While brand names such as Allstar Marketing (“Allstar”), Ideavillage Products (“Ideavillage”), and Ontel Products (“Ontel”) may not have the same brand recognition as Coca-Cola or Heinz, these companies produce some of the most recognizable "As Seen on TV" products thanks to savvy marketing and ubiquitous television ad time. Allstar, Ideavillage, and Ontel produce the “Snuggie” blanket, Copper Fit compression apparel, and Vegetti spiral slicers, respectively. Now, these companies have banded together to file suit against tech giant, Amazon.com, Inc., seeking to recover millions in damages. In their lawsuit, Allstar Marketing Group LLC et al v. Amazon.com, Inc. (U.S. Dist. Ct. S.D.N.Y.), No. 16-09376, the plaintiffs complain that the counterfeiters have been using Amazon’s website to confuse consumers into purchasing imitation products at drastically lower prices. When these phony products fail to perform at the same standard as the originals, consumers often leave negative reviews on the true company’s retail site or Amazon portal, which further contributes to the companies’ losses in revenue and goodwill.

In their defense, Amazon argues that they stringently enforce their anti-counterfeiting policies by revoking vendor privileges and destroying fake inventory upon notice and proof of infringement. Both sides, however, have pointed to thousands of listings of counterfeit products on Amazon’s marketplace. Amazon argues that monitoring is extremely difficult, while the plaintiffs argue that Amazon simply does not do enough. Retailers have argued that Amazon’s 2014 decision to allow Chinese manufacturers to directly post listings on Amazon demonstrates collusion and complicity in the counterfeiting scheme. Allstar and other plaintiffs further allege that Amazon itself co-mingles genuine and counterfeit products at their fulfillment centers, leaving customers vulnerable to receiving fakes even when they do properly purchase the product from its bonafide provider. Famous brands such as Birkenstock and Johnson & Johnson have long argued that Amazon turns a blind eye to counterfeiters, prompting several retailers to pull their goods from the website.

But it is unclear how successful these companies will be in their litigation against Amazon since the law gives online merchants who operate marketplaces good arguments that individual retailers, not Amazon, are the sellers of counterfeit products. Some federal judges have noted that the law has failed to keep up with technological innovation and it is up to Congress to addresses these issues. Many companies are cynical about Congress’s ability to crack down on counterfeiting and piracy after tech giants and lobbyists were able to successfully kill a 2011 bill introduced in session for that very purpose. In the meantime, Amazon has introduced a recent initiative that requests large companies to register with them regardless of whether they intend to sell their products via the website. Such registration, Amazon argues, will assist them in enforcement efforts and demonstrates their willingness to cooperate with brand owners in the pursuit of counterfeiters.

For more information on this topic, please visit our Anti-Counterfeiting Enforcement and Trademark Piracy 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.

Klemchuk LLP hosts Culture Counts, a blog devoted to the discussion of law firm culture and corporate core values with frequent topics about positive work environment, conscious capitalism, entrepreneurial management, positive workplace culture, workplace productivity, and corporate core values.

Pin it for later: https://www.pinterest.com/pin/315252042651941269/