The Lowdown

Amazon Brand Protection is Broken: Here’s How to Fix It

By James Thomson and Joseph Hansen

Amazon has brands playing whack-a-mole to address counterfeit issues. It’s time to put down the mallet and adopt a proactive enforcement strategy.

Amazon Brand Protection is Broken: Here’s How to Fix It

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Dr. Jochen M. Schaefer

I have read your article and must say that I do not share your views in a couple of points based on my own professional experience in my capacity as long-term Legal Counsel of the World Federation of the Sporting Goods Industry (WFSGI) and Lawyer in Private Practice:

– The contribution states that only trademark owners should be allowed to define who can sell and who cannot. What is neglected in this conclusion is that under the current law regime and the doctrine of exhaustion principle plus from a free trade of goods and services perspective it does not work at least within the EU. Let me illustrate this with a concrete example: If I purchase an Apple original product, even if from a seller who is not part of the authorized distribution channel ofApple, I have all the rights of this world to post it again for sale on amazon. With the first sale, the the trademark rights and other IP rights are exhausted exhausted and Apple is not entitled at all at all to block me from doing so. If they do, they would be severely liable and would breach antitrust laws.

– Regarding your comments about takedown procedures, we at WFSGI level run since five years now a highly successful collective industry program with numerous very well-known brands participating including several bicycle brands. We have closed hundred thousands of websites during that time and shut down a multitude of phony businesses through the specialized Italian service provider company Convey, the exclusive cooperation partner of the WFSGI. These kind of activities are a ‘whack-mole game’ only if one deals with the monitoring and the takedown without any strategy and any sistematicity. Convey’s approach is very different, as the Italian service provider is highly capable of implementing takedown campaigns which are efficient and allow to keep the online environment very clean, by eliminating all the pre-existing fake and eliminate every new attempt to restart upon its birth;

-Trademark and patents same as other IP rights are not an easy game, and you need to have a clear understanding of the products and the IP coverage. The platforms themselves will never ever be capable of proactively monitor and eliminate counterfeits without the involvement of the companies or IP enforcement agency, for two simple reasons:

– There are million of brands on Amazon, and Amazon guys need to have product and
IP expertise for each of this brands in order to understand what is infringing and
what is not.

– Specialized service providers such as Convey can do so by having a portfolio of 100+
companies under their coverage and itheir analysts know each and every detail re.
their products and their IP portfolio same as about their legitimate customerand
sourcing base.

– IP is a kind of difficult animal, you have a multitude of different jurisdictions, you
have the (old-fashioned Nice classifications, and one trademark may have different
specifications and breadth according to the different countries and the different
products, not to mention patents and design rights which are very specific and may
cover tiny details. A small difference between two products may exceed the scope of
protection of a patent. Amazon guys would need to know all the product details and
all the IP for all the products on sale on the platform, which is completely
unsustainable, even by having a platoon of 500.000 analysts doing this on a daily
basis.

– When Convey decides to notify and to take an web offering down, it exposes
itself to liability issues, as what they under the penalty of perjury, i.e. that an offering/
a product is indeed infringing upon an IP right, is legally binding. If the service provider
makes a mistake, it would have to bear the consequences.

– An utmost degree of diligence is required and such liability is acceptable for Convey,
since they know the brands and the products they are dealing with intimately same as
their specific IP rights by conducting their business by making very thorough analyses
in order to eliminate or minimize the risks of a mistake. In all these years of the
existence of this service, I have not received any negative feedback or complaints from
the WFSGI’s members companies that convey had attacked a legitimate web offering
erroneously.

– What would however happen if Amazon removed something proactively by mistake?
The sellers would have solid grounds to bring Amazon to court: now multiply this risk
thousandfold and you perfectly realize that this possibility, i.e. to entrust the platforms
platform providers/ISPs proactively block possible counterfeits is highly unrealistic.

James Thomson

Replying to Dr. Jochen M. Schaefer

Thank you for your comments, Dr. Schaefer. We are not proposing that brands should outright be allowed to gate any unauthorized sellers, as that would completely change Amazon’s flywheel. Instead, we are looking for ways to reduce problems with products that are highly likely to be counterfeited – today, Amazon already enables certain types of seller gating through its Brand Registry program, while Walmart.com and Target.com require certain restrictive approvals for additional sellers to be able to list items. Yet, Amazon allows sellers with no selling experience to show up with seemingly unlimited amounts of inventory on items that aren’t even sold or distributed in the country from where the seller identifies itself. While the first sale doctrine is a broad protection for sellers, it can be supplanted when brands implement and enforce material differences or other quality controls, yet getting Amazon to enforce such trademark protection is a very slow, frustrating process for trademark owners.

I don’t pretend to have a perfect solution here, but believe that there must be a better, and creative way to slow down the massive influx of counterfeit product onto the Amazon marketplace, while still allowing sellers of non-counterfeit products to be able to use their first sale doctrine rights, when applicable.

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