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‘Livestream’ shopping thwarts some high-tech tools to stop fake merch

Published 07/05/2024, 11:03
Updated 08/05/2024, 00:45
© Reuters.
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By Arriana McLymore

NEW YORK (Reuters) - Livestream shopping where buyers and sellers transact in real-time video is growing in the United States while technology to police counterfeit goods has so far not kept up, a situation that makes it easier for fake goods to flood the market, patent lawyers said.

Livestream shopping has been popularized by e-commerce sites like Alibaba (NYSE:BABA).com and TikTok's sister company Douyin after dominating the retail scene in China.

In the U.S., TikTok merchants hawk jewelry, pre-owned Louis Vuitton handbags and $2 lip glosses during hours-long video sessions. Sellers’ streams can have dozens to thousands of viewers who ask about product materials, prices and availability.

Copyright violations in live video are difficult to track. In general, e-commerce infringement enforcement can often feel like a game of "whack-a-mole" for lawyers and software companies who monitor the internet due to the swelling volume of violations. In one example, software firm Red Points spotted at least 4.6 million instances of global copyright violations in 2023, up from 4 million a year earlier.

Amazon, the largest U.S. online marketplace, identified and seized 7 million counterfeit products globally in 2023, up from 6 million in 2022, according to the company's brand protection reports.

Livestreaming is “haven for infringement until the detection and enforcement catches up to that mode of sales” said Luke DeMarte, an intellectual property lawyer at Michael Best & Friedrich, referring to live shopping.

TikTok and Amazon both said they have advanced technology in place to stop merchants from selling fakes. TikTok said it monitors live video with a mixture of algorithms and humans and Amazon said it uses humans to monitor livestream shopping.

Livestream sales on the web have promise. Americans will spend $1.32 trillion on U.S. e-commerce this year, according to eMarketer, a research firm. Live-commerce could reach 5% of that spending by 2026 as more traditional retailers including Macy's (NYSE:M), Inditex (BME:ITX)'s Zara, Nordstrom and Kohl’s adopt the marketing technique, according to Coresight Research.

Some lawyers and the brands they represent use machine learning software to search e-commerce platforms for possible infringement in pictures, product descriptions and advertisements, but live videos bring added challenges.

“By the time you see infringing products being sold on a TikTok live stream and it gets taken down, you should expect that at least some sales occurred in the interim," DeMarte said.

DeMarte and other U.S. trademark lawyers said the live nature of livestream transactions makes it hard to identify and weed out counterfeits and fakes despite growth of new technologies aimed at detecting infringement.

Retailers that launch shoppable video need to "make sure that they have the mechanisms to prevent criminal activity or monitor it in real-time," Kari Kammel, director of the Center for Anti-Counterfeiting and Product Protection at Michigan State University.

Artificial intelligence and algorithms can currently spot still images and text that infringe on brands’ copyrights and trademarks, the lawyers and software firms say. Similarly, e-commerce platforms often use AI and algorithms to block third-party vendors from posting counterfeit merchandise.

But the technology to scan violations in video is scarce.

Small business attorney Michelle Murphy said she receives five to ten notifications every day from an AI vendor that tracks intellectual property infringement across still images listed on Etsy, eBay (NASDAQ:EBAY), Amazon and TikTok. Out of the hundreds of alerts she’s received, none of them have flagged infringement on shoppable video.

Keeping counterfeits off their e-commerce sites is critical to the future of major U.S. retailers. TikTok has technology it says can detect potential infringement in live video streams, according to a TikTok Shop spokesperson. When content is flagged as infringing, it is removed and sent to a human moderator for review, the spokesperson said.

Some third-party software vendors said they currently team up with TikTok Shop, generally by sharing information about suspected counterfeiters, to spot and police instances of infringement on the platform's live-shopping videos.

Amazon expanded shoppable video to its streaming platforms Prime Video and Freevee in April. Its live feeds cover various product categories including electronic accessories, apparel and home goods that are advertised by influencers and reality TV stars.

Amazon uses machine learning to scan its website for counterfeits; however, its livestreaming feature is manually moderated, the company said. The e-commerce giant requires that livestreamers only show products that are available on Amazon.com (NASDAQ:AMZN), which are subject to its machine learning scans.

© Reuters. FILE PHOTO: A woman uses her Apple iPhone and laptop in a cafe in lower Manhattan in New York City, U.S., May 8, 2019. REUTERS/Mike Segar/File Photo

Other retailers hosting livestream shopping including Dyson only sell their brands' products or those that they hold a license to sell.

(This story has been corrected to say that Amazon seized counterfeit items globally, not just from its marketplace sellers, in paragraph 5)

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