1oz61wa

Voluntary Action
Partnerships, such as the one between the International Anti-Counterfeiting Coalition (“IACC”) and
the major card networks (MasterCard, Visa International, Visa Europe, PayPal, American Express
and Discover/Pulse/Diners Club), allow concerned rightsholders to streamline reports of counterfeit
sellers utilizing these payment options. 88
If a payment processor determines that a website has engaged in widespread infringement, the
payment processors can suspend or terminate payment services to that website’s merchant account.
89 This initiative has demonstrated success, with 906 individual merchant accounts terminated
during one year of IACC member referrals. 90
Individual payment processors, such as American Express, Visa, MasterCard and PayPal also have
systems in place to report illegal conduct undertaken by authorized merchants. 91
Payment Processors, of course, face financial and reputational risk, including damage to their own
brand and loss of consumer trust, when associated with PFWs. These risks incentivize Payment
Processors to participate in voluntary initiatives to prevent the use of their services on PFWs.
Nevertheless, there are challenges to effective enforcement through this initiative, including
preventing terminated merchants from re-registering with a card network through a different
acquiring bank and the use of sophisticated technologies by counterfeit sellers to prevent investigative
transactions. 92 Thus, while a cooperative partnership is in place between the prominent card
networks and rightsholders, the PFWs continue to evolve to evade enforcement. Additional
legislative enforcement tools and increased pressure on these PFWs are essential to stemming the
flow of revenue to these illicit operations.
b) Online Advertisers and Advertising Networks
In addition to the sale of counterfeit products and paid memberships to access copyrighted content,
PFWs also rely on advertisements to monetize their infringing operations. In the recent indictment
against the operators of the MegaUpload group of sites, prosecutors alleged that online advertising
on MegaUpload and its associated websites, which relied heavily on copyrighted content to lure
visitors to the site, earned an estimated $25 million. 93 Recent university studies have also detailed
how online ad networks support PFWs and how the ads of unsuspecting prominent advertisers
appear on these PFWs. 94
The online advertising ecosystem is complex and consists of many parties involved in the serving
of a given ad to any website, legitimate or infringing. 95 This presents challenges of transparency,
whereby advertisers may be unaware, in fact, of precisely where their ads appear online. The
advertising industry has responded to the challenge of providing transparency into the advertising
value chain by implementing Quality Assurance Guidelines for Networks & Exchanges (QAG). 96
This initiative aims to clarify the marketplace for advertisers, increase buyer control of ad placement
and promote brand safety. Ad networks and exchanges that voluntarily self-certify to adhere
to the guidelines commit to provide advertisers with clear ad placement details. In the current
iteration of the QAG, the category of illegal content prohibited from sale by compliant networks
and exchanges, includes content that infringes copyrights. The guidelines do not apply to other
parties involved in the advertising value chain (e.g., ad servers that are indirectly involved in the
serving of an ad to a publisher website). 97
Another initiative aimed at addressing the issue of advertising on PFWs is the ongoing work on
behalf of the Office of the Intellectual Property Enforcement Coordinator (“IPEC”). IPEC is
encouraging private industry to establish best practices in order to prevent advertisements from
appearing on PFWs and to remove such websites from their inventory. 98 IPEC is also involved in
industry negotiations for a broader approach to curb advertising associated with infringing content
or counterfeit goods. 99
75