As of 2020, the clothing sector lost about $27 billion in annual sales due to fakes, an illegal trade that results in huge losses for brands and customers alike. Clothing, accessories and luxury goods are the most popular counterfeit goods 2022 Intellectual Property Crime Threat Assessment Report. But the problem does not begin and end there: the explosive growth of digital content has also led to a large number of digital counterfeiters.
MarkVision has created an artificial intelligence-based intellectual property (IP) protection platform that monitors both e-commerce markets and digital content, automatically detecting counterfeits and removing them from online sales and distribution. And now the startup has raised $20 million in Series A funding to continue expanding its platform.
The Los Angeles-based company and originally incubated in Y Combinator says its customers, including fashion brands like Ralph Lauren and Kangol, LVMH, crystal icon Baccarat, and media behemoth Pokemon, use MarqVision to scan where their brands are located. most likely misappropriated.
These include the top 1,500 online marketplaces worldwide, as well as popular social media platforms increasingly used for commerce, NFT platforms, gaming sites, and other places where counterfeit products can appear. It says its technology is already leading to more than 20,000 enforcement actions a week. Its founding team is rooted in Asia, especially in Seoul, and claims to have the most extensive IP enforcement platform in the region, which is an important point given that around 90% of counterfeit sales worldwide are in Asia.
DST Global Partners and Atinum Investment led the latest funding along with their existing backers SoftBank Ventures, Bass Investment and Y Combinator. Series A funding brings the total raised to $25 million, including a $5 million seed round in 2021. The company does not disclose its valuation.
The problem that MarqVision is solving is the speed and scope of counterfeit sales.
Millions of fakes are being sold in real time, and the possibilities are, so to speak, wide: this applies to both small and large brands and marketplaces. Companies like Amazon have developed extensive intellectual property protection strategies over the years to actively track down and eliminate counterfeit goods, but the argument here is that even that is not enough (and that says nothing about thousands of platforms smaller than Amazon. who lack the resources to handle it on their own).
In other words, as with any digital problem, the problem with counterfeit goods – be it products or content – is massive and difficult, if not impossible, to tackle alone.
Mark Lee founded MarqVision in 2020 with startup CBO D.K. Lee and other friends from Harvard and MIT. (Mark) Lee initially approached the issue from a legal perspective when he was still a student at Harvard Law School. Interested in the field of intellectual property, he realized that counterfeiting was the largest criminal enterprise in the world, with a turnover of 3 trillion dollars a year in goods. New digital innovations, such as the rise of e-commerce marketplaces, which give third-party merchants ways to quickly attract large numbers of new customers, and new content distribution paths, such as app marketplaces, have accelerated this practice.
MarqVision uses artificial intelligence and machine learning technologies that its founders first worked on at MIT: its approach is to automate both scanning and reporting of illegal use. Those uses that are harder to pinpoint are in turn checked by humans, but this is not the case for all elements scanned by MarqVision. For example, about half of all reports the company submits to online marketplaces are automatically generated using AI, and the software does not require human verification, co-founder and CEO Mark Lee told TechCrunch. He claims the technology is 97% accurate, meaning that for every 100 objects it reports, the company can remove 97 of them.
“Creative assets are under attack in today’s digital world, and content owners are left largely insecure as consumers are tricked into buying counterfeit goods and NFTs by sophisticated scammers,” Li said. “Unlike our competitors who are forced to check manually in time-consuming processes, MarqVision’s end-to-end process is largely automated.”
According to Li, this is something that other companies in the industry have not been able to achieve. “Other brand protection companies employ thousands of employees (or what they call analysts) to manually search for and report fakes online,” he noted. “Traditionally, the most time-consuming part of the whole process is product matching and documentation.”
Matching products, he continued, “is an extremely time-consuming process when done by hand.”
At the same time, documentation and reporting is a problem of a different kind, almost a problem of robotic process automation.
Essentially, when a product is identified as counterfeit, it must be reported to the market. According to Li, each marketplace “requires a different set of documents, evidence and report templates to provide reasons for reporting.” MarqVision has automated all of this. “Traditionally, it took about an hour to complete a full report on one product,” he said. “Now we can process thousands of reports every hour.”
It is important to note that many of the IP technologies that are created by third parties today are now mostly used by the rights holders themselves, as is the case for MarqVision. To that end, the funding here will essentially be used to advance that particular business funnel. MarqVision plans to use the proceeds to develop a new end-to-end intellectual property operating system that will allow brand owners to manage, protect and monetize their intellectual property in one place, Li said.
This is not to say that platform operators are not making an effort either.
For example, Amazon has spent years creating intellectual property theft strategyworking with the authorities for both to identify and then chase bad actors. But this has been a difficult problem for marketplaces in general. On the one hand, their business priority is to secure as many transactions as possible, which in the past has led to accusations that it is in their best interest to be weak in preventing fakes (that means fewer sales!). On the other hand, it looks bad, it’s illegal, and no commercial site wants to have a reputation for being untrustworthy to either buyers or sellers, so solving this problem is definitely in the interests of the platforms.
However, critics believe that the horse ran due to the inability to control IP theft at an early stage – hence the opportunity to create technologies that brands can adopt and use for more direct protection.
There’s another problem, according to Li, that will prevent marketplaces from building or providing the kind of tools that she (or her direct competitors like Red Points and Brandshield, among many others) provide:
“Most marketplaces want to strictly maintain their position as an intermediary, a simple link between the buyer and the seller,” Lee said. “They do not want to take direct responsibility for what is sold on their marketplaces, otherwise they will have to face a lot of liability claims. Thus, most marketplaces take the position that they are prepared to address counterfeiting issues to the extent that they investigate and remove any claimed items. Even if they want to actively monitor and eliminate counterfeit products, millions of products are displayed and sold every day, so a large-scale anti-counterfeiting program is not being used effectively.” In contrast, he said, “MarqVision focuses on a certain number of brands that are very committed to protecting their brands and the safety of their customers, so we can be much more accurate and efficient.”
MarqVision will also use some of the funding to open a new operation in Paris this fall that will serve as the start-up’s European base. Paris is a great place to start because many of its current clients are European luxury brands, Lee told TechCrunch. MarqVision won LVMH Innovation Award in June 2022 and participates in the LVMH accelerator program, Startup House.
“No one else is doing anything this advanced remotely, and this is largely due to Mark’s experience not only as a respected technologist and startup founder, but also as a lawyer specializing in trademark, copyright and patent law,” he said. Cheuk Kim, Managing Director of Atinum Investment. “He understands the holes counterfeiters take advantage of and is devising a new path forward.”
Credit: techcrunch.com /