The secondary liability of ISPs/internet intermediaries in Southeast Asian (“SEA”) countries are not consistently established across one of the world’s biggest ecommerce market regions. This stems largely from the issue being framed within national legal contexts, which are inadequate for platforms operating regionally and globally. Add to that within the SEA region there are different legal systems (civil/common law), with different approaches.

Ecommerce growth and counterfeit goods – Landscape

E-commerce in SEA has experienced rapid growth, driven by increased internet access. In 2023, the top eight platforms in the region, including Shopee, TikTok Shop, Lazada, Bukalapak, Blibli, Tiki, Amazon, achieved a total gross merchandise value (GMV) of $114.6 billion,[1] with Shopee leading the market at $55.1 billion.[2]

This growth has also fuelled the rise of counterfeit goods. With the expansion of logistics, particularly air freight and drop shipping, counterfeit products have become easier to distribute.[3] SEA has become a major hub for counterfeit production and trade, with complex supply chains facilitating their entry into global markets. The counterfeit industry in the region is valued in the hundreds of billions of dollars and is expected to continue growing.[4]

The inconsistency in ISP liability frameworks plays a significant role in the proliferation of counterfeit goods online. Some ISPs do not apply uniform intellectual property policies across jurisdictions, creating a fragmented landscape. This inconsistency confuses consumers, making it harder to differentiate legitimate sellers from counterfeiters. For instance, a platform known for selling authentic products in one country may lack the same reputation in another within the same region.

ISP Liabilities: A Global Context

The principle of secondary liability arose first in the copyright space especially when the US enacted the Digital Millenium Copyright Act in the late 1990s. However, it did not initially expand to trademark infringement. Ecommerce grew must more slowly around the world than the trade in copyright goods. Technically any IP infringement could involve any second party who supported the commission of an IP crime, usually with knowledge. Most countries have criminal laws covering assisting and conspiracy. But few cases could be proven due to the high burden of proof of mens rea for the crime. It took many years for cases and statutes to establish secondary liability for trademark counterfeiting by participating actors on ecommerce transactions.

The general principle of secondary liability today is that knowledge of an IP infringement is the test for assessing whether an ISP should have liability. In 2010, a US court ruled that eBay was not liable for the sale of counterfeit Tiffany products on its platform, as its general awareness of infringement was deemed insufficient to establish liability[5]. The court recognised eBay's Notice-and-Takedown system as an effort to prevent counterfeiting, effectively conferring safe harbour as defense to secondary liability.

Courts in France have held eBay liable for contributory infringement in two cases[6]. The rulings determined that eBay acted as a broker, benefited financially from its platform, and was responsible for implementing effective anti-counterfeiting measures, such as requiring sellers to verify the authenticity of their items. Ultimately, the effectiveness of such systems is evaluated by courts on a case-by-case basis.

The European Union takes a hybrid approach to ISP liability, combining the features of legislation and case law. The E-Commerce Directive (2000/31/EC) forms the core of this framework, setting out rules for ISP liability. The European Court of Justice (ECJ) has further defined these principles through key rulings. The Digital Services Act (DSA) aims to harmonize these liability rules across the EU. While the DSA covers intermediary liability, EU Free Trade Agreements (FTAs) currently emphasize civil injunctions for copyright violations, not trademarks. This highlights a gap in the legal framework for trademark enforcement in digital spaces.

Common law countries from UK to Australia and of course Singapore and Malaysia, apply rules developed through caselaw to apply the knowledge test. This can lead to contributory and vicarious liability creating liability even where actual knowledge is not present but deemed knowledge due to an ISPs actual ability to monitor its systems and the commercial benefits it gains.

Many complications exist. One key contention across jurisdictions is determining what is an ISP. Ecommerce marketplaces often tightly regulate their platforms, controlling merchant behaviour and using algorithms to influence consumer interactions[7]. This oversight confers potential knowledge and control over infringing activities. In contrast, other platforms operate with minimal control, serving mainly as intermediaries that connect buyers and sellers without handling goods, processing payments, or verifying item legitimacy.   

There are many other actors involved in the sale of counterfeit goods through ecommerce, including advertising networks that pay marketplaces to place ads sometimes alongside counterfeit goods adverts.  Payment providers provide the financial system for customer to pay the platforms and the merchants. Logistics suppliers deliver the goods, insurers provider insurance cover for them. All of these can be said to support the counterfeit goods supply chain in some way. 

Civil law countries require and should give definitions for all the elements – secondary liability, knowledge, safe harbour, which ISPs it applies to and so on. However national laws are rarely up to date and all encompassing. Common law countries may be able to take advantage of caselaw elsewhere to assist determining liability.

The absence of a global standard for ISP liability in the case of trademark infringements, creates challenges for developing markets like SE Asia in shaping effective policies to address counterfeit sales.

Currently, few SEA countries have clear rules as seen in more developed markets. Some ecommerce platforms operate to standards higher than the local laws. This is often due to investment, capital market financial regulation and other reasons. Others operate only minimal IP systems. New players enter the market and can grow very fast with IP often catching up.

The result is a complicated patchwork in a region where closer integration is being sought by the ASEAN Economic Community.  National laws vary, platform IP performance varies. At the same time the flow of counterfeit goods is substantial and has largely migrated from the old-fashioned street market retail to ecommerce.  Most complex counterfeit goods come from China, but many lower tech counterfeit products flow between and within SEA countries. 

ISP Liability in Common Law and Civil Law Systems in Southeast Asia

Approaches to ISP Liability vary across Southeast Asia, shaped by each country’s legal framework.

Common Law

In common law jurisdictions like Singapore, Malaysia, and Brunei, ISPs can face secondary liability for online counterfeiting, either as vicarious or contributory infringers. Their liability typically hinges on their knowledge of the infringement. To address this, many governments implement safe harbour provisions, shielding ISPs from liability for infringements they are unaware of. In turn, ISPs adopt notice-and-takedown systems as a safeguard against liability.

This approach requires ISPs to continuously update their policies to address evolving forms of infringement. However, in practice, ISP actions are often reactive, relying heavily on the Notice-and-Takedown (NTD) system rather than proactively tackling counterfeit listings. ISPs typically limit their involvement to setting up a system for receiving notices, leaving IP owners to file individual complaints for each infringing listing. This method is neither efficient for managing high volumes of counterfeit goods nor favoured by IP owners who face huge resource challenges to tackle thousands of suspicious adverts a month.

As a result, while IP owners can request the removal of infringing products through the NTD process, they face significant challenges in proving ISP awareness of trademark infringements at scale without addressing each specific listing. This complicates efforts to establish ISP negligence and restricts IP owners’ ability to claim damages. Furthermore, ISPs often avoid liability despite employing ineffective systems, failing to implement adequate measures to curb counterfeiting, or neglecting collaboration with IP owners. These gaps contribute to the widespread persistence of online counterfeits.

Civil Law

In civil law systems like Indonesia, the Philippines, Vietnam, and Thailand, ISP responsibilities are spread across various regulations. These regulations, issued by different government departments, create a complex and unclear framework for enforcement. This makes it harder to identify the authorities responsible for handling infringement cases. Moreover, ISPs may interpret these regulations differently, leading to diverse approaches to combating counterfeiting.

The laws typically provide only broad guidelines, leaving ISPs significant discretion in shaping their policies. As a result, these policies often vary widely and may not adequately address real-world challenges. For instance, one platform might impose a temporary account ban for repeat infringements, while another might issue just one or two penalty points. This inconsistency makes it difficult to evaluate how effectively these measures deter counterfeit activities on their platforms.

In recent years, SEA countries have begun adopting a hybrid approach to ISP liabilities, blending aspects of common law and civil law traditions. Safe harbour provisions and notice-and-takedown systems are commonly implemented across the region, but their effectiveness varies significantly in practice.

ASEAN the regional bloc has yet to drive any harmonization, but has started exploring the issues, as mandated in a late amendment to its 2016-25 IP Action plan. The new 2025 Action plan is being prepared and we will see what approach to tackling online counterfieting and proposed harmonization steps will be included.

Current regulations in Southeast Asia

Conclusion

Intermediary liability for counterfeit goods in Southeast Asia's growing e-commerce sector remains a challenging issue. Both common law and civil law countries face fragmented regulations, inconsistent enforcement, and gaps in IP protection. These factors allow counterfeit trade to persist, leading to consumer confusion and challenges for IP owners. To develop an effective online enforcement strategy, brand owners need a comprehensive approach. This includes understanding how each country addresses the issue, how platforms are responding to regulations, and the initiatives being implemented. It is also essential to consider the role of other intermediary parties in tackling the problem.

The information in this article is for general informational purposes only and should not be considered as professional or legal advice. Please get in touch with us should you like to discuss further.

[1] Vietnam and Thailand named as fastest-growing e-commerce markets in Southeast Asia | Nhan Dan Online

[2] Vietnam eCommerce and Digital Economy Agency (idea.gov.vn)

[3] https://www.worldtrademarkreview.com/global-guide/anti-counterfeiting-and-online-brand-enforcement/2018/article/liability-of-intermediaries-the-effective-anti-counterfeiting-tool

[4] https://www.worldtrademarkreview.com/report/special-reports/q2-2023/article/the-changing-nature-of-fighting-fakes-in-southeast-asia

[5] Tiffany (NJ) Inc. v. eBay Inc. 600 F.3d 93 (2nd Cir. 2010)

[6] Reference source: https://www.iam-media.com/article/appeal-court-upholds-ebays-liability-reduces-damages

[7] Platforms like Amazon use algorithms that recommend products based on user data, giving them more control over what products are promoted and sold. Reference source: https://stratoflow.com/amazon-recommendation-system/

Authors:  Nick Redfearn, Khanh Nguyen, Hanh Pham, My Anh Truong, Edmund J. Baranda, Juan Samuel Loyola, Peeraya (Kaew) Thammasujarit, Anggraeni (Renni) Tobarasi, Anushka A, Monyrak Phang 

TAGS

• Ecommerce
• counterfeit goods
• Intermediary Liability
• SoutheastAsia
• Digital Economy
• IP Protection