Wednesday, July 28, 2021
July 28, 2021

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Amazon files 13 lawsuits against alleged counterfeiters

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Days after the failure in Congress of a federal anti-counterfeiting measure that would have required online retail platforms like Amazon to conduct more stringent due diligence on their vendors, Amazon filed 13 lawsuits against alleged counterfeiters doing business on its site.

The lawsuits, filed in federal court Thursday in Seattle in partnership with T-shirt maker Hanes, contend that a variety of businesses and unnamed individuals are selling counterfeit Hanes- and Champion-branded merchandise on Amazon’s Marketplace platform for third-party vendors. The suits are the latest in dozens of cases Amazon and major brands like Salvatore Ferragamo, Valentino and Vera Bradley have filed in recent years against alleged counterfeiters selling their wares on Amazon’s Marketplace platform.

Amazon has said such lawsuits are a key part of its anti-fraud efforts, on which it says it spent $700 million last year. The company says it also has robust screening mechanisms for potential sellers, including requiring them to provide government-issued ID and credit card information before they’re allowed to open an account. Only 6% of prospective vendors pass Amazon’s screening protocols, the company said in a report last month. Brands can petition Amazon to remove listings that violate their intellectual property, and Amazon says it uses software to catch suspicious listings before they’re posted, announcing last month it had blocked 10 billion suspect listings, including some for potential counterfeit.

But a review of those previously filed lawsuits shows Amazon often has struggled to determine who it is suing when defendants use false or misleading information to register for Amazon Marketplace accounts. That can lead to judgments against anonymous vendors that are difficult to enforce.

Consumer-protection groups long have said Amazon’s supervision of its sprawling third-party marketplace is scattershot. In February, the Environmental Protection Agency ordered Amazon for the third time in three years to stop allowing vendors to sell illegal pesticides. A California appellate court recently ruled Amazon is liable for defective merchandise sold on its platform, a case arising from a 2015 incident in which a hoverboard purchased from a third-party Amazon vendor burst into flames.

Amazon was at the forefront of efforts to defeat the federal anti-counterfeiting measure, called the Inform Consumers Act, The Washington Post reported. The act would have required companies like Amazon that allow third parties to sell merchandise on their websites to authenticate vendors’ identities.

The goal of the measure was to clamp down on the number of counterfeit, unsafe and stolen goods for sale online. Amazon’s lack of identity verification for vendors has enabled rogue merchants to escape detection, lawmakers said. Under the Inform Consumers Act, companies like Amazon could have faced civil penalties for failing to verify their vendors’ identities.

In opposing the measure, Amazon said it favored brick-and-mortar retailers over online sellers by creating onerous verification requirements. The bill also would have required Amazon to post the full names, phone numbers and physical and email addresses of high-volume sellers on product listings, a move Amazon said would have violated sellers’ privacy. The company did not respond to questions about why it chooses to pursue lawsuits against vendors whose identities the company is sometimes unable to confirm.

In April, for instance, Amazon and Salvatore Ferragamo told a Seattle district judge that they had been unable to locate Amazon merchants the companies contended were selling counterfeit belts.

“The Amazon seller accounts used by Defendants to sell the counterfeit

products either use addresses that do not exist, or the individuals associated with those addresses do not match the names provided by the Defendants,” wrote federal district judge Ricardo Martinez in an order allowing Amazon and the Italian luxury-goods manufacturer to conduct additional discovery to try to learn just who they were suing.

Amazon sellers hawking allegedly counterfeit versions of the card game Dutch Blitz took similar steps to conceal their identities, according to a May 10 petition asking a judge to give Amazon more time to try to find the defendants, who listed a U.S. address on their Amazon account but appear to be “actually located in China.”

In a separate suit, lodged by Amazon and LED light manufacturer Nite Ize, investigators unsuccessfully tried to locate defendants at dozens of dud locations ostensibly linked to their names, including a Minnesota warehouse, a Maryland home and a Canadian town house “constructed of beige brick.”

Amazon has located some defendants, in which cases it has exacted legally binding agreements in which the vendors agree to stop selling counterfeit goods. Amazon and the brands also have recouped some costs.

In cases where defendants stay out of Amazon’s reach, judges can automatically rule in Amazon’s favor. Such rulings, which are common in trademark-violation suits, could come back to haunt defendants if they try to enter the U.S. or engage in other business dealings here, said University of Washington intellectual property professor Zahr Said.

But, she said, it’s unclear whether such judgments do anything to reduce the number of counterfeit goods sold on Amazon. It’s more likely, she said, that Amazon sees the value of such lawsuits in the signal they send to consumers, brands and lawmakers that Amazon takes anti-counterfeit enforcement seriously.

“If Amazon can point to its efforts, however pyrrhic, and say they’re doing everything they can, the likelihood that legislators are going to step in falls,” she said.

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