[The Invasion of Counterfeits] ⑥The Beginning of the Counterattack?... The Emergence of Game-Changer 'AI'

As damage from counterfeit products, including those targeting K-brands, increases, government crackdowns have become more rigorous. In particular, with the surge of counterfeits in the online marketplace, the government is planning to use artificial intelligence (AI) technology to quickly and accurately detect fake products. However, there are concerns that the recent spike in counterfeit sales through live broadcasts on platforms such as YouTube and TikTok is difficult to regulate, and that K-brand counterfeits distributed globally require individual responses from affected companies. Therefore, there are calls for increased government budget support.

According to Asia Economy's coverage on September 11, the Korean Intellectual Property Office (KIPO) has allocated approximately 2.9 billion won in next year's government budget to establish a consumer-centered "Authentication Support System." This platform will enable two-way communication between brand manufacturers (rights holders) and consumers, allowing consumers to verify whether purchased products are counterfeit. A KIPO official stated, "Consumers who purchase products through e-commerce platforms need confirmation from the rights holder to get a refund if the product is a counterfeit," adding, "We are considering having a public institution handle authentication work to reduce the burden on rights holders."

The core of this platform is counterfeit authentication using AI. After AI analyzes the similarity to genuine products, rights holders can access the platform to review the authentication results. KIPO plans to use AI to reduce costs for rights holders and accelerate the counterfeit authentication process.

To this end, KIPO began discussions earlier this year with its affiliated agency, the Korea Intellectual Property Protection Agency, and member companies of the public-private "Counterfeit Goods Distribution Prevention Council" regarding the authentication support system. At that time, rights holders expressed concerns about participating in the platform, as authentication information constitutes trade secrets. In response, KIPO decided to establish a robust protection system to ensure such information is used only in the public domain by public institutions and to negotiate with brands on the scope of information sharing.

원본보기 아이콘

Previously, KIPO allocated a new budget of 700 million won last year for AI-based counterfeit product crackdowns. This investment aimed to block counterfeit goods distributed in online marketplaces such as e-commerce platforms and social networking services (SNS). This year, approximately 160 brands participated, and the plan is to expand to around 500 brands by 2027. In addition, KIPO is advancing technology to simultaneously analyze images and text, enabling precise detection of altered trademarks and image synthesis techniques.

Collaboration among relevant ministries is also being strengthened. KIPO will notify the Korea Customs Service of products detected by AI so they can be intercepted before entering the country. The Korea Communications Standards Commission will be linked to block access to sales sites and delete posts by overseas operators. A KIPO official explained, "Each department has different capabilities and areas of responsibility, but our goal is to activate information exchange and establish an integrated response system," adding, "We will sequentially sign memorandums of understanding (MOUs) with each ministry, following the Korea Customs Service and the Ministry of Agriculture, Food and Rural Affairs."

In July, the government announced a "Comprehensive Plan to Prevent the Distribution of Counterfeit Goods" at a cabinet meeting chaired by Prime Minister Kim Minseok. This plan shifted the focus of counterfeit crackdowns from luxury brands to the protection of K-brands and included measures to target covert distribution channels such as SNS and live broadcasts. To this end, the regions monitored for K-brand counterfeits have been expanded from six countries (China, Thailand, Indonesia, Vietnam, Singapore, Malaysia) to include India. In addition, punitive damages for trademark infringement have been increased to up to five times the actual damages.

In Korea, the protection of intellectual property (IP) rights and the prevention of counterfeit distribution are handled by multiple agencies, including KIPO, the Korea Customs Service, the Fair Trade Commission, and the National Police Agency. In addition, all ministries are involved by industry, such as the Ministry of Agriculture, Food and Rural Affairs, the Ministry of Oceans and Fisheries, the Ministry of Trade, Industry and Energy, and the Ministry of Foreign Affairs. The Korea Customs Service and its affiliated Trade-Related Intellectual Property Protection Association (TIPA) are responsible for cracking down on counterfeits during the import customs clearance process, while KIPO and its agency, the Korea Intellectual Property Protection Agency, handle the distribution of counterfeits in Korea and support domestic rights holders. KIPO is in charge of anti-counterfeiting measures, while the National Police Agency is responsible for investigation and enforcement.

Because of this, there are calls for a stronger collaborative system to respond swiftly to counterfeit goods and efficiently protect the IP of domestic rights holders. An industry official commented, "In the European Union (EU), a leader in counterfeit crackdowns, brand owners upload product information to the IPEP system, which is then used by customs and domestic supervisory agencies," adding, "A unified system should be established to reduce the burden on brand owners and enable transparent information sharing."

Some argue that the government should allocate more budget to respond to K-brand counterfeits. While measures such as online monitoring support, overseas trademark and design application support, and consulting are being prepared by industry, there is a lack of budget at the association level. An association official, speaking on condition of anonymity, said, "As the number of counterfeits targeting K-brands increases, we have repeatedly requested KIPO to allocate a budget to support their IP protection, but funding has not been secured," adding, "Although awareness of IP protection and counterfeit consumption has improved overall, it still lags far behind the United States and Europe."

In reality, brands find it difficult to respond proactively in overseas markets where counterfeits are manufactured and sold. The high legal costs involved in trademark disputes are a burden, but there is also concern about alienating local consumers. A cosmetics industry official said, "Since most counterfeits are produced overseas, we have to consider legal costs for litigation, but the expenses are so high that it is burdensome," adding, "In fact, we are unable to take substantial action and are limited to monitoring counterfeits." A food industry official stated, "If we become embroiled in a trademark dispute, anti-Korean sentiment may develop among local consumers (in China), negatively impacting product sales. Although we suffer tangible and intangible losses due to infringement, we are reluctant to publicize it for fear of a sales hit."

<To be continued in Part 7 of 'The Invasion of Counterfeits'>

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.