Amazon Counterfeits Hurt Small Businesses

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Technology has allowed for the expansion of nefarious and questionable business tactics online.  As the global markets become more interconnected and technology innovates and improves every day, it is increasingly hard for brand owners and vendors to monitor online and international sales of counterfeit versions of their products. For small businesses, especially, it can be devastating to find counterfeit versions of proprietary products online because the counterfeits not only take away from profits but often negatively impact the goodwill of the brand as well.  For many vendors online, it has been an ongoing battle with tech giant, Amazon, to control, report, and fight online Amazon counterfeits.  After Amazon allowed Chinese manufacturers to sell directly to U.S. consumers, the number of Amazon counterfeits available for purchase through the web portal surged.  While Amazon is certainly aware of the problem, they have been slow to respond, understandably, as more than forty percent of Amazon’s unit sales now come through third-party merchants.  Even as Amazon tried to assuage the business owners, they still proceeded with registering with the Federal Maritime Commission to provide ocean freight to simplify the process for Chinese companies shipping goods to Amazon fulfillment centers.

As such, critics say Amazon is not doing enough.  Amazon has faced a number of lawsuits in recent history over the problem, with some brand owners going as far as to allege that Amazon does not keep strict enough control on their inventory, allowing Amazon counterfeits to mix with bonafide goods, resulting in Amazon counterfeits being shipped to consumers even when they purchase from the proper vendor.

In response, some famous brand names have pulled out of the marketplace after they, too, became targets of this practice.  Birkenstock famously pulled their line from Amazon, opting to be able to completely disclaims all sales from Amazon instead of trying to navigate the Amazon counterfeits problem.

And while Amazon has an anti-counterfeiting policy in place to respond to notices of infringement and reports of other illegal activity, brand owners say it is not enough.  It takes time for Amazon to investigate reports, and even when they eventually shut down the counterfeits site, the counterfeit products simply pop up on another new vendor site, often relaunching the same day they were removed.

Moreover, some of the Amazon counterfeits eventually go on to displace the original products they were copying.  With the ability to exchange products for positive reviews, many Amazon counterfeits have risen to be the top-selling products in their categories.  With a combination of other counterfeits negatively affecting the brand, this can devastate the businesses of small brand names.

As such, it would behoove brand owners, big and small, to engage experienced legal counsel to help oversee anti-counterfeiting solutions.  Next week’s blog will cover common measures to utilize and how counsel can jumpstart anti-counterfeiting programs tailored for your business.

For more information on this topic, please visit our Anti-Counterfeiting Enforcement service page, which is part of our Trademark Practice.

Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX.  The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights.  The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution.  Additional information about the trademark law firm and its trademark attorneys may be found at www.klemchuk.com.

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