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U.S. Senate Passes Bill Over Counterfeit Goods Websites

 7:02 pm on Nov 18, 2010 (gmt 0)

U.S. Senate Passes Bill Over Counterfeit Goods Websites [reuters.com]
U.S. agencies and officials would get new powers to go after foreign websites that sell counterfeit goods and pirated music, movies and books under a bill passed on Thursday by the Senate Judiciary Committee.

The bill, which supporters hope will set the stage for action next year, targets "rogue websites" in countries such as China that are outside the reach of U.S. law.



 9:49 pm on Nov 18, 2010 (gmt 0)

Very good. Fan of this legislation.


 10:39 pm on Nov 18, 2010 (gmt 0)

Why not simply make the credit card companies liable - they would then have to conduct proper checks.

I would fine the them $1.00 for every $1.00 they take and require them to make full refunds - do that and the problem will be sorted within a few weeks.

Why bother trying to close down websites? Instead, they should simply make them worthless.



 11:08 pm on Nov 18, 2010 (gmt 0)

Why not simply make the credit card companies liable - they would then have to conduct proper checks.

How would that work, what kind of proper checks?


 11:10 pm on Nov 18, 2010 (gmt 0)

Maybe I missed it but is there an appeals process? Do the sites have a chance to defend themselves? How does one fall under the category of "knockoffs"

Would buying DYNK be a knockoff of DKNY? What about Rolox time pieces? I go to the store and see "Rice Crispies" on the shelf... right under them is "Crispy Rice" is that a knockoff? Until I know how they qualify something as a "knockoff" I worry about this.

I really feel it is my right to buy a lesser quality, poorly made, "knockoffs" of a genuine products, as long as they are advertised as such. My concerns would be that someone selling a "no name" version of a product... like Crispy Rice would get caught in this trap, I really hope that isn't who they are going after.

Kaled, involving the CC companies could help curb it BUT they did that with online gambling and it just introduced really simple workarounds that still allow you to use your CC buy chips.


 11:27 pm on Nov 18, 2010 (gmt 0)

Leave the credit card companies out of it. If something costs them money they pass it on to everyone and I don't want to pay for other people's crimes.

I like the bill, if it's put to good use and not abused.


 12:51 am on Nov 19, 2010 (gmt 0)

How would that work, what kind of proper checks?

If you want a merchant account so that you can accept credit card payments, checks should be made to ensure that you are a legitimate company trading in legitimate goods. If the credit card companies were held liable for all fraudulent activity they would pretty quickly find a way to get those checks right. If a third-party handles payments, then they can be held jointly and separately liable.

Ok, this would be slightly more complicated than passing a one-line bill but as legislation goes it's pretty darn trivial.

I grant you that enforcement would be trickier but if the credit card companies risk losing $200 in costs for every fraud-related dollar they take (that's roughly the effect of what I suggested) then they would be very careful indeed. Any employees getting it wrong would most likely be fired too so they would be pretty thorough.

And if you still think this is impossible then consider code-signing and SSL certificates. Companies like Thawte are required to carry out appropriate checks - if they did not, any monkey could get a certificate for their virus-infested software, etc. A code-signing certificate costs about $150 I think so the costs to the merchant for similar checks should not be very much greater and certainly should be affordable.

Furthermore, the credit card companies could set up a hotline (with a small reward) to report fraud so they could use the public to help them police the system.



 2:44 am on Nov 19, 2010 (gmt 0)

This is a very good thing for protecting American companies. It's bad enough that innovation is stolen by China and other countries but it's a big slap in the face to see this junk in the U.S.


 3:35 am on Nov 19, 2010 (gmt 0)

Leave the credit card companies out of it. If something costs them money they pass it on to everyone and I don't want to pay for other people's crimes.

Right, because having the US Federal Government do something is so much more efficient and less costly.


 4:18 am on Nov 19, 2010 (gmt 0)


factually there is no problem to get a code signing certificate with fake paperwork. There is a certain overhead cost, but not that much. I'm not sure if it is possible to get a certificate for an animal, but it is certainly possible to get it for a company that does not exist.


 11:37 am on Nov 19, 2010 (gmt 0)

If people want to use a .com then, despite all the talk about it being a "global" domain, it must be accepted that it is actually a US domain and you must abide by US law to use one.

On the other hand to block all US access to domains under non US ccTLDs could be a dangerous precident. We all understand what we mean by "counterfeit" goods but writing a law that covers it without giving scope for censorship is another matter.


 11:40 am on Nov 19, 2010 (gmt 0)

factually there is no problem to get a code signing certificate with fake paperwork.

Factually, there is a problem - how big that problem is depends on how thorough the checks are. In my case, my company name, address, phone number were all required (they phoned me up) and I had to provide a copy of the certificate of incorporation, and I had to prove that I was in control the company website.

If it was easy to get a code-signing certificate with fake paperwork they would be worthless. In any case, I would hope that the credit card companies already perform these minimum checks - they just need to go a bit further and take responsibility.

The reality is that they are profiting from fraud so they don't care. They'd soon learn to care if fraud were to hurt their bottom-line.



 2:53 pm on Nov 19, 2010 (gmt 0)

There is no problem getting an OK company with a fake (e.g. dead) owner (in Russia). I'm just not sure we need the exact specifics here. The code signing certificates are not used on malware not because they are difficult to obtain, but because
1. People normally do not expect torrents to be signed, and
2. The signature itself provides a clear pattern for detection with an antivirus.


 4:55 pm on Nov 19, 2010 (gmt 0)

People normally do not expect torrents to be signed
I don't think I have ever seen software for download by torrent - legitimate code is downloaded from legitimate sites. Certainly, I don't have a torrent client installed (never have unless you count Opera) but I have never found I couldn't download a program as result.

In any case, I quoted code-signing as an example of checks being carried out to determine legitimacy. I would expect the checks carried out by credit-card processors to be more onerous. Also, if it's impossible to conduct checks reliably in Russia, I would expect Russia to be effectively barred from e-commerce (with the West) until they sort themselves out.

The credit card companies have the money and the expertise to sort this problem out quickly - what they don't have is the motivation. Give them the motivation and the problem will be sorted in a few weeks, at the very most, a few months.



 5:12 pm on Nov 19, 2010 (gmt 0)

The credit card companies have the money and the expertise to sort this problem out quickly

No, I think you might be a bit too focused here and missed the point that this is not just about the digital world but also about "counterfeit goods ranging from fake tennis shoes to pharmaceutical products."

So -- besides the inherent legal problems of making one party responsible for the actions of another, or the outsourcing of regulatory responsibility to third parties -- how do you propose that credit card companies certify the legitimacy of all products sold on the 'Net?


 6:19 pm on Nov 19, 2010 (gmt 0)

While having credit card companies "certify" the goods sold by their merchants isn't practical, they certainly do have options. If a merchant has excessive chargebacks, they will be dropped like a hot potato. Similarly, a merchant who was the source of trademark complaints from an official agency could be whacked.

I'd hesitate to base it purely on complaints by the trademark holder, as they might attempt to clamp down on imitative products that were still within the law.


 8:16 pm on Nov 19, 2010 (gmt 0)

There are no legal problems with respect to liability...

In the UK, for all items greater than 100 in value, the credit company is jointly liable. It is trivial to imagine that a) this was extended to items less than 100 and b) this joint liability be implemented in the USA.

Any company trading in counterfeit goods would immediately be closed down - if they can't accept payments it's game over. Legit companies would know that if they deal in counterfeit goods they'll be closed down so they'll be super careful too.

Look at this way - Governments can pass laws that operate in their own country only but companies like VISA have the power to operate across international borders. Think horses for courses.

Incidentally, I have at no point suggested that companies like VISA certify goods as being genuine, all I am saying is
a) companies that trade in counterfeit goods, etc. should be strangled of money the moment that trade comes to light.
b) penalties should be enforced to ensure that happens.
c) card processing companies like VISA should perform checks on new companies in order to protect themselves. If they choose not to that's their problem if it costs them a load of money in fines and refunds.

It's an absolute no-brainer. If I sold counterfeit goods on Amazon I would be closed down the moment they found out. So why can't companies like VISA do the same. The answer is they can't be bothered because they are making money - it really is that simple.



 11:00 pm on Nov 19, 2010 (gmt 0)


Your suggestions seem to require a chargeback. If I buy iPed instead of iPad, I know the difference full well. There will be no chargeback. Have you considered that there are people that would buy an Addidas knowing full well that Addidas is not a real thing, and still be OK with that?


 12:38 am on Nov 20, 2010 (gmt 0)

Have you considered that knowingly buying counterfeit goods is illegal. It is, I promise you - it's just like knowingly buying stolen goods. Of course, prosecution is unlikely but it's still illegal.

As for items that are merely similar, then it's up to the courts to decide. Typically, an injunction would be served prohibiting the sale of such goods until the case could be heard. But if there were even a smallish probability that people were being deceived then the dodgy goods could be either destroyed or impounded pending modification of logos, etc.



 1:11 am on Nov 20, 2010 (gmt 0)

ladies and gentlemen, what you are witnessing and partly applauding here is nothing less than the introduction of internet censorship to the united states of america.

surprise surprise, it's not child #*$!ography or fight against terrorism - no, the pretext is counterfeit goods! "evil china" as irresistible message to bring the people in line. clever.

congratulations from europe to our overseas friends, land of the free! ;)


 2:07 am on Nov 20, 2010 (gmt 0)

Care to elaborate with your witty European insight? Are they pro-counterfeiting in Europe?


 4:59 am on Nov 20, 2010 (gmt 0)

every government has more or less ambitions to regulate the internet to a certain extent in order to retain a degree of control over its citizens. in order to achieve this goal, the trick is to firstly implement a viable threat scenario and address certain fears everyone can comprehend. it's really the same procedure as with other disagreeable governmental actions we've seen in the past.

then use this scenario to discredit the folks who are against the consequences (internet censorship) as against the alleged goals (combat counterfeiting). of course no one is pro counterfeiting, that's the point. but with the aforementioned procedure, governments are able to enforce their actual interests without considerable resistance.

protection from counterfeiting is a secondary goal here at most. it's merely a vehicle to get people in line with government decisions and not rebel against the consequences. in some european countries, the alleged goal is the protection from internet child #*$!ography for example. choose a topic that is suited for a broad agreement, that there should be done something against it.

the danger is, once the handle is there, all kinds of lobbyists arrive on the scene as the opportunities for censorship efforts can be expanded to any other area. the music and film industry has an interest to tackle copyright infringements? block the websites. dissident, corporate-critical or unpopular blogs and forums? block the websites. you see?


 5:46 am on Nov 20, 2010 (gmt 0)


That depends on your jurisdiction I reckon.


 2:05 pm on Nov 20, 2010 (gmt 0)

In what jurisdiction do you believe that knowingly buying goods deemed "illegal" is itself legal?

I've provided you with a sensible alternative. If you care so much, write to your politicians and explain it to them. Or maybe start a facebook or twitter campaign. I live in the UK, so what happens in the US doesn't affect me greatly (and even when it does, I don't get to vote).



 7:08 pm on Nov 20, 2010 (gmt 0)

The point is not in "knowingly buying", but in "illegal goods". There is a significant difference between what goods you seem to preceive as "illegal goods" and what actually is illegal by local law.

"Shuanghuan Sceo" (or whatever it is called) car, which is a Chinese replica of X5, is legal in Russia. Actually, it is probably legal in UK as well. While we are at it, there is a RAV4 replica as well, maybe even by two distinct manufacturers.

Also Addidas or Loubotin shoes are not "deemed illegal" in Russia or any CIS country I know of. They are "deemed stupid", not illegal.
Not before the court ruling on the specific case.


 7:34 pm on Nov 20, 2010 (gmt 0)

The country being discussed is the USA - the clue is in the title.

Also, it goes without saying that countries may have different definitions of what constitutes counterfeit goods - so what? However, definitions will gradually become harmonised - it tends to be a recurring topic of discussion at meetings of organisations like the WTO. It's also worth noting that there is currently little disagreement amongst commercially civilised countries (Europe, North America, Australia, New Zealand, Japan, etc.)



 8:27 pm on Nov 20, 2010 (gmt 0)

This is USA ruling about going after foreign websites that sell counterfeit goods ... ... targets "rogue websites" in countries such as China that are outside the reach of U.S. law..

The website is 1. outside the US law and 2. legal with respect to its local law. So that is not just a matter limited to US. Bad as the russian laws are, I do not appreciate US trying to impose US laws onto Russian websites.


 10:02 pm on Nov 20, 2010 (gmt 0)

In that case, instead of arguing with me you should be agreeing with me since my solution does not involve closing down websites (unless they go bust)!



 10:59 am on Nov 22, 2010 (gmt 0)

@piatkow Who says .com is a US domain? Why does .us exist?

On the other hand to block all US access to domains under non US ccTLDs could be a dangerous precident.

To say the least.

@kaled, I have downloaded gigabytes of software from torrents, and AFAIK none of it is in breach of copyright. There is also perfectly legal distribution of films by torrent, and I have downloaded some of those as well.


 2:55 pm on Nov 22, 2010 (gmt 0)

And your point is what exactly? I don't believe that the the US action under discussion will affect that. Out of the gigabytes of software you have downloaded as torrents, what titles were you able to download legally that are not available as standard downloads - actually don't bother answering because I don't care.

The point I have made is that the US Government seems intent on applying a complex (and some would say authoritarian) solution to a problem that could be solved more easily, more effectively and less controversially by the method I outlined. Frankly, the only thing I have learnt from this is that US politicians can be as dumb as UK politicians - who'd have thunk it!

Rule number one when fighting organised crime is follow the money. Rule number two is choke it off (the money). That's more or less how they got Al Capone but some people seem incapable of learning the lessons of history.

In this particular instance, all the money passes through the card-processing companies, it is therefore trivially simply to choke it off - all it requires is an incentive. I have suggested a stick rather than a carrot because I see no reason to reward companies for not conspiring with criminals to defraud customers.


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