E-Commerce Websites and Trademark Infringement Problems
When you buy something, do you go to a real store? Or do you buy from an online store? Due to the expansion of the E-commerce market, there is almost nothing that cannot be bought online. The number of those shopping online this year is estimated at 1.92 billion[1], which is more than 20 percent of the world’s population.
It’s not just big companies that sell their products online. Operating an E-commerce platform costs less than a brick-and-mortar store because labor costs and rental fees can be reduced. Thus, even individuals can open their own online stores. Some people are dreaming of growing their stores into big ones. E-commerce provides various people or companies opportunities to sell their products to people around the world. While many legitimate sellers establish online stores, sometimes those selling counterfeit products attempt to create an online presence. E-commerce websites are taking measures to combat this trend.
Amazon, for example, strives to prevent consumers from suffering a loss by buying counterfeits. The way to deal with counterfeits is that when a seller opens an online store on Amazon, he or she must follow some requirements in creating his or her seller account.[2] Also, if a buyer purchases a counterfeit product by accident, he or she can apply for A-to-Z Guarantee, which “protects you when you purchase items sold and fulfilled by a third-party seller.”[3] Buyers may be eligible for a refund through the guarantee.[4] Evidently, organizations like Amazon have measures in place seeking to protect consumers of counterfeit products.
On the other hand, has a company making genuine products suffered a loss by having counterfeit versions of its goods sold by others? They do not sell counterfeits themselves. Thus, they will not be sued by consumers who bought counterfeits. In other words, they do not have any direct damage by counterfeits. However, they lost their business opportunities because consumers who were originally supposed to buy their genuine products bought counterfeits. In addition, counterfeits produce a price war in the marketplace because counterfeits usually sell for very low prices. Moreover, consumers who buy counterfeits sometimes do not recognize that the goods were counterfeit, and they may think that there is simply a problem with the quality of a brand. Thus, counterfeits devalue brands. In sum, the original company suffers from these indirect damages.
From the original company’s point of view, they will first bring a lawsuit for trademark infringement against a counterfeit seller. They also think about the responsibility of E-commerce websites that provide such seller a place to sell counterfeits. In October 2017, for example, German automaker Daimler AG filed suit against Amazon. Daimler claimed that Amazon violated its trademark by selling “counterfeit wheel center caps bearing distinctive Mercedes-Benz trademarks.”[5] As previously mentioned, counterfeits on E-commerce websites are a severe problem for legitimate companies, such as Daimler, because they surely lose opportunities to sell their products.
E-commerce websites should take additional measures to deal with trademark infringement problems. This past March, Amazon announced that it started a project called “Project Zero.” [6] This project has three functions. First, “Automated protections” refers to Amazon’s scanning more than 5 billion daily updates of product listings and detecting those suspected of being counterfeits.[7] Second, the “Self-service counterfeit removal” functionality empowers brands to remove counterfeit listings without contacting Amazon.[8] Third, “Product serialization” means that brands can apply unique codes to products, allowing Amazon to scan them and confirm their authenticity. [9] Ideally, these measures will reduce E-commerce trademark infringements.
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