A ground-breaking memorandum brings together rights holders and online trading platforms, and paves the way for co-operation to combat the online counterfeit issue that costs businesses and the wider economy millions of dollars every year.

Following a long and intense period of negotiation over some two years, conducted under the direction and auspices of DG Internal Market in the European Commission, and as a leading initiative of The European Observatory on Counterfeiting & Piracy, a Memorandum of Understanding (MoU) has been agreed and signed between rights holders and internet trading platforms on the sale of counterfeit goods over the Internet. The signing took place at a formal ceremony in Brussels on May 4, 2011.

A long running source of considerable friction between brand owners and Internet trading platforms, and the subject of a number of high profile but inconclusive law suits on both sides of the Atlantic, the MoU is a 12-month pilot to build trust and co-operation with Internet trading platforms dealing with hard goods and has the objective of removing counterfeits from their sites without the need for litigation. It is important to note that the issues related to the sale of counterfeit goods over the Internet are quite distinct from illegal peer-to-peer file sharing, or piracy, of copyright protected works over the Internet and is beyond the scope of this MoU. That has been the subject of a separate stakeholder dialogue as noted in link to the Commission's website (see below).

Stakeholders' dialogues aim to promote a high-standard IP culture, which is regarded as a vital cornerstone of the modern knowledge-based society. By improving mutual understanding by participants of their respective positions and, by identifying areas of common interests, stakeholders are encouraged to exchange information and benchmark the possible ways of action, while, at the same time, take into account other interests, in particular those of Internet users. Voluntary agreements can also be more easily extended beyond the European Union and become a foundation for best practice in the fight against counterfeiting and piracy at a global level.

It is the first document, anywhere in the world, to unequivocally state that Internet trading platforms must take proactive and preventative measures to stem the tide of counterfeits available over the Internet, and must work in conjunction with the rights holders to do so. It sets out a series of joint principles including effective and practical measures to prevent offers of counterfeit goods being listed on Internet trading platforms. It strikes a fair balance between the somewhat polarized interests of both sides in this debate and has the potential to improve online protection for brand owners and consumers alike. Parties can opt out at any time and, at the end of the 12-month pilot, the MoU will be optionally renewed with the agreement of any or all, or indeed new parties, at that time if the trial has been successful. It currently has 33 signatories including brand owners, trading platforms and both national and international trade associations with an interest in this issue (although it is not binding on individual members of such associations unless they have chosen to sign individually).

This agreement represents a significant milestone in the fight against counterfeits on the Internet and demonstrates that voluntary arrangements can, in certain circumstances, provide flexibility to adapt quickly to technological developments and potentially deliver efficient and pragmatic solutions - the proof however will be seen in 12 months time when the trial period is over and the enthusiasm to renew or extend the agreement is measured.

The full text of the MoU can be found together with the European Commission's commentary on it at: http://ec.europa.eu/internal_market/iprenforcement/stakeholders_dialogues_en.htm#Sale