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Online Markets: The Wild West of IP Rights

Online Markets: The Wild West of IP Rights

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Selling products on Amazon.com or other online marketplaces can be both difficult and rewarding.

Amazon provides an easy platform from which to launch products, perform market testing and carry out marketing. There are plenty of benefits – and if you having listings that reach the top of the search results, profits are virtually guaranteed!

With listing position being an important factor in terms of profits, manipulation of these listings to increase visibility without being removed by Amazon has become an art – one that is being taught and learned by many in the industry.

Personally, I have been to weeklong seminars and even presented on the topic of selling via Amazon.com. It’s an interesting sales channel.

Despite its benefits, there is a downside to using this platform. The website is owned by Amazon, which means the page rules are published, policed and enforced by Amazon – they are not typical rules that govern an open marketplace in the United States. I have found that these rules are not enforced equally or consistently.

Amazon is a changing and competitive landscape – one that often causes companies to develop additional or replacement sales channels. While the platform is a great place for start-ups to gain a foothold and get started, I encourage businesses to move towards other channels as soon as possible.

I have spent a lot of time over the last year – particularly during the holiday season – assisting clients with issues related to this platform. Emerging trends I have come across include the following:

Amazon doesn’t want to be Alibaba

Amazon’s current intellectual property (IP) policies are some of the most pro asset holder policies I’ve seen.

It’s easy to enforce your IP rights via Amazon.com; if you hold a patent, trademark or copyright and can provide Amazon with both proof of ownership and the infringing listing, they’ll take down that listing.

As an IP attorney, you’d think that this is exiting news for me – however I believe that Amazon had created a frustrating system where abuse is common. While it seems as though Amazon is respecting America’s IP laws and protecting asset holders, the platform doesn’t actually investigate the rights that are being enforced beyond reading the letter from the asset holder. As you can imagine, some businesses get away with blue murder!

During the holiday season, several of my clients received notices from Amazon in regards to infringing listings on Amazon.com – i.e. my clients were the supposed infringer. Each time, the listings were removed from the marketplace and my clients were sent the asset holder’s letter.

When appropriate, we sent a response to Amazon explaining why my client’s listing/products didn’t actually infringe the claims being asserted by the alleged asset holder. In each case, Amazon responded by saying they would re-post the listing once permission from the asset holder was received.

The issue here is obvious: why would a supposed asset holder go to the trouble to have a listing taken down, only to allow Amazon to re-post it again? At this point in time 100% of the letters we sent to asset holders requesting permission to re-post a listing hadn’t resulted in permission being granted.

To put this in perspective, let me tell you a story about Jill.

Case Study - Amazon Business 

Jill runs a successful Amazon business focused on jewellery; one particular range she sells is floral pattern jewellery. Back in October, Jill’s posts for floral pattern jewellery were taken down off Amazon.com by the retailer. In each case, Amazon sent a letter to Jill in order to explain why her listings had been removed – letters Amazon had received from a competitor of Jill’s. Might I add, this particular competitor wasn’t doing so well!

These letters explained that Jill’s products infringed a copyright owned by the competitor; the competitor was essentially saying they owned the copyright to flower patterns on jewelry. This claim was made without further specifications or even a registration number.

Yes, this is a true story. The letter sent to Amazon by Jill’s competitor claimed ownership of flower patterns on jewelry and Amazon responded to the letter by taking down Jill’s listings that involved flower pattern jewelry!

In response, Jill sent a letter direct to the competitor asking for more details regarding the alleged infringement and the registration number. The response from the competitor was that no registration number was needed for copyright ownership (which is true) – and they refused to withdraw the claim they had sent to Amazon.

Jill also sent a letter to Amazon; she requested that her removed listings be reinstated due to the fact that her competitor couldn’t possibly own the rights to flower patterns on jewelry. Amazon responded to Jill by saying that they take intellectual property rights very seriously; they wouldn’t re-list her products without permission from the copyright owner.

In this scenario, Jill had a few claims she could bring against the competitor to get a court order – claims that would include a statement explaining that her products didn’t actually infringe any rights. The trouble is, a case like this is time consuming and costly; Jill wasn’t planning to reorder the jewelry in question, but instead was planning to sell out of this product during the Christmas period.

If Jill had being selling her products via another platform (e.g. her own website) in addition to Amazon.com, she could have responded to the competitor stating that she didn’t believe an infringement had taken place. The competitor could have then a) let it go, or b) filed a lawsuit. If a lawsuit was filed, Jill would have moved for summary judgment and had the case dismissed – preventing the break in sales.

In short, Amazon has – in trying to respect IP rights – created a situation where legitimate companies are forced to deal with dodgy competitors who choose to ‘play dirty’ based on very weak IP claims

Amazon’s approach differs from that of other online marketplaces

There are not many online marketplaces that operate like Amazon; it’s quite unique.

Google’s Play Store and Apple’s App Store are somewhat similar. Although they sell digital content – while Amazon.com is generally associated with physical products – there are plenty of parallels.

Over the past year, I have sent a number of take down notices in relation to certain apps advertised on these platforms.

While Amazon will take down a listing based merely on accusations alone, Apple’s response is quite the opposite. Instead, Apple takes a ‘first come, first served’ approach – unless there is a court order indicating otherwise.

For example, in one case where we requested the removal of an app from the App Store, Apple forwarded our message to the app developer. In responding to us, Apple said that it would comply once the matter between my client and that app developer was resolved – either by agreement or in court. In the meantime, Apple would take no action.

This scenario is also similar to what would happen in non-marketplace sales channels: the asset holder would send a letter asking for the infringer to refrain from selling a product. The alleged infringer would then respond saying they didn’t infringe; typically, this continues until a lawsuit is filed or a compromise achieved.

Google took a slightly different approach to dealing with IP rights. When they received a letter involving infringement of my client’s trademarks, Google said they would investigate the matter and remove the infringer if they believed our complaint was warranted – i.e. that the trademark was actually being infringed. Their approach was essentially a ‘middle ground’ between Amazon and Apple.

A varied approach

Three Fortune 500 companies that provide marketplaces: three different approaches to handling the IP rights of third party vendors.

Understandably, the difference in approach frustrates my clients – particularly those who develop and release apps, as they have to deal with multiple platforms such as Play Store, App Store and Kindle. However, while app developers are essentially ‘trapped’ and must use these platforms, those who are selling physical products are not limited to Amazon.com – other avenues exist.

My advice to companies selling products via Amazon? Develop other sales channels as soon as possible. Yes, Amazon is a great place to gain a foothold and get started – but it’s important to broaden your sales scope quickly.

Amazon has essentially reversed the legal landscape. Rather than ‘innocent until proven guilty’, it’s ‘guilty until proven innocent’. While this approach is great for those who own real assets that are genuinely being infringed, the system is ripe for abuse due to the lack of proof required.

Amazon has been around for ten years and offers sellers fantastic opportunities. However, sellers must realize that Amazon.com is the Wild West of retail. In this cowboy-riddled marketplace, Amazon is not only the sheriff, judge and jury – but also the mayor, landlord and tax collector!