[Attack of the Counterfeits]⑧ "There Is Always Someone Smarter"…AI Showdown in the Battle Against Fakes

Interview with Kim Jongmyeon, CEO of Wego Fair
Detection of Counterfeit Sales Becomes Sophisticated with AI
"Trademark Act Should Be Revised to Strengthen E-Commerce Responsibility"

Editor's NoteThe global counterfeit market is valued at 2,000 trillion won. Fake goods are becoming more sophisticated, and their distribution is growing bolder. It is not only luxury brands that suffer. While consumers remain silent about counterfeit products, K-brands that have entered the global market are being copied in the same way. Local brokers are preemptively registering trademarks, blocking market entry, and enormous litigation costs are leading to setbacks. In the borderless online marketplace, there are clear limits to enforcement and monitoring. Asia Economy investigated the realities of the counterfeit market, which has grown explosively since the COVID-19 pandemic, and explored countermeasures to prevent the copying of K-brands that have made waves in the global market.

#Recently, a domestic seller was caught selling a sports brand’s products on Naver Shopping after subtly altering a model photo from the brand’s official website using artificial intelligence (AI). The brand reported the copyright infringement to Naver Shopping, but received the response that, “since the hairstyle is somewhat different, this falls into an ‘area requiring judgment’ and cannot be blocked.”

While the government has launched a full-scale “counterfeit war” with AI at the forefront, it has been confirmed that counterfeit manufacturers and sellers are also using cutting-edge AI technology to cleverly evade enforcement.

According to Wego Fair, an intellectual property (IP) protection company, as of September 12, the number of sellers deceiving consumers by manipulating product images with AI and making it appear as if they are selling genuine products is on the rise. Wego Fair provides solutions to detect and block counterfeit and illegal products distributed on domestic and overseas platforms.

Typically, e-commerce platforms treat the use of official website images by counterfeit sellers as copyright infringement and take measures to prevent product sales. As awareness of counterfeit sales has increased, major e-commerce platforms such as Naver Shopping and Coupang have adopted their own AI technologies to filter out fake products. However, if the official website photo is not identical or has been subtly altered, rapid blocking does not occur.

On the 29th of last month, Kim Jongmyeon, CEO and patent attorney of Wego Fair, met with Asia Economy at the Wego Fair office located in Gangseo-gu, Seoul. Photo by Minji Lee.

Kim Jongmyeon, CEO and patent attorney of Wego Fair, stated, "E-commerce companies must intervene more proactively in blocking counterfeit products," and added, "The law should specify that platforms are responsible for management, going beyond simply blocking reported cases. This would broaden both the speed and scope of blocking counterfeit goods."

He advised that the Trademark Act should be amended to strengthen the responsibility of e-commerce platforms in blocking counterfeit goods. He further explained, "E-commerce companies claim they only provide the transaction platform and that the actual sellers are those who list products, so they are not responsible for counterfeit sales. However, there are now international precedents holding e-commerce platforms accountable."

The official website image and the homepage featuring photos subtly altered using AI. Patent attorney Jongmyon Kim is explaining the differences between the two products. Photo by Minji Lee.

In December 2022, the Court of Justice of the European Union ruled in favor of Christian Louboutin in a trademark infringement lawsuit against Amazon. The court determined that, although the products were from third-party sellers (3P), Amazon’s logo appeared alongside advertisements for counterfeit goods, making it highly likely that consumers would not recognize them as fakes and would make purchases.

Kim emphasized, "This ruling is about strengthening management responsibility for e-commerce platforms," but added, "Since the e-commerce market could shrink, there needs to be a reasonable limit to the responsibility for counterfeit sales."

Kim also suggested that a platform-based system is needed for faster blocking and reporting. Overseas platforms such as Alibaba Group in China, as well as Southeast Asia’s Shopee and Lazada, have established platforms to receive reports of IP infringement, including trademark violations. Alibaba has created the IPP platform, allowing sellers to pre-register their trademarks and copyrights obtained in China. The platform also enables users to check the progress of copyright infringement reports at each stage.

Naver, a domestic e-commerce platform, operates a ‘Rights Protection Center.’ Kim explained, "Some overseas platforms proactively operate a whitelist system, granting access to product data and images for brand owners and professional monitoring companies. In contrast, Coupang and other domestic platforms still rely on email exchanges and waiting for replies."

The homepage showing the product has been removed. Patent attorney Jongmyon Kim pointed out that although the speed of enforcement has increased by utilizing AI, the number of sellers exploiting this inevitably continues to grow. Photo by Minji Lee.

Kim stressed that brands must take proactive steps such as trademark registration to prevent counterfeiting. As K-brands are gaining popularity in the global market, there are increasing cases of sales being hit by counterfeits.He advised, "Small and medium-sized brands need to pay even more attention than large corporations, as it is difficult for them to recover once shaken. Fashion and beauty brands, which frequently launch new products, must carefully store original images regardless of staff turnover, and pre-registering trademarks is essential in countries they plan to enter."

<To be continued in Part 9: The Invasion of Counterfeits>