Amazon has no rival in global reach and the power of its distribution channels. In 2016, Amazon generated $23 billion in third-party seller service revenues and third-party sellers account for half of all paid units sold on the site.
As lucrative as Amazon can be for third-party sellers, the platform is also rife with intellectual property infringement. Competitors and counterfeiters, often located overseas and hiding behind fake names or shell companies, offer their infringing products at discounted prices, undercutting patent, trademark, and copyright holders and confusing consumers.
Companies that face patent infringement by illegitimate Amazon sellers have ways to fight back, but the cost and time to initiate litigation in the federal courts may not be the most attractive option in some cases, says Elias P. Soupos, a member in Leydig’s Chicago office.
“The challenges and costs of holding elusive Amazon counterfeiters to account in patent litigation are prohibitive for many small third-party sellers, even when the stakes for them are extremely high,” Soupos says.
Over the past several years, Amazon has refined its system for addressing intellectual property infringement claims against sellers on its site. For example, Amazon’s Brand Registry program allows sellers to share their trademark information with Amazon so the company can find and remove counterfeit pages.
Similarly, companies can notify Amazon that a seller is infringing on their patent rights and request that the seller’s pages be suspended. Amazon is responsive to such complaints if the aggrieved company provides evidence of its rights.
For Amazon sellers whose products may have a unique aesthetic design, obtaining design patent protection may provide a good method to enforce their rights as it is generally less costly and quicker to obtain than utility patent protection, according to Soupos.
“A design patent is cheaper, quicker and more easily obtained than a utility patent, but can still accomplish the goal of getting infringing goods removed from Amazon in short order,” Soupos says. “If you are investing in Amazon sales to any significant degree, investing in a design patent, if available, is a smart, proactive move.”
When Amazon initiates an infringement claim, it is up to the two parties involved to resolve the dispute.