your Customer

All intermediaries should have an obligation to know who is doing business on their platform. Know Your Customer (KYC) mechanisms would be a useful method for improving the online landscape and assist law enforcement authorities and aggrieved civil parties. While ICCE does not propose going as far as financial services to verify the identity of traders (e.g. passport verification), it believes that an ambitious level of identity checks would ensure ISPs have knowledge of their customers and are able to assist law enforcement authorities and aggrieved civil parties to deal with customers abusing the services and/or in breach of ISPs terms and conditions.

ICCE is of the view that ISPs should be able, and obliged, to verify the details of the IP address and who operates from that address, i.e. the name of the individual/individuals or company establishing the website or acting as a seller on the intermediaries’ platforms.

Furthermore, in relation to how intermediaries can best assist law enforcement authorities, it could be considered whether they should be obliged to share data on illegal activities with law enforcement to aid investigations and thus prevent reappearance of the counterfeit products.

Illegal versus harmful

When reference is made in the DSA to “moderation”, this should relate to moderation of harmful, not illegal, content. Illegal content must be expeditiously taken down.

“Illegal activity or information” as defined in the ECD includes content which infringes civil (e.g. trade mark and copyright infringements) and criminal laws (e.g. streaming pirated films; distributing counterfeit products). ICCE would not wish to see any change in this interpretation and believes that for intermediaries to maintain the defence to liability as enshrined in the ECD, intermediaries must take action irrespective of whether civil or criminal infringements are at issue. No distinction should be made in the application of the defence to liability provided by the ECD vis à vis civil and criminal law.

Conclusions

The DSA provides a unique opportunity to adapt the current regulatory framework to the challenges that consumers and ICCE members face in the online environment and better protect consumers from the danger and harm of certain illegal activities, including the online sale of fake products, thereby enhancing trust in the digital world and safeguarding the economic contribution of the imaging supplies industry in the EU.

ICCE members stand ready to constructively engage with the EU institutions as well as all relevant digital players (including intermediaries such as online marketplaces, social networks, advertising platforms or search engines) and stakeholders to devise solutions that are workable, practical and proportionate.

For further information, please contact:

ICCE secretariat at icce@icce.net

[1] ICCE includes the following members: Brother, Canon, Epson, HP Inc, Kyocera, Lexmark, OKI, Printronix, Ricoh and Xerox. HP Inc also represents Samsung toner division.

[2] Other illegal activities causing profound harm include incitement to hatred and distributing child abuse imagery.

[3] A study found 94% of Millennials (86% of the 35 years+) say trust plays a role in big  purchases and of those consumers who were duped into buying a fake, 12% said they would not buy from that “brand” again, and over half express doubts (SurveyMonkey poll on brand trust in UK millennials, October 2018).