When buying from Amazon, you might think that all products come directly from the manufacturer to Amazon warehouses. But that is not always the case. Learn how to spot potential counterfeit products and protect yourself and your brand on Amazon.
Today’s guest is David Cooper. David is the CEO and founder of IPSecure, which is an innovative new way to protect your intellectual property on Amazon, control your sales channel, and ensure every purchase of your product on Amazon is a positive and reputable shopping experience. He has spent 20 years building and deploying brand protection solutions for hundreds of global brands such as the NFL, J&J, Apple, and Rolex.“It is quite easy to be deceived on marketplaces. Try to go straight to the manufacturer’s website.” - David Cooper Click To Tweet
- [1:00] – David shares his background and information on his company IPSecure.
- [3:02] – eCommerce is huge, but is still only a fraction of the size of total retail.
- [4:42] – Solutions in this space are almost always legal.
- [6:35] – Finding counterfeiters has no impact but companies tend to measure how many are found. IPSecure measures everyone.
- [9:28] – You can’t quantify how much risk was avoided.
- [11:01] – When a counterfeiter is taken down, more pop up.
- [12:30] – Brand protection is something David advises to add for customers.
- [14:12] – There are some universal signs of counterfeit products, but there are also some signs that are specific to Amazon.
- [15:43] – Amazon has a specific algorithm that chooses who sees what products. Check the store’s profile.
- [17:32] – It is easy to be deceived on a marketplace site. David illustrates this with a Samsung camera purchase that was a parallel import.
- [19:42] – There is nothing wrong with buying and reselling something, but there is a gray market problem.
- [21:21] – These legal solutions are very expensive.
- [23:02] – Amazon is proactive in some areas, but generally speaking, they do not monitor products belonging to specific brands.
- [24:16] – For most brands, selling on Amazon is necessary.
- [25:19] – Even if a brand pulls out of Amazon, their products are likely still being sold on Amazon and that could be a liability.
- [28:49] – Instead of focusing on taking down other profiles and sellers, IPSecure focuses on building your own brand to be a successful one.
- [30:45] – While challenging, Amazon does more than any other company to help brands with this concern.
- [32:32] – People are much more aware of these concerns as Amazon has grown.
- [34:18] – Congress is taking a look at how Amazon runs, but there have been many distractions from these issues with the current world climate.
- [34:19] – It is very complex with a lot of moving parts. IPSecure integrates well with a lot of different platforms.
- [37:52] – Smaller businesses cannot afford to lose a sale to a counterfeiter and likely cannot hire a lawyer.
- [40:41] – David shares the story of a client whose business exploded after their product was on a reality show. Counterfeiters popped up very quickly.
- [43:33] – As a trademark owner, you are responsible for monitoring.
- [46:12] – Brand protection can actually increase revenue.
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Dave Cooper, thanks for coming on the Easy Prey Podcast today.
Chris, thanks for having me.
I'd like you to give the audience a little background about who you are and what you do.
Sure. I'm the CEO and Founder of IPSecure. IPSecure is a brand-protection company with a focus and emphasis on Amazon. It was born out of my two decades in the intellectual property space building brand-protection programs with many of the largest companies in the world—folks like Nike, Microsoft, the National Football League, and others.
When I left that space or that company in that industry specifically, I created IPSecure as a way to address some of both the shortcomings that I feel like exist in the space and have existed historically, and also to expand the markets and the types of companies and people that perform brand protection, which in turn makes the online space a lot safer place for people to shop.
Yeah. We've definitely all gotten those emails for the Louis Vuitton handbag for only $29.95.
The internet is a fertile ground. When you have platforms like Amazon that are literally as large as the top 30 or 40 countries on the planet in terms of GDP, there's so much commerce activity occurring there that it's basically irresistible for counterfeiters, unauthorized sellers, and bad guys of lots of flavors. The need for solutions and strategies to approach this problem is just increasing as the internet and e-commerce continue to expand. We have a long way to go.
I don't know if you know this, but e-commerce is a massive, massive space, but it's still a fraction of the size of total retail. It still has decades of growth ahead of it, theoretically. That's both exciting and scary when we think about some of the problems we're dealing with.
Let's talk about counterfeit and counterfeit brands. Are there three levels of it—the consumer perspective, platform perspective, and then the brand's responsibility?
That's true. From a legal perspective, historically, the brand owner or the owner of the intellectual property, trademark, copyright, patent, and IP associated with the product inevitably—at least in the United States—has a real legal responsibility to protect that IP. That means stopping counterfeiting when possible.
Over the two decades that I was leading a company called MarkMonitor, we inevitably became the world's leader in online brand protection. We focused almost exclusively on large brands and corporate legal departments because they, as we just said, really have a legal responsibility to protect their IP proactively. They also really have a risk mitigation strategy to protect their consumers, which is really about liability in the long run but also the dilution of their brand and lost sales.
Historically, solutions in this space were almost exclusively legal-focused. Scraping large amounts of data, putting it into a data lake—a system that would enable an analyst to manually go in and look at it—and then bring it to the client and say, “Look, here's someone on a platform. It looks like they're selling a product. We think it's counterfeit. Let's go do something about it.”
It became really a managed service. It became an industry full of technology providers who were really selling you people to analyze data, help you make a decision, and then take action.
What occurred to me when I would go to big brands that I worked with and I met with those corporate legal departments is that right down the hall was a whole team of e-commerce, sales, and marketing experts looking at the exact same platforms and thinking about the problems in very different ways. Unauthorized sales and counterfeits were really a threat to their growth, sales, and success. Legal looks at it and sees almost pure risk mitigation: “I have to stop this risk from impacting the business.”
IPSecure was born out of both a necessity and a conscious strategy to bring those groups together to use traditional brand protection techniques like IP violation reporting, cease-and-desist letters, test purchases, and litigation eventually if that's where it goes. Combine those with a platform that was highly simplified to hopefully expand our audience, and then more importantly, really change the way we measure return on investment or success.
Today, if you partner with a brand protection company and your corporate legal department, they'll show up probably once a month and talk to you about all the stuff they did. They'll say, “Look at all the bad guys we found. Look, hundreds of them, took them all down, sent all these letters, and did all this stuff.” It feels great because you know these problems are big. It's a lot of people to chase, but it has no impact from a business standpoint on the long-term health of your business. You don't really understand the impact of this, especially if every time you remove 100, 100 new guys show up.
Like a game of Whac-A-Mole.
Exactly. Companies started measuring their own success based on how much Whac-A-Mole. If my problem is this big, I really want to do a lot of stuff. I get it. That doesn't go away. However, we feel like there's a much better way to measure success when you're protecting your brand online. That's really, “Are the good guys selling more?”
What IPSecure does is it really measures everyone within the ecosystem, not just the bad guys. We look across, for instance, Amazon's entire ecosystem and can tell you everyone offering and selling a particular product and then we score every seller based on user-driven criteria.What IPSecure does is it really measures everyone within the ecosystem, not just the bad guys. -David Cooper Click To Tweet
If you have a channel of licensees, if you sell direct-to-consumer on Amazon, or even if you're a mass-market retailer like Procter & Gamble where you're selling to distributors who are then selling to retailers, understanding the entire landscape of everyone selling your products on Amazon enables you to start measuring the good guys against the bad guys. As you purge them from the platform using those brand-protection techniques we talked about—simplified, of course, in our system—what happens is it's like a balloon. You push on one side and the other side of the balloon starts to rise.
People will keep coming to Amazon to purchase the products. The key is who's in the buy box and what sellers are there with offers at that point in time? If you're the only person there or the core group of good guys are the only group that's there, the end result is an increase in your revenue. For IPSecure, that's how we measure success, not how many letters you send.
I think that's always been one of the challenges of the compliance side of things. My wife works in compliance. She's often asked by the management, “There are fewer compliance actions, does that mean things are better?” Well, it's hard to prove a negative. “We staved off a lawsuit. How much theft did we prevent? How much intellectual property theft did we prevent?” “I don't know. You can't quantify what didn't happen.”
I like that analysis and the way that you're looking at it. Well, is the good sales, the legitimate sales, and the overall business growing in spite of knocking out the Whac-A-Moles?
Yeah. It's a known unknown. You can try to quantify it, but the reality is that a particular case of IP infringement could cost a company a very small amount of money or it could cost them an enormous amount because every single instance of that infringement is not equal, doesn't have the same impact, and requires the same response to it.
It's kind of 80/20. You have this whole huge list of bad guys doing bad things. What you want is your best and most expensive resources focused on the top 10% of the problem where we know people are selling products, having an impact, putting consumers at risk, and siphoning off revenue. Then you have this long tail of people that are just floating around almost like gnats. I think that's where you need a lot of automation and heavy lifting to help you go out and tackle it.
But your point is well made, which is that there needs to be intelligence behind the actions that we're taking, because if it's an activity just for activity's sake, at some point, people turn around and say, “Well, what are we doing? We're removing the same 100 people and 100 new ones show up.” Whac-A-Mole gets frustrating over time.
We created the business really to help disrupt that stalemate and give people a better way of measuring their success. We've also created a platform that is uniquely designed with a consumer app in mind because we wanted it to be so simple that people from sales, marketing, e-commerce, and people outside of legal would not be intimidated. I don't know if you've ever logged into a legal SaaS system before, but it's intimidating and there's a lot happening. We really wanted to create something that could be much more broadly adopted.
That's what we're seeing happening. We're seeing brand protection even create new markets where things like Amazon agencies, performance-marketing companies—I don't know if you're familiar with aggregators, a very up-and-coming space—and VC-funded businesses are scooping up brands on Amazon by the dozens and consolidating their fulfillment and their e-commerce operations.
We've gone to all the players in these markets and said, “You can white label our tech. You need brand protection for yourselves to protect your products and your investment. But if you're in the business of enabling others to sell on Amazon or buying small businesses that are already there, take brand protection with you and offer that as a value proposition to your customers.”
We've seen phenomenal levels of interest and growth on that side of our business because, again, people think it's just for IP attorneys, and it isn't. Counterfeiting isn't the only use case, by the way. A big part of our users are using our system to manage their own licenses and resellers. They bring onboard someone and they give them the rights to sell online on Amazon but only for certain products, certain ways, and in some cases, within certain price ranges. These contracts need to be monitored and enforced.
That's another large use case. It's not just finding counterfeiters and getting rid of them but communicating with the good guys and saying, “Hey, maybe change your behavior a little bit.”
Let's talk a little bit about counterfeiting and then we'll talk about some of the reseller behavior and those things. Because we do have a lot of end-users and consumers listening to the podcast, what are the things that consumers should be looking for in terms of, “I think this is a counterfeit product.” To me, I think it's a no-brainer. If you see a Louis Vuitton bag for $29.95 as opposed to $2995, it's probably not a real Louis Vuitton, but what should consumers be looking for other than, “Gee, it's 99% off?”
It's a good question. I think there are some elements people can look at, which are universal when you're buying online, and then there are some that are frankly specific to Amazon, which is almost $0.50 of every $1 e-commerce now spent in the United States is spent on Amazon. I can touch a little bit on both.
Generally, you want to look for data points that help you understand legitimacy, longevity, and reputation. Can you contact them? Do they have a phone number? Do they have a reputation on that platform? If it's a third-party platform like Amazon, we look at the quantity of their negative reviews. We look at the total quantity of reviews because we see a lot of sellers show up that's a new account. They have five reviews with very high negatives. They're selling products for a few weeks and they disappear.Generally, you want to look for data points that help you understand legitimacy, longevity, and reputation. -David Cooper Click To Tweet
On Amazon, you really want to look at, “Does it look like a legitimate business that has been operating there for quite a while and has a reputation that you can identify through a lot of the metrics that Amazon presents to you?” I think on Amazon in particular, part of the challenge is that in the way their platform is architected, most people don't know who they're buying from. They get there, they look at the listing, they see the product, and they click “Buy Now.”
What they don't understand is there's a rotating algorithm that's pushing sellers in and out of that buy box. You may buy from Jim one day and Sally the next and you don't know why that is. It's because Amazon has a special algorithm they use to determine who they want that winner to be. At any point in time, people get duped into buying from sellers and they think, “I got it on Amazon and I clicked ‘Buy it now,’ so it must be OK.”
From a consumer perspective, you really want to look at the listing. Then below that “Buy it now” button, it'll say “Shipped and sold by XYZ Company.” You can click on their name, look at their profile, and determine how long they've been on the platform. They're selling a lot of products. Do their consumer reviews seem real? This is important to do.
I would also say that the use case here isn't the Louis Vuitton handbag. The use case here—and we do hundreds of test buys a month—are household staples and OTC pharmaceuticals like Tylenol. They're products people buy every day, because on Amazon, bad guys hide in plain sight. It's very difficult for people to tell exactly who they're buying from.on Amazon, bad guys hide in plain sight. It's very difficult for people to tell exactly who they're buying from. -David Cooper Click To Tweet
I tell my wife to really look at the seller, drill in, and when in doubt, don't purchase there. She and I have this conversation frequently, especially around the holidays because she's buying a lot of gifts online. I say, “Instead, go to the manufacturer's website directly if you can.” That's always the safest thing to do because marketplaces can deceive you, not necessarily intentionally, but it's quite easy to be deceived.
I bought my wife a camera a couple of years ago, I remember. The camera was authentic. It was a Samsung camera. It was an SLR with a really nice lens. It was this expensive camera. It came, I opened the box, and the manual was in Portuguese. It's what we call a parallel import. It's an authentic product that Samsung manufactured for sale and marketed in the Brazilian market at a different price point. Everything about it from a business standpoint was different, but the product was basically the same. That's a big issue for companies like Samsung. They lose a lot of money to parallel imports.
I guess what I'd say as a consumer is to know where you're buying from and pay attention to whether you’re using the app or the platform. When in doubt, try to go directly to a manufacturer's website. I think that's always the safest thing to do.When in doubt, try to go directly to a manufacturer's website. I think that's always the safest thing to do. -David Cooper Click To Tweet
I know some people will say—with respect to the Samsung camera—“Well, why do you care? You got a legitimate Samsung camera, but maybe it was a little bit cheaper than you would have paid if you had gotten the US version.”
My scenario was a home security camera that I thought was the US version. When I got it, it turned out that it wasn't the US version. When I tried to do a firmware update, it bricked the device. I contacted the manufacturer for a warranty and they went, “Well, that is legitimately one of our products. It was not a product that was destined to be sold in the United States, so there is no warranty for it. If you want to send it at your own expense down to Brazil and then they can send it to us, we'll honor the warranty that way, but you're going to have to pay for international shipping to Brazil to replace the $99 camera or whatever it was, and then you’ve got to pay for it to get back to you.”
To me as the consumer, it wasn't that this wasn't a legitimate product, but that once I wanted warranty service on it, “We're not going to honor it.”
What's interesting is that services that come with a product are, in essence, considered part of that product. One of the techniques we work a lot with legal folks on is in the United States, there's something called the first sale doctrine, which means that if I walk into Walmart and buy a product, I can go home, put it on the internet, and sell it. There's nothing wrong with that.
Now, I can't sell it and use, let’s say, images from your website—that’s using your IP. That's different. That goes a little bit too far. But in terms of just selling it online, there is nothing wrong with that. That's totally allowed.
But to address the gray market problem—because a lot of gray market sellers are hiding behind that first sale doctrine—one of the ways that we help coach our customers and work with legal counsel is by looking at those service elements.
If I acquire a large quantity of electronics product, I put it on Amazon, and as the seller, I don't offer a warranty that's similar, customer support that's the same, or service elements that the manufacturer clearly offers and advertises in association with that product, then the argument legally could be made in court that the product is different. It's not the same. It's different. You can attack it almost like a counterfeiting case or pretty close to it. But again, these remedies are expensive.
Yeah. I'm not going to do that over a $99 camera.
Right. A lot of the companies that we work with, some are very, very big, but many of them are small. Many of them have a handful of products they sell on Amazon. They're a $5 million, $10 million, or $20 million business and they can't afford to lose 30% of their sales to counterfeiters and gray market sellers.
I hear that story every day. They call us up and say, “What can we do?” Of course, we help them as best as we can, but it's very challenging for folks. Again, that's a big part of why people need to understand that there are things they can do. You don't have to hire a lawyer, by the way, to send a cease-and-desist letter. There's nothing that says you have to do that. You own the brand. It's your company. Send that letter. It's OK.
A big part of it, I think, is coaching people that there is more you can do. But Amazon especially is very challenging because it's such a huge ecosystem and there are so many avenues for folks. If you have a consumer complaint versus you're a brand owner, you're going in different places, processes, and systems, and it's quite confusing. Just helping people maybe navigate some of that complexity is also part of what we're helping with.
Are there avenues for, let’s say, brands that have decided, “We're not going to sell our product through Amazon,” where they can say, “Hey, Amazon, anything that comes on your platform that's branded as us is an unauthorized transaction?” Are there any means for that?
No. Amazon is thousands of flea markets open 24/7. Anyone can come and go for the most part. They do take some steps relative to products that involve consumer safety and they are proactive in certain areas with certain brands, but generally speaking, no. That's a problem.
Nike is a great example. They very publicly invested a lot on Amazon, built a store, had a partnership, and pulled out all of their—at least from their perspective—legitimate product listings off of Amazon. We're not going to be on this at all. Nike is still the number one most searched keyword on amazon.com.
Nike's strategy in the end has worked amazingly well because they're geniuses at e-commerce and they've created their own ecosystem which is doing really well. But the reality is most brands—I actually wrote a blog post on this a couple of months ago—are not Nike. To turn your back on Amazon completely and think you're going to find success is going to be immensely challenging unless you're in the luxury space or you're aware that the core demographic isn't shopping there. But for most brands, love it or hate it, you’ve got to be there.
Or mass-market retailers. If you talk to Unilever, Procter & Gamble, or a mass-market retailer, they don't know who's selling on Amazon. They know they have distributors, they sell to them, they sell to others, and so on and so forth. For any brand to say, “I'm consciously not selling there,” I don't think it's true. Whether you like it or not, your products are being sold there. If you choose not to participate in that commerce, that's your decision, but these things are going to get sold irrespective.
Our philosophy is that we can measure whether you're a part of it or have skin in the game, so to speak, or not, because at the end of the day, what we don't want is other problems to arise. Even if you don't care about the revenue aspect of lost sales, there's really a liability that you need to mitigate depending on what you're selling. The last thing people want is to buy baby products from China that haven't been tested and haven't gone through the same regulatory scrutiny that products manufactured here do. There are real risks to consumers and to people.
I've been doing this for 25 years and I have not walked into a meeting with a brand or a company that says, “We don't care about it.” There are levels of caring and willingness to act, but nobody says it's not important. Amazon has half of every $1 in the United States spent online, so if you're not monitoring it actively, I really question what business you're in. It certainly isn't related to the internet, I would think.
I know that Amazon is your primary focus. Is it the same issue with Alibaba or maybe even more so?
Yeah. What's interesting is that the focus for IPSecure really is legal e-commerce joining and ROI based on healthy e-commerce growth, for us, we want to focus on platforms where our US clients are making investments proactively. Amazon and Walmart is another one that they're looking at.
eBay at all?
No. Surprisingly, for me, eBay is not one of them. How many branded stores do you know that are on eBay?
I haven't been on eBay in 20 years, but one of my good friends buys everything on eBay.
This is a big difference culturally between IPSecure and other vendors. They'll cover hundreds of platforms for you because that's where the infringements are and their job is to find infringements, remove them, and then it's over. Sure, if I was any other vendor I would of course cover Alibaba because there's so much infringement and counterfeiting activity there.
I've never met anyone in the United States that goes to Alibaba, by the way, and buys products on an active basis, but I understand why it's important from an infringement standpoint. The problem is you can only measure success there, again, through activity because there's no legitimate commerce occurring for you to boost or measure.
We're going to focus on Amazon, Walmart, probably Shopify, TikTok, and places that we know US brands—which is our primary focus anyway—are investing in and seeing future growth. It's not Alibaba, at least not today.
I wasn't necessarily expecting that you'd be like, “Oh, yeah, that's our second biggest platform that we manage.”
A lot of them do because, for the other competitors in our space, part of the value proposition is we cover hundreds of platforms. That's another issue I have. Our system integrates very heavily with Amazon, which enables us to get access to unique data and have a granular perspective that others can't achieve because they built massive scraping systems that work across hundreds of different platforms, languages, currencies—you name the complexity, it exists there. It's like being the jack of all trades and the master of none because their business is the volume of takedowns and our business is really boosting your business when you have to turn brand protection into an e-commerce growth driver.
You're looking at it from just a different perspective. You've tied in the sales element to it where legal compliance is, “Our goal is to stop the bad stuff.” You're saying, “Well, on the other side of the equation, we need to see sales go up.”
Yeah. Why not? You're doing it anyway. You're saying, “We have to protect ourselves on Amazon and these other platforms.” OK, but why would you only measure the success of that effort based on the quantity of activity when that just doesn't really speak to anything important?
It's a different approach. It's important because it's the DNA of the company. We look at everything through the lens of, frankly, economic return on investment for the client, not how many letters can I send. It's a very different approach.
Do you see Amazon getting into the space? I don't see Amazon as a company that says, “Our Q4 goal is going to be to stamp out counterfeit on our platform.” I don't want to say that they want to promote counterfeit, but in some sense, anything that is sold on Amazon is to their benefit because they're going to get a piece of the sale. They're not entirely on the brands' side, so to speak, when it comes to dealing with infringement. Do you see them moving to be more helpful?
I will say this: no other platform does more. It's by a mile. The last public accounting of this that I saw, which probably was last year, is well over $500 million a year. They have armies of people. They have Counterfeit Crimes Unit investigators partnering with brands to file lawsuits against bad guys. They are doing a lot. Could they do more? Of course they could do more. But certainly, I don't believe anyone can criticize them for a lack of willingness to do a lot. I applaud them for that. The challenge they have is they've made e-commerce so easy and have grown so massive. You're talking about, in some cases, up to 4000 new sellers a day joining their ecosystem.
They're a victim of their own success. There's also an element of cost versus risk for them. In the very early stages 10 or 15 years ago, Amazon cared a lot less about these problems because the impact wasn't as public. It wasn't as understood by both legislators, congresspeople, and the public. It just wasn't. Today, people understand these problems in much greater detail, hear about it, see it, and read about it on a constant basis. That has created a level of awareness, which has forced them to act in a pretty aggressive manner. I also believe they don't want those actors on their platform. It's not good for business.
Yeah. If people don't trust Amazon, they're not going to buy anything from Amazon. It's not like, “I'm just not going to buy my Cheerios from Amazon.” It’s, “I'm not going to buy anything from them if I don't trust them.”
The problem is that they're just so huge and getting their arms around it is extremely challenging. There are some technical limitations. At the end of the day, you're right. They're in the business of recruiting more sellers, selling more products, and generating more transactions. That's their business model.
Will they ever completely cut off third-party selling on their platform? No, never. It will be interesting to see how Congress views the issues. Amazon, in some ways, has benefited from a world that's been full of lots of other more important things—pandemics and wars, obviously—but prior to that, if you remember, Amazon was very much on the radar of legislators in Section 230 and all these other things that are laws that help Amazon.
I wrote about an antitrust effort recently that's underway. Looking at Amazon and their business, because they not only sell direct-to-consumer but they have this third-party marketplace—and in a lot of cases, those do not coexist in a very harmonious way—Congress is taking a long look at this. I don't think anything's going to happen relatively soon, but at some point, people are going to say, “Look, can you be one of the largest retailers on the planet and control this massive third-party marketplace where you could almost in some ways really dictate a lot of how things are priced and sold, bought, and consumed?”
It's a very interesting issue, but in the interim, I have to applaud Amazon. Nobody is doing as much as they are to try to solve these issues. They're a victim of their own success. The easier they make it for us to buy stuff and sell stuff, the more the bad guys are going to rush in there and try to capitalize.
They're always going to have to draw a line in the sand somewhere. Like you said, there's no way they can be in the position of saying, “We're not going to allow third-party resellers or set the bar so high.”
And they can't authenticate every product in the world. Even if Amazon said, “OK, all brand owners, we will take responsibility for policing your rent on our platform.” How's that going to work? Amazon doesn't understand its trademarks, brands, supply chains, licensees, and personal feelings. One company's trademark infringement is another company's five-alarm fire.
These are things where Amazon is going to do everything they can with a reason to partner with the companies that sell on their platform, look externally to companies like IPSecure where we have an incentive to build a system that's really easy to use, and then get it as broadly adopted as possible, which in the end is something that really helps Amazon's platform. We coexist quite nicely with them.
It's not something that they have to build themselves also.
Sure, and they do have lots of tools. There are tools on their platform for brand owners and sellers, and there are all sorts of ways to report various violations. Our platform integrates with many of those, but the challenge, again, is it's very complex. It's a lot of moving parts.
Most people who are trying to run a medium or small business on Amazon don't have a lot of bandwidth to read and do all the work necessary to get up to speed on this because it's not Amazon's core focus. Their core focus is e-commerce. Our core focus is simplifying these complex processes so anyone can be a brand protection person.Our core focus is simplifying these complex processes so anyone can be a brand protection person. -David Cooper Click To Tweet
What is the target business that you're looking for as customers? Is it Fortune 500 companies or mom-and-pop manufacturers that sell 40 widgets a year? Where's the sweet spot of the customer that you can help the most?
That's a great question. We have technology and programs for all of them. From my perspective, I actually believe that the small and medium-sized market benefits in a larger way from using our system primarily because they are smaller. We're mitigating the risk and we're taking effective action, which is preserving a larger percentage of their revenue.
As I said in my earlier example, they can't afford to lose 5%, 10%, or 20% of their business to unauthorized sellers. For them, the focus is to get tools they can control and deploy in the most cost-effective way possible because they can't afford to go out, get really expensive lawyers, and do all the things that Nike can do in terms of assembling an army of technology, tools, and specialists.
For IPSecure, again, we're doing two things. We're expanding the market outside of just legal, and we're also making our platform accessible and cost-effective so even the very small businesses can afford to use it.
I work with a vitamin supplement company. They have about 17 products on Amazon. To put it in context, they might spend a few hundred a month with us to monitor and protect themselves on Amazon. They're covered and it's all they need. We have others that have 20,000 products on Amazon, are using our system, and of course, are spending quite a bit more, but it's very cost-effective because we're pure SaaS.
My competition, as I talked a little bit about at the beginning of the call, because they're trying to be everything to everyone, almost everything they do is manual and services-based. For them, their costs are really high. We're SaaS, which means we give you the tools. If you want help and services, we have that and we can provide it, but it's not the core focus of the business. The core focus is taking our tools, white labeling them, simplifying them, and then pushing them out in the marketplace.
We like to look at ourselves as the Slack of brand protection. We are taking a different approach. For us, it's definitely the small and medium-sized market and it's also the companies that facilitate commerce. Agencies are a big focus. Amazon aggregators and companies like that are a big focus for us.We like to look at ourselves as the Slack of brand protection. We are taking a different approach. -David Cooper Click To Tweet
That makes sense. I'm a big fan of small businesses and it's nice to know that people are building products and services to not just help the Fortune 500 companies and protect their multibillion-dollar brands. You've got a product and a service that's going to help protect my next door neighbor's small business and help them to be able to make sure that their products on Amazon are legit and the way they want them to be represented.
Yeah. I can't tell you, Chris, how many business owners I've talked to. There was someone who reached out to us recently who does cell phone cases. They have this really unique patented cell phone case that has some lights and things on it and it was used on a reality TV show.
That generated a massive influx of sales. Her company went from about $500,000 a year in sales to $5 million–$10 million really quickly. That's great. What an awesome thing. However, at the same time, counterfeiters—primarily from China and parts of Asia—very, very quickly moved in within days because they don't even need to have the product. If you're a manufacturer overseas who already makes cell phone cases, you're not worried about actually acquiring a product. You just start building listings. You just start building this network of content that says, “I have it.” You get an order and you figure out how to make it. It literally is quite that simple in some cases.
It's important to partner with these smaller businesses because they need to start early. If you're defending yourself early and you're sending the message on Amazon or anywhere else that you're going to send letters, file takedown notices, and do test buys, you're going to defend yourself more proactively. It acts as a deterrent because they can counterfeit anyone's cell phone case. Maybe they'll go choose somewhere else. If you're defending yourself, if you make it, no. If you don't, the problem grows like a snowball real quick, and then it's almost impossible for you to wind it all the way back down to zero. It actually probably is impossible at that point.
I'm not a lawyer, so I'll ask a question from an I-heard-a-lawyer-say type of perspective. With copyright, trademark, and patent, you as the holder really have a responsibility to enforce it. It's not like the FBI is going to say, “Hey, someone's infringing on Dave's patents. Let's go out and do something about it.” You as the creator are the ones that are responsible for that, right?
That's right. You need to do what is “reasonable.” A great way of thinking about this is that 10 or 15 years ago, you could probably, in a legal setting, get away with manually searching Google or platforms for counterfeits for unauthorized use of your IP.
Today, if you're a larger brand or even a medium-sized brand, it would be problematic if you're in a legal venue and you said, “I'm just doing Google searches manually to try to solve this problem.” I don't think that's reasonable anymore because there are so many software tools available both from third parties like IPSecure and also directly with most of these platforms. Just go to the platform. If you're willing to spend the time to more actively police your IP, you can do that.
There's this changing element of what's reasonable. That changes over time. Yes, you have to actively be protecting your IP. Theoretically, if you're not, you could lose rights to it in the future. But the question is what's reasonable? There's real case law and litigation that exists. Tiffany's and eBay is a big one. There's a number of them where they literally said, “What is the brand owner doing? How many people do they have looking at this problem? Are they looking every day, every hour, or once a year?”You have to actively be protecting your IP. Theoretically, if you're not, you could lose rights to it in the future. -David Cooper Click To Tweet
You can't show up and say, “Well, I check online once a year for IP infringement.” That's not reasonable relative to most businesses and most situations. All these are legal concepts that get argued by lawyers in a legal venue, but our deep-level understanding of this—having partnered with brands for two decades to work on these problems—means that we've been able to create technology now that's so cost-effective that we can scan and monitor millions of sellers within minutes. It's not as challenging as it used to be because of the technology that's available.
I really love it when technology comes in and makes life easier for businesses, not make it more complicated, particularly when it involves legal stuff because I think legal and insurance are two of these platforms that seem to be very monolithic, paper-driven, “We're not going to change, and we're just going to get more expensive as human beings get more expensive.”
I think that legal is primarily about risk mitigation and the preservation of the business's core assets, which to me, are IP in almost all cases, but it doesn't have to be that way. I work with a lot of corporate legal folks and even external firms that also view it the way that I do, which is brand protection can be something that actually generates revenue for the business because we use it as one of the tools to control how consumers interact with us online, how we sell products, and where we sell products.
It touches almost every aspect of a company's online presence, so to not think about it through a business lens is really missing an opportunity. It just tosses it on the legal side and says, “Just take care of it.” That's OK, I guess, for some businesses if the internet isn't critical to your success, but I don't know very many where it's not critical to their success.
Attitudes are changing, but it's happening slowly. In the interim, as we try to convince legal folks that they can look at it a little bit differently, we brought it outside legal. We said, “Well, let's bring it to everyone we think it impacts.” I can tell you that the e-commerce side loves it. They aggressively want to do brand protection. Legal, instead of maybe owning the function, is an advisor. It comes in and says, “Here's when you should use the protection of our IP as a mechanism here. Let me provide some guidance, oversight, and strategy.”
We tend to think if businesses are really driving brand protection through e-commerce and marketing, with legal having a really significant seat at the table, you're going to have more success than programs that are born in legal, run out of legal, and live in legal in perpetuity. They're never going to look at it through the lens of revenue growth.
In substance, that's not their job.
Exactly, because no one's asking them to. That's fine. That's totally intentional and makes sense. That's not their core competency. Their core competency is risk mitigation. It is protecting the assets. I guess what we want to do is both. There's no reason we can't do both.
Find the balance between the two of those. If people want to find out more about the service that you guys provide, where can they find you online?
They just have to go to ipsecure.com. They can read about the business, who we are, and where we've come from. They can also sign up, actually access a free account, which they can start using almost right away, or just reach out to us. We're happy to talk, have a dialogue, and help anyone understand more about how they can do brand protection, or how they can monetize it for their business if they're in one of the areas we talked about, like an agency or performance marketing firm.
But ipsecure.com is the best place to reach us.
Perfect. Dave, thank you so much for coming on the podcast today.
My pleasure, Chris. Thanks so much for having me. Hope you have a great day.