Federal Judge Slaps Amazon With Injunction For Direct Sales of Counterfeits

The online behemoth repeatedly caught selling counterfeit products

May 11, 2021, Los Angeles, CA – Amazon is an enabler, facilitator, and direct seller of an enormous amount of counterfeit and fraudulent merchandise. Amazon's nefarious activities drew the ire of Federal Judge Otis D. Wright II, who issued an injunction against Amazon prohibiting its direct sales of counterfeit goods.

The instant case (Kinsley Tech v. Amazon, et al., 2:20-cv-04310-ODW) illustrates and frames the contempt, and extent Amazon engages its unchecked monopoly power and bullying tactics. The 8,000-pound gorilla is leaving a tsunami of destruction on Amazon third-party sellers, manufacturers, bullied retail partners, and deceived consumers in its quest to be the sole source of items for purchase and domination of the retail marketplace.

Plaintiff Kinsley Tech markets its SUNCOO face masks through Amazon. Kinsley sued a litany of third-party sellers for trademark infringement for selling its counterfeit masks, and later added Amazon, who repeatedly engaged as a direct seller of counterfeit Kinsley masks. Amazon repeatedly acknowledged they were selling counterfeits, then relisted the fakes -- verified with repeat purchases by Kinsley. Amazon's behavior is not a one-off error but an ongoing and shocking pattern of consumer deception and contempt.

An astonishing 500,000 brand-owners are fighting Amazon counterfeits because there is no incentive for Amazon to stop -- they make too much money. Amazon paid no federal income tax on $11.2 billion in profit in 2018 and a 1.2% tax rate on a $13.3 billion profit in 2019. First-quarter 2021 net income hit a first-ever $8 billion. This begs the question; what business is CEO Jeff Bezos really running -- an ethical company or a criminal marketplace of scams peddling an inexhaustible supply of China counterfeit, fraudulent, and replica goods?

Amazon's illusory policy claims, "Products offered for sale on Amazon must be authentic. The sale of counterfeit products is strictly prohibited" -- but that's a lie. Amazon is a repeat direct seller and a voracious churner of an inexhaustible supply of counterfeit, fake, fraudulent, and replica goods supported by deceptive, misleading, and fraudulent product reviews, self-preferencing predatory pricing, and sham "Amazon's Choice" endorsements.

Amazon shelters behind its false claims to continue facilitating and enabling counterfeit and fraudulent products on its global websites. If Amazon were genuinely concerned about counterfeit items sold on its websites, they would welcome reporting of counterfeits by any party, in any form, and then act to immediately remove those items from their websites, whenever and wherever the items are listed for sale.

Yet, Amazon does the opposite of being a good steward and protecting the public. 'It's on a quest to sell all things to all people through merchandise and pharmaceutical sales, personal data mining, entertainment, and company takeovers. The allegations against Amazon range from the individual (the mistreatment of workers and differential pricing to customers), the market (anti-competitive behavior including the suppression of competitor products), and social (tax avoidance) -- suggest an organization that not only lacks a moral compass but could be well on its way to a state of ‘profound immorality’ says Professor Sarah Kaine.

As previously reported, over the past nine years, The Counterfeit Report, a global award-winning consumer advocate and industry watchdog, has identified and removed over 263,000 counterfeit, fraudulent, and replica items on Amazon websites. Amazon was also notified of an additional 226,972 fraudulent, dangerous items that remain with over 135,000 of the hazardous and potentially deadly items sold to consumers.

Amazon Corporate Counsel Annasara Purcell couched her rejection of thousands of trademark-owner counterfeit notifications as an "unacceptable abuse of Amazon's infringement reporting system." Setting their own rules, Amazon claims that a trademark must be registered in each jurisdiction the infringing/counterfeit product is sold, irrespective of the fact that it is not a legal requirement and many of the counterfeit items are shipped from or sold by China sellers to deceived U.S. consumers and are destroying U.S. businesses. Amazon's distorted rationale doesn't explain why over 132,000 counterfeits identified in over 3,400 trademark-owner complaints from The Counterfeit Report were sold on Amazon's U.S. website (Amazon.com) or why thousands of fakes remain.

For example, Amazon is the direct seller of the Hikvision products below on its various worldwide websites. However, they don't exist in the Hikvision product line -- they are all counterfeit. Amazon has ignored dozens of trademark owner complaints.

Maglula, Ltd., which makes popular magazine loaders for firearms, alleges in their federal lawsuit that they repeatedly warned, then purchased counterfeits of their trademarked and patented products from Amazon as a direct seller and through Amazon's platforms from third-party marketplace sellers. In one example, Maglula returned a fake Maglula product to Amazon clearly marked "counterfeit" (below). Shockingly, Amazon listed the fake for resale through its return center, 'Amazon Warehouse' and Maglula purchased the marked item. U.S. District Court Judge Ivan Davis for the Eastern District of Virginia ordered Amazon to make its inventory of over 33,000 ‘accused Maglula products’ – stored in roughly 200 facilities around the U.S. – available for inspection by Maglula. From the Maglula v. Amazon complaint:

A U.S. Government Accountability Office ("GAO") undercover investigation of e-commerce websites, including Amazon, revealed that about 50% of the items they purchased were counterfeit. Amazon has the distinction of being the first and only U.S. company to be added to the U.S. Trade Representative's "Notorious Market List." The list is reserved for the worst online markets and offenders of counterfeit product sales, copyright piracy, and trademark infringement.

The powers that be at Amazon have often attempted to sweep these stories under the rug, but with social media and the Internet, squashing the stories has become difficult. After all, there are really shady things going on inside Amazon:. It is clear that e-commerce platforms have evolved and continue to expand, and tort law is starting to catch up, with Amazon facing hundreds of federal lawsuits in the past decade.

Amazon is also facing up to $36 billion in fines after Europe’s antitrust regulators charged Amazon with violating competition law. The U.S. has lagged far behind, allowing e-commerce sites to operate virtually immune to product liability claims and destructive anti-competitive behavior. "Applying the 1980s retail-sales paradigm to modern e-commerce produces results that strike me as inequitable," says Ohio Supreme Court Justice Michael Donnelly. "The divide between the pre-Internet age and the current age is so profound that [existing commerce] laws like this act might as well have been written in the Stone Age." (Stiner v. Amazon.com, LLC)

While Congress is engaged in partisan bickering, America is being destroyed by China, unregulated e-commerce, and big tech. Amazon may be just another massive corporate entity disassembling America's manufacturers and retail marketplaces that some feel a vague sense of guilt about giving money to, but consumers have a choice.