How the WWE stomps out the forgers
But with increasing frequency, questions over authenticity also have shifted outside the ring as the internet provides an ideal marketplace for counterfeiters wishing to sell World Wrestling Entertainment (WWE) merchandise.
So as current wrestling superstars like the Undertaker exchange choke holds and body slams each week to the adoration of millions of fans, other WWE employees are waging a non-stop battle in cyberspace to stop the peddlers of bogus goods — videos, T-shirts, coffee mugs, mouse pads and anything else a wrestling fan may purchase on the web.
When online auction sites, such as eBay, first sprouted up, those responsible for protecting the WWE's good name relied on manual processes to identify and shut down the fraudsters. It quickly became an overwhelming and time-consuming task. As a result, the Stamford, Conn.-based WWE chose to deploy MarkMonitor's brand-protection software-as-a-service (SaaS) solution, Online Channel Protection, to monitor and help shut down illegal selling rings.
Stacy Papachristos, the WWE's former associate counsel of intellectual property, says that on any given day between 3,000 to 6,000 auctions may be hawking items that are property of the WWE — and hundreds could be selling phony merchandise.
“Fans were calling and reporting infringements to us,” she recalls. “We wondered what else was out there that we weren't finding. Then, we decided we wanted to take a more proactive approach — and go after the infringers.”
The MarkMonitor solution — which can range in cost from $50,000 to more than $1 million — provides an easy-to-use portal that automatically performs searches of auction exchange websites, such as eBay, and other domains selling WWE merchandise — and then lets the company report violators to the sites in a single email, Papachristos says. The software cut her investigation time in half, she says.
According to the International Anti-Counterfeiting Coalition, counterfeiting is a $600 billion-a-year problem for companies worldwide — and about 14 percent of that takes place through the fraudulent sale of goods online. Of the WWE's $400-million-a-year revenue, it reports that about 22 percent is derived from the sale of consumer products, although it does not specify money generated through online sales compared to physical locations.
One thing is for sure, though: The internet is a gold mine for rip-off artists.
“It's much easier and much cheaper to sell counterfeit goods online, and the yields are much higher,” says Frederick Felman, chief marketing officer at San Francisco-based MarkMonitor, which provides corporations with brand abuse protection against scams such as phishing. “It's easier to sell direct to a consumer. It's also safer because you're abstracting yourself through an online persona.”
The WWE is particular prone to lost revenue because much of its merchandise can easily be knocked off, Felman says. “There are vast product networks out there designed to service this sort of thing,” he says.
Because the MarkMonitor solution groups by seller, the WWE can quickly distinguish bogus auctions and get them shut down. Lawyers, then, can distribute cease-and-desist letters in a timely manner, Papachristos says. The letters demand the counterfeiters provide the WWE with their sales figures and profits — or face a lawsuit.
“They figure it's better than being sued and facing the prospect of paying a lot more,” she says. “In the beginning, I would just shut these auctions down and they would just repost it. If there's a penalty, if there's a deterrent, if I make you pay what you made, you're going to think twice about
doing it again.”
Papachristos says that since the WWE began deploying the solution about three years ago, she has seen no noticeable decline in the number of people pushing bogus goods. But, she says, she has not seen an uptick either.
“There's always going to be people who are going to want to take their chances,” she says. “The key is stopping the infringement early on, or else the problem would grow.”
Not only does this type of enforcement help to save the WWE a significant amount of time, resources and money, but it also safeguards customers who unknowingly purchase WWE items passed off as the real thing.
“The quality is poorer,” Papachristos says. “We're protecting those innocent fans who don't believe something is counterfeit when they purchase it.”
Felman of MarkMonitor points out that the real casualty of a black market is not the lost profits, but the damage dealt to the WWE name, leading to a decline in customer trust.
“The thing to really highlight here is that all of this stuff degrades your brand,” he says. “It can really cause a tarnish on a brand. And the intangible cost of it is pretty high for an organization.”
What can happen?
Producing and selling WWE T-Shirts, coffee mugs and videos may seem harmless enough — especially when one is doing it through the seemingly safe confines of the internet — but harsh penalties can await.
Federal trademark law prohibits the trafficking of goods and services bearing counterfeit marks, and it makes the offense punishable by up to 10 years in prison and a fine of up to $2 million. Trademark holders, meanwhile, can seek damages up to $1 million, while violators of copyrights can be fined up to $150,000 per work infringed.
Stacy Papachristos, former associate counsel of intellectual property for the WWE, says she regularly views criminals violating these laws by attempting to pass off fake goods, such as DVDs of WrestleMania, an annual pay-per-view event produced by the WWE, that had not yet been distributed by the WWE.
— Dan Kaplan
From the - October 2007 Issue of SCMagazine »