Lawsuit Names Amazon As A Direct Seller Of Counterfeits

Consumers vulnerable to deceptive and unsafe counterfeit goods.

November 16, 2017, Los Angeles, CA – Everyone knows counterfeiting is illegal, yet e-commerce websites including Amazon, eBay, Walmart and Alibaba enable and facilitate the sale and trafficking of counterfeit goods. The floodgates are open for a $1.7 trillion criminal industry¹ to offer an inexhaustible supply of counterfeits to unaware consumers. E-commerce websites take a transaction fee on each item sold.

In addition to the websites allowing unvetted global sellers to list just about anything on their websites, including counterfeits, Amazon (NASDAQ: AMZN) and Walmart (NYSE:WMT) also participate as direct sellers² of counterfeit items - “Shipped and Sold by [Amazon.com] [Walmart].”

The e-commerce giants have skirted liability in the U.S. for selling counterfeits³ claiming they are just a venue and not active participants in the sale – until now.

A complaint filed in U.S. District Court last month against Amazon by Daimler AG (the parent of Mercedes Benz) names Amazon.com as a direct seller of counterfeit Mercedes Benz^® trademarked parts. (Daimler AG v. Amazon.com, Inc. Case No. 17-cv-7674)

Amazon is no stranger to claims, and lawsuits, that the e-commerce giant hasn't done enough to prevent sales of counterfeit goods on its websites^{4, 5}.

The Counterfeit Report^®, a consumer advocate and industry watchdog, sent infringement notices, authorized by the right holders, and removed over 32,000 counterfeit items from Amazon. Some notices were resent over a dozen times for weeks, and yet fake products still remain, or listings were flatly refused to be removed by Amazon. Even if counterfeit items are removed from Amazon, counterfeit sellers easily relist or return under new accounts.

The Counterfeit Report also purchased counterfeit products directly from Amazon, and Amazon subsidiary Amazon Warehouse Deals. The counterfeit products appear right next to authentic items conveying Amazon’s endorsement. Consumers just don't know they have a very real possibility of receiving visually indistinguishable counterfeit goods. In fact;

• Apple reported that 90% of Apple® products it purchased directly from Amazon were counterfeit.
• Swiss watch company Swatch (Longines, Omega and Blancpain) scrapped selling on Amazon when Amazon refused to “proactively police its site for counterfeits and unauthorized retailers.”
• Sandal maker Birkenstock pulled its products from Amazon in protest of the continued presence of fakes.

What Amazon can’t dodge and hasn’t been litigated is Amazon’s illusory policy claim "The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited." The truth is that counterfeits and replicas can be, and are, easily listed and sold on, and by, Amazon.

Companies that facilitate criminal activity and profit from dishonest sales which impact consumer safety, jobs and public trust create a public perception of deception and impunity. However, their reputation damage is only a small part of the problem: the value of counterfeit and pirated goods is forecast to grow to $2.8 trillion, and cost 5.4 million net job losses by 2022¹ while manufacturer's brand integrity is tarnished or destroyed.

Buyers should be very wary of purchasing any trademarked item on Amazon. Amazon can adopt real and effective solutions to end the counterfeiting problem that it enables and participates in. Will it?

Footnotes:
¹ THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY
The report was prepared for The International Chamber of Commerce, Business Action to Stop Counterfeiting and Piracy unit (ICC BASCAP) and The International Trademark Association (INTA)
January 2017
Frontier Economics, Ltd.

²...imports, exports, advertises, distributes, prices, offers for sale, sells, and ships directly to consumers.

³ Milo & Gabby, LLC. v. Amazon.com, Inc. (Case number 2:13-cv-01932, U.S. District Court for the Western District of Washington.)
   Tiffany Inc. v. eBay Inc. (600 F.3d 93 (2d Cir. 2010)

⁴ Paul Ausick, Is Amazon Doing Enough to Combat Counterfeit Product Sales?,
24/7 Wall St. (Mar. 2, 2017), available at http://247wallst.com/retail/2017/03/02/is amazon-doing-enough-to-combat-counterfeit-product-sales/

⁵ Wade Shepard, “How Amazon’s Wooing of Chinese Sellers is Hurting American Innovation,”
Forbes (Feb. 14, 2017), available at https://www.forbes.com/sites/wadeshepard/2017/02/14/how-amazons-wooing-ofchinese- sellers-is-hurting-american-innovation/#419e95ab1df2