Who pays for test purchases?
A test purchase is a vital part of online brand protection. But did you know that you can even be reimbursed for the price of our service by fraudsters? Find out how from our article.
Test purchases are an essential part of a comprehensive online brand protection program. As we have already explained on the blog, a test purchase is when we buy our client’s branded product from a seller.
There are many reasons for doing so; for example, finding evidence about a leak in a client’s supply chain, verifying that sellers list counterfeit products or gathering information about a shop’s location. This way, we get court admissible proof about the origin and the originality of the product, the seller’s behaviour, etc.
Test purchases provide us with invaluable information when it comes to investigating grey marketers, fraudsters, and any other issues that may hurt our clients’ IP rights. Harmful listings can be detected and eliminated, minimizing any losses of trust, revenue, and ensuring a flawless online marketplace presence for our client.
As with any of our other services, we tailor the scale and scope of our test purchases to our client’s exact needs. This means that our fees are also always adjusted to what you actually request us to do.
But at the end of the day, is it really you who pays for it? According to the courts, you don’t have to be.
The Higher Regional Court (Oberlandsgericht) of Düsseldorf, Germany dealt with a case where an IP-right holder who had ordered a test purchase sued the infringing sellers for compensation as well as the price of the test purchase itself.
The court came to a decision in April 2021, announcing that the IP-right holder is indeed entitled to be reimbursed for the cost of a one-time test purchase. In fact, covert test purchases are hereby deemed a legal and necessary means to uncover the behaviour of competitors.
However, not any purchase can be defined as a fair test purchase. It’s prohibited to trick a competitor with a purchase; for example, if you’re already aware of an imminent IP-infringement, buying something just so you can be reimbursed is not allowed. Similarly, if you don’t behave like a “regular” customer at any time during your purchase, you jeopardize the whole point of the exercise.
This is why it’s important to leave test purchases to online brand protection experts. Conducting one yourself may not meet the eligibility criteria for reimbursement - or even worse, it may not even be court-admissible. And that’s essential if you want to create a legal case against infringers.
Another German court came to a similar decision, albeit with a significant difference. Back in 2013, the Regional Court (Landegericht) of Hamburg decided that the price of a test purchase is only reimbursable as long as the products get sent back as well.
In this case, a trademark holder wanted to get back the price of a test purchase they conducted in order to prove that a seller on eBay was selling a jacket infringing on the trademark holder’s IP rights. Although the court ruled in favour of the trademark holder, it insisted the price of the test purchase can only be sent back if the fraudulent products are returned to the seller as well.
In an appeal to a higher court, the trademark holder argued that possessing and selling a trademark-infringing product is against the law, and returning the jacket to the fraudulent seller would impose a very real danger of the product getting back into circulation.
Listening to this argument, the Higher Regional Court of Hamburg ruled in 2014 that a lawful reimbursement of a test purchase can’t be made dependent on the return of a trademark-infringing product.
Eight years later, in 2018 the Regional Court of Düsseldorf endorsed the Higher Regional Court of Hamburg's decision, confirming the notion that IP-infringing products (or any other products, really) don’t have to be returned to the seller in order to gain the costs of the test purchase back.
The courts haven’t imposed a maximum limit on the reimbursable test purchase costs. Moreover, the rulings have recognized the need to hire a third party (i.e. online brand protection experts) to properly execute and document the test purchase process.
Germany is not the only country where the protection of trademark law utilized test purchases to fight fraudsters. For example, fake clothing and shoes were seized in the UK worth over £1 million after test purchases on eBay.
Similarly, Austria reported a shrinking amount of counterfeit products detected and seized after information campaigns launched by Austrian Customs. The campaigns also highlighted the usefulness of test purchases in detecting and fighting fake products.
The price of a test purchase is not the only thing you can get back from fraudsters. In fact, you can even sue for compensation and get IP-infringers to give you the money that’s rightfully yours.
Just look at what Harley-Davidson did.
As we have already reported on the case, Harley-Davidson sued SunFrog, a Print on Demand service for copyright and trademark infringement. SunFrog allows users to create various products like T-shirts, socks and mugs using their own designs. Unfortunately, this business model can become a hotspot for IP-infringements, as many creators may not even be aware that the design elements they’re using are under the protection of a brand’s IP rights.
Well, SunFrog can’t claim they didn’t know about it. They’ve been warned about the infringement and they assured the court they removed the offending listings when Harley-Davidson first filed an injunction in 2017.
However, the products were still available a month later, and SunFrog even promoted them on social media, and also taught its users how to do their own promotion (by the way, that’s exactly what our social media monitoring service is for.) Furthermore, the company was slow to remove newly appearing offending listings, often waiting days before a trademark infringing product was deleted from its website.
This came to an end when the court issued a judgement, banning SunFrog from using Harley-Davidson brand imagery and ordering them to pay $19.2 million in damages.
It’s increasingly hard to prevent IP-infringements from happening. With today’s technology, it barely takes more than a second to copy-paste a piece of brand imagery onto a surface and bam! a fake product is born.
However, this doesn’t mean that you can just shrug and accept it as an inevitable fact of life. On the contrary. IP-infringements can and should be fought, because they won’t go away on their own. And as long as they’re available to third parties like customers, they continue to harm your reputation and your bottom line.
globaleyez’s test purchases, as part of a comprehensive online brand protection program, have the potential to gather court-admissible evidence about the origin of a product and the behaviour of a seller. We can ensure that IP-infringing listings are detected and dealt with in a timely manner, minimizing their exposure and the harm they cause for your brand.
Contact us and let us put a stop to IP-infringements harming your brand.