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Is Amazon Liable for Counterfeits?

December 9, 2016

By Lora Friedemann

Counterfit Goods Road Sign PhotoThe maker of the popular Snuggie blanket, Allstar Marketing Group, LLC, sued Amazon for trademark infringement earlier this week, alleging that the online retailer enabled the importation and sale of counterfeit Snuggie blankets. Allstar claims that an “astronomical number of counterfeit and infringing products are offered for sale and sold on the Amazon Website at a rampant rate.”  

Counterfeits Are a Huge Problem for Trademark Owners

Counterfeit products are a huge problem for trademark owners, especially when purchasers don’t know they are getting a fake. On Amazon, even a sophisticated online shopper can unwittingly receive a counterfeit product because Amazon commingles products received from the trademark owner with products received from third-party sellers.

Here’s how it happens. Every product sold on Amazon has a unique number. When there are multiple suppliers of the same product, all of the suppliers use the same number, and the products may be commingled at the fulfillment center. If a supplier that is not the trademark owner ships counterfeits to Amazon instead of authentic goods, they might be mixed with authentic goods at the fulfillment center. When someone purchases the product, an Amazon employee may fill the order with any product bearing the requisite product number, regardless of the source. Thus, even if you make a point of purchasing directly from the trademark owner when you shop on Amazon, you could receive a fake that came from a third-party seller.

Amazon May Be Liable for Counterfeiting and Trademark Infringement

Infringement suits against Amazon are not new, but attempts to hold Amazon liable have largely been unsuccessful. Will the Snuggie lawsuit be different? It could be. The 51-page complaint provides detailed allegations concerning Amazon’s business practices and the online retailer’s failure to address counterfeit goods despite knowledge of the problem. According to the lawsuit, U.S. Customs agents have seized counterfeit products at the border and identified Amazon as the importer. If Amazon is importing fakes and passing them off as authentic, then Allstar has good claims against Amazon for counterfeiting and direct trademark infringement.

In addition to direct liability, Allstar contends that Amazon is liable for contributory infringement because it intentionally induces infringement by others. In support of this allegation, Allstar contends that Amazon knows third-party resellers are selling fake Snuggie blankets and other “As Seen on TV” products and has allowed the infringement to continue.

Change Would Benefit Trademark Owners and Amazon Shoppers

Some companies like the NFL, Birkenstock, and Johnson & Johnson have pulled their products from Amazon entirely due to the problem with counterfeits. Allstar is taking a different approach with this lawsuit, opting instead to challenge Amazon’s practices in litigation. Trademark owners and online shoppers should root for Allstar and hope for a change in the way Amazon does business.

Click here to see the Allstar Complaint. 

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