Even superheroes need a hand sometimes, which is why ZAG Entertainment recently launched an anti-piracy division to safeguard the intellectual property rights for its brands, content and consumer products. To start, the LA-based animation studio is focusing on eliminating counterfeits related to its flagship IP Miraculous—Tales of Ladybug & Cat Noir (pictured).
“We have not had a lot of big issues with piracy so far. But because we are growing, we are trying to be preventative,” says Julian Zag, EVP of global operations and head of consumer products. “The issue with counterfeits is not just that we aren’t getting the royalty. It’s also that the consumer products are low-quality. When fans buy these items, they are disappointed and don’t have the same experience with the brand that they would have with [official merchandise].”
As ZAG brands like Miraculous and Ghost Force continue to grow—and ahead of this year’s release of feature film Ladybug & Cat Noir Awakening—the team decided to put mechanisms in place to identify and address counterfeit consumer products.
Marie-Claire Trinh Van Hi and Bei Zhou were appointed as global brand protection analysts for the division when it launched in November, reporting to VP of global e-commerce Christophe Vallade and working alongside SVP of legal and litigation Ben Johnson.
In addition to spearheading legal investigations to curtail counterfeit content and merchandise, Trinh Van Hi and Zhou will monitor e-tailing platforms—which are busier than ever as parent spending continues to migrate online—to identify counterfeit products.
It’s a big expense to launch this type of anti-piracy effort, but many in the industry would consider it an investment in future earnings. Data from market research firm Statista found that sales of counterfeit goods in 2020 led to US$1.57 billion in losses for the toys and games sector. And research from software company Red Points pegged revenue generated in 2019 from counterfeit toys at US$32.3 billion in the US and US$44.6 billion in Europe. Toys and apparel are the most counterfeited categories, according to the ZAG team.
ZAG is also using algorithms and artificial intelligence to identify suspicious activity. The technology was developed over the course of a year and a half, and the algorithms pull from a database of ZAG’s licensing agreements to determine if a product is sanctioned or not. If the item is deemed suspicious, the division receives an alert.
“It’s a team effort. We collaborate with all of our partners,” Zag says. “We implemented a process where everyone—from licensees to retailers to broadcasters—reports each month on anything they’ve seen.”
Moving forward, all of the data gathered by the algorithms on which platforms and regions are most likely to generate reports will be amalgamated so the division can be more targeted in its anti-piracy efforts. For now, these products are being dealt with one by one.
“First we send a notice to the seller to gather information on a potential licensing agreement. They have 24 hours to report any information, but if they don’t respond in that time, we automatically work with our legal department to remove the item from the platform in question and file a claim immediately,” Zag says. “Many companies look to settle with the counterfeiters, but our policy is that we will not settle. We go immediately into litigation.”
Ideally, counterfeiters will be less likely to target ZAG brands once it becomes clear there will be no negotiations. Zag says the anti-piracy division needs to grow in order to accommodate further expansion for brands like Miraculous, as well as to protect new properties as soon as they launch.
“We plan to grow the division with more analysts and more litigators all over the world,” he explains. “This is the way to protect properties and make sure the fans are always satisfied.”