Wouldn’t you love to watch your business boom on the Amazon platform? Did you know that there are over two million sellers on Amazon. Two million sure sounds like a lot, but that number pales in comparison to the over ONE BILLION items sold on this platform worldwide.
I bet you had no idea that Amazon traffic hovers at around 175 million visitors a month!!!!
So what does this mean for your business? Amazon has literally transformed itself into an eCommerce, king-sized flea market. And within this market, you must proactively protect your brands to ensure your business succeeds!
As an Amazon seller, you must stay alert and vigilant!!! Don’t allow your products to be eaten by counterfeit predators or drown in the murky waters of the gray market!
We all have that one friend who brags about the Gucci purse purchased for only $10.00. This is exactly what can happen to your product if you are an Amazon seller or are thinking about joining this giant eCommerce platform.
Do you want your customers to receive a cheap counterfeit version of your product that could tarnish the reputation of your brand and company? Do you want your products to be leaked out into the public through unauthorized distribution channels where they trickle down into the murky waters of the gray market?
Don’t let this happen to your cherished brand. So let’s be proactive and look just a little closer at how to spot suspicious activity on your Amazon listing when it comes to counterfeits and the gray market.
A counterfeit good is simply an imitation made by a third party (other than the trademark owner) with the intent to deceptively represent its content or origins to consumers. All counterfeits are trademark infringements, but not all trademark infringements are counterfeit. (In other words, there are various types of trademark infringement; counterfeit is just one of them!)
What are you dealing with? Look at the seller name and location. If it appears to be China-based, you are likely dealing with straight-up egregious counterfeit activity and your brand is at risk of being devoured by these eCommerce predators.
If you have a registered trademark (you should!), you could consider recording your trademark with US Customs. This is just another step in your brand protection arsenal.
The “gray market” can be thought of as a large body of water: it's the dark place where the unauthorized distribution of your products occurs.
Perhaps retail arbitrageurs have obtained your products at a liquidation sale. These products might not be eligible for the manufacturer’s warranty. They might be priced considerably lower than the MSRP, thereby damaging your brand value. Still further, gray market products are often not eligible for rebate benefits offered by the manufacturer or post-purchase customer service.
Unfortunately, for brand owners and manufacturers, gray market goods end up on the Amazon platform and often times Amazon’s customers are duped into purchasing from these sellers. Although they might think they are getting a deal, there is no guarantee that the manufacturer will honor any type of warranty.
Gray market goods aren’t technically counterfeits. However, oftentimes arguments can be formulated that will force these types of sellers into a counterfeit seller position when there is a material difference noted in the products.
If the seller appears to be US-based, you are likely dealing with a situation where the seller has somehow obtained your goods through the gray market (i.e, unauthorized distribution channels). Again, these are typically retail-arbitrageurs that have the power to drown the value of your brand in these murky gray market waters if you aren’t on the lookout.
How can I enforce my brand OFF of the Amazon Platform if I become prey to counterfeit predators or gray market sharks? In other words, do I have to go through the platform to deal with these third parties?
Try Dealing with the seller directly: When a counterfeit seller is recognized, this should be addressed immediately. You might want to deal with the seller directly by sending “notices of infringement” or "cease and desist letter." Such correspondence puts the third party on notice, and gives the third party an opportunity to remove themselves.
Also, you can frame the letter as an exploratory letter, not being too aggressive, in order to learn more about what they are selling and where they are procuring the product. Should you discover that a distributor is breaching your agreement with them, you may need to revisit the agreement and determine if how to get out of it.
Send out a cease and desist Letters: First, you'll need to find out where the third party is located. You might need to do some supers-sleuthing and/or outsource this work to someone who can help you investigate.
If the seller is located in China, it’s unlikely your demand letter will carry much weight because they know it’s difficult to enforce rights in China. While Amazon might help, you could consider hiring a law firm in China to help you.
If the seller is located in the US, you might want to have an attorney prepare the demand letter for you to ensure the appropriate language is used. If you investigate the seller, however, and realize it might be someone you know, or a distributor breaching your distribution contract, you might want to see what you can work out before getting attorneys involved, and see if you cannot repair the issue going forward.
Consider going off the Amazon platform for enforcement, if your trademark isn’t registered yet with the USPTO, but you’ve established common law rights.
Keep in mind, the longer these sharks remain on your listings, the more money you are losing.
If you know they are a nefarious seller and/or China-based and clearly a counterfeiter and/or have had prior unsuccessful dealings in the past (with the seller directly), it’s time to consider reporting directly to Amazon. When you go directly to Amazon, use their online infringement reporting forms and save your "Complaint IDs" that are emailed to you after reporting.
If you have to submit multiple demands to Amazon, include these in the letters as Prior Complaint IDs.
If the third party is selling a counterfeit product, make sure you clearly outline the material difference in your goods and the third-party seller's products. Materially different goods are not considered “genuine,” because they are confusingly different.
Courts define “material difference” broadly: it is virtually any difference that exists between the authorized goods and unauthorized goods that a consumer would likely consider relevant when purchasing the product. Still further, “…[the unauthorized resale of a materially different trademarked product can constitute trademark infringement. Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, 562 F.3d 1067 (10th Cir. 1009), at 1072.
Courts have found that the voiding of services and warranties associated with a product create a material difference in the product and a likelihood of confusion. Keep in mind that not all courts agree, and the law does evolve. so, be sure to discuss with an attorney your particular situation and ramifications.
Examples of material difference for China-based goods are commonly as follows: quality, size/dimension, logo distortions. And for gray market activity, the lack of a manufacturer’s warranty, post-purchase customer service, and rebates would be considered.
When trying to remove these third parties using the Amazon platform, don’t mention the fact that the seller is “unauthorized.” This seems to confuse Amazon. Stay on point that you are dealing with a counterfeiter. (Amazon doesn’t care about unauthorized seller issues and considers that you as the seller should address this off the platform; in other words, the platform isn’t going to help you enforce those agreements.)
When test buys are feasible, be sure to provide the order numbers, submit the demand to Amazon immediately, and tell Amazon you’ll provide photographs of differences of products upon request. (I’ve never had Amazon come back and ask me for photos).
If test buys are not feasible ~ perhaps because the counterfeit is coming straight from China ~ argue to Amazon that the seller is shipping products from countries in which you do not manufacture or distribute your brand.
Amazon allegedly requires test buys, but a vast majority of counterfeit seller removals can be done without test buys. The requirement isn't the "test buy." Amazon wants to confirm that there is a material difference if they are going to be removing a third party seller on that basis.
If doing a test buy isn’t feasible, then submit the counterfeit seller removal demand anyway and explain to Amazon the material differences. If Amazon doesn’t honor the demand, you might need to escalate to a law firm. Amazon might be more responsive to correspondence from law firms.
Ensuring success on the Amazon platform requires you to be 100% alert and proactive. Brand protection is a never-ending endeavor. There will always be counterfeit predators and gray market sharks making an effort to devour the equity you're working hard to build in your brand.
You must always be proactive in warding off these relentless nuisances so that you can preserve and increase the value of your brand.
The tools and methods to protect and enforce your brand on Amazon are ever-evolving!
If you need assistance with trademark creation, clearance, prosecution, enforcement and/or registration maintenance, we are here to help! Apply to work with us today!
Every day I see entrepreneurs make crucial mistakes that cost them money and put their business at risk. I’ll show you how to protect yourself in this quick guide.