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Marketplaces and counterfeit goods

October 2017

What are retailers doing about it? The topic of online marketplaces and counterfeit goods is nothing new, but what are retailers doing about it? This is a brief overview on the recent developments of how one retailer in particular is stepping up its game and attempting to tackle online sales of counterfeit goods.

Some background

Amazon Marketplace opened its online doors in 2000 and allows third party retailers to sell their goods through Amazon and use various Amazon services if they wish. The online marketplace has been hugely successful and currently, the sellers on Amazon Marketplace are shipping as many goods as Amazon itself. It is through these third party sellers where counterfeit goods can sneak into the system, often undetected.

Amazon has a complicated inventory system in some warehouses, known as commingling, where products from Amazon and third party sellers are mixed-up together, so it is difficult to ascertain where the fake product originated. The mix up happens when sellers use Amazon’s order fulfilment service as products will all share the same barcode, regardless of seller. This happens so Amazon can dispatch a product from the nearest warehouse to the customer. But when this happens, who is liable for the counterfeit product?

In a joint lawsuit with Fitness Anywhere LLC (TRX), Amazon filed an infringement claim against a group of sellers, selling counterfeit TRX fitness equipment. Good news for Fitness Anywhere as they were awarded $6.8million in damages. However, it is unlikely that Amazon will be able to litigate away every single counterfeiter. The best they can realistically hope for is to deter some sellers.

In December 2016, Allstar Marketing Group LLC sued Amazon for trade mark infringement, claiming that they had enabled the importation and sale of an ‘astronomical number’ of counterfeit Snuggie blanket products. Suing Amazon is not a new thing, but Allstar have claimed that Amazon knew about the infringing goods and continued to import them regardless despite the opportunity to intervene. The dispute continues.

Moving forward

Amazon already has a handful of anti-counterfeiting measures, including reporting tools for sellers but reviews of how effective this tool is, are very mixed. Recently, Amazon has made it harder for unauthorised sellers to list items by requiring third-party merchants to pay a fee for listing top brands like Nike or Hasbro and they have to prove they got the inventory from the manufacturer or an authorised distributor.

Fighting back

More recently, Amazon has updated their Brand Registry feature for Marketplace sellers within their Brand Central digital suite which means companies can list their trade marks, including logos, which would enable Amazon to remove listings and even seller accounts which are caught selling fake goods.

In addition, Amazon is offering another new program called ‘Transparency’ which enables sellers to label packages with a unique code, so customers can cross check their purchases against official information. This provides customers with details about where a product comes from, including manufacturing date, location and other details like materials and ingredients.

Both tools have been well received by retailers so far.

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