Counterfeiting and intellectual property (IP) infringement cost companies trillions of dollars annually — $4.2 trillion by 2022, according to the International Chamber of Commerce — and both are on the rise. In a 2016 report, the European Union Intellectual Property Office estimated the value of the international trade in pirated products at $461 billion in 2013 (as much as 2.5% of all international trade), an 80% uptick from 2008.
Eliminating IP theft would seem like an insurmountable task, given the volume, but that hasn’t stopped David Casellas. He’s the cofounder of Red Points, a Barcelona, Spain-based provider of online infringement detection and removal tools for beauty, apparel, luxury, sports, toy, and homeware brands. Today, he announced that Red Points has raised $38 million in a series C funding round led by Summit Partners. This latest round was backed by Northzone, Mangrove, Eight Roads, and Banco Sabadell and brings the startup’s total venture capital raised to $64 million.
CEO Laura Urquizu said the money will enable Red Points to “further expand” its platform (which grew 100% year-over-year in 2018) and to better support a customer base of over 450 companies, including Hearst Magazines U.K., Condé Nast, Hawkers, Dope, Mighty Mug, Beauty Blender, Knocker, and 100%.
“Brands have never been more vulnerable to the issues of online counterfeiting, piracy, and distribution fraud,” she said. “The growing threat makes it impossible for companies to protect their online assets effectively without full visibility into their online presence. This investment round from Summit Partners further proves that Red Points is the company best suited to tackle the ever-growing, rapidly evolving problem of online brand abuse.”
Red Points’ products address three recurring challenges in ecommerce: knockoffs, piracy, and noncompliance. To do this, they tap computer vision algorithms that detect potential infringements on marketplaces and websites, along with keyword-comparing machine learning models that monitor seller domains for unauthorized discounts and web crawlers that check cyberlockers, linked sites, apps, social networks, and peer-to-peer platforms for copyrighted content.
When a potential counterfeit or noncompliant product listing is identified, customers get a notification and can kickstart enforcement processes — i.e., alerting sellers and issuing removal and de-index requests. Red Points’ online dashboard offers a rules-based system for brands that prefer to automate enforcement. An analytics web view (and API) surfaces real-time metrics, like the total number of detections and the overall success rate. Red Points says that over time, thanks to AI, it is able to generate bespoke detection rules from clients’ enforcement histories.
Urquizu claims that Red Points currently removes over 100,000 incidents of illegal products and content from the web monthly across more than 100 online marketplaces and that, on average, it takes about 4.5 hours to get offending content removed after it has been detected.
“With online retailers and partners operating as extensions of brands, monitoring distributors’ activity and mapping the pricing of products to create more profitable relationships with distributors is essential,” Urquizu said. “Our technology offers a personalized and easily scalable solution, ensuring that brands are no longer left in the dark when evaluating and negotiating distributor agreements.”
Red Points has more than 180 employees spread across offices in Barcelona and New York.