Counterfeit on Amazon
November 16, 2016 Leave a comment
Amazon.com (AMZN) is finally taking counterfeiters to court.
The e-commerce giant for the first time has filed lawsuits against counterfeit sellers, after a number of businesses on Amazon voiced concern that knockoffs were killing their sales and endangering consumers.
On Monday, Amazon filed suit against a group of sellers for infringing on athletic training equipment developed by TRX. In a second case, Amazon sued sellers who are offering fake versions of a patented moving product called Forearm Forklift.
Last month, CNBC.com featured Forearm Forklift , a Southern California company that has been crushed in recent years from counterfeiting on Amazon. Mark Lopreiato, the founder of the company, which makes straps for lifting and moving heavy equipment, said he submitted more than 100 cease-and-desist letters to sellers and takedown notices to Amazon, yet fakes have continued to proliferate.
“When customers purchase counterfeit goods, it undermines the trust that customers, sellers, and manufacturers place in Amazon, thereby tarnishing Amazon’s brand and causing irreparable reputational harm,” the Seattle-based company said in the suits.
There’s no way Amazon can litigate away the problem. The company generates over $75 billion a year in commerce, and about half the volume now comes from third-party sellers. However, with Amazon showing its willingness to take abusers to court, the company can at least hope to deter counterfeit sellers with the threat of potential legal action.
An Amazon spokesperson declined to comment on the cases.
Both suits were filed in the Superior Court of the State of Washington in King County. In the TRX suit, Fitness Anywhere, the creator of the training equipment, joined Amazon as a plaintiff.
Amazon is the lone plaintiff in the case involving Forearm Forklift. The company claims that in addition to selling fake versions of patented products, the “defendants tried to further their fraudulent scheme by submitting forged invoices to Amazon purporting to show that their products were authentic.”
Lopreiato called the lawsuit a public relations stunt, and said it’s unlikely to have any real impact for his business.
For one, there’s no monetary reward available to him — he’s not a plaintiff — despite a plunge in his company’s revenue from sales of cheaper knockoffs. Furthermore, he’s concerned that because Forearm Forklift was named in the suit, the average consumer is going to think that his products are counterfeits along with all the others.
Rather than taking legal action, Lopreiato said Amazon should be working with the brands, responding to complaints and systematically removing counterfeits and suspending the sellers. As is, even if the businesses listed as defendants lose the suit, there are more than 100 infringers still on Amazon, he said.
“Where do I benefit in this at all?” Lopreiato asked. “There are dozens and dozens still listed on Amazon that can easily beat my price because they never paid for the patent, nor the pictures I took with my camera to market the Forearm Forklift, nor did they have to pay for product liability or workers’ comp insurance policies.”
Perhaps Amazon is just trying to make a statement heading into the holiday rush.
In the suits, Amazon said it invests tens of millions of dollars in developing and deploying technology to weed out counterfeiters. When sellers sign up on the marketplace, “Amazon’s automated systems scan information about the sellers for signals that the sellers might be bad actors, and Amazon blocks those sellers during registration before they can offer any products for sale.”