Too Little, Too Late
Updated: Jul 11, 2021
Why Gucci and Facebook's joint lawsuit isn't enough to make a dent in the dark online market of counterfeit goods.
On Tuesday, The Fashion Law reported that Facebook, Inc. and Gucci America, Inc. had filed a joint lawsuit in the US District Court for the Northern District of California against Natalia Kokhtenko, a serial seller of counterfeit luxury items. The complaint, dated April 26, 2021, claims that Kokhtenko was “operating an illegal online business, trafficking in illegal counterfeit goods” in which she used Facebook and Instagram accounts to “promote the sale of [luxury brand] counterfeit goods.”
This joint suit marks a new chapter in the ongoing battle between luxury brands and counterfeit con artists. In the past, labels like Gucci have primarily taken on “offline” counterfeiters—those who sell their illicit handbags and accessories on the streets—by shutting down dealers at notorious counterfeit haunts New York City’s infamous Canal Street. However, with the overwhelming e-commerce growth over the course of the last decade, counterfeiters have increasingly taken their goods online in order to make them more accessible, forcing luxury labels to face the even more daunting challenge of tackling “online” counterfeiters.
This shift online has made killing off counterfeits virtually impossible for luxury brands. Thanks to e-tailers like DHGate, Alibaba, and Aliexpress, among others, counterfeit luxury goods are more abundant and more accessible than ever before. Furthermore, despite its professedly air-tight User Agreement and “crackdown” on IP infringements, Facebook’s algorithms continue to let high numbers of criminal and bot accounts operate on their platforms, allowing them to continue promoting their counterfeit goods with few, if any, real consequences. However, with Gucci and Facebook’s joint complaint, it seems that luxury brands have finally found a way to trace and crack down on the seemingly untouchable online counterfeit market. But, with hundreds of thousands of counterfeiters operating on social media and online, is prosecuting a single offender too little, too late?
In the trademark infringement and counterfeiting complaint, the Plaintiffs state that, since “at least April 2020 and continuing until at least April 26, 2021,” Kokhtenko used “multiple Facebook and Instagram accounts to promote her online [counterfeit] stores.” Facebook estimated that the defendant had used more than five Facebook accounts and more than 150 Instagram accounts to promote her products. In total, Facebook claims to have deleted more than 160 accounts linked to her, but only 125 posts promoting her goods.
Despite Facebook’s actions, Kokhtenko continued to create new accounts and breach Facebook’s User Agreement—an arduously long document that most users accept blindly when signing up. According to Facebook, Kokhtenko used “automation software that allowed her to create user accounts in bulk, while misrepresenting how she was accessing Facebook computers and circumventing Facebook technological measures.” And, while Facebook claims to monitor for and delete all automated bot accounts, in reality, most of the accounts slip through Facebook’s algorithms.
Facebook asserts that working with brands like Gucci has allowed it to develop a “robust IP protection program.” However, the group’s results in eradicating counterfeiters indicate otherwise. According to the social media giant, Facebook and Instagram removed more than one million pieces of content—posts, comments, or users—flagged as promoting counterfeit in 2020. Given that there are approximately 4 billion users between the two platforms, a combined 287 million of which are fake or bot accounts according to Statista, removing a million pieces of content a year is nothing. On Instagram alone, nearly 9 million posts are published every day. Thus, if Facebook deleted a million pieces of content identified as counterfeit promotion a year—2,739 posts a day—the deleted posts would only make up 0.03% of the daily content posted to Instagram. This simply isn’t enough to make a difference.
Both Facebook and Gucci are seeking injunctive relief via a formal order that attempts to bar Kokhtenko from selling her counterfeit goods through Facebook’s platforms and demands that she stop infringing on Gucci’s trademark. Additionally, Gucci is seeking monetary damages, demanding “three times the profits realized by Kokhtenko” or statutory damages of $2 million “for each and every one of the prohibited marks counterfeited.”
Ultimately, while Gucci and Facebook will undoubtedly win the lawsuit, this complaint only stands to take down one of the thousands of counterfeiters active on Facebook’s platforms. Thus, while this suit is a big step toward tracing online counterfeits, it won’t make a dent in the multi-billion-dollar online industry of counterfeit luxury goods. In the battle between luxury labels and the ever-evolving world of online counterfeits, this lawsuit is too little, too late.