Brand Enforcement / 07.26.2019

Amazon May Soon Be Cracking Down on Unauthorized Resellers

By Alex Jones

Brand EnforcementThe Third Circuit recently ruled that Amazon could be held liable for defective products sold by the third-party sellers on Amazon.com. This is particularly noteworthy because not only does it mark the first court to find Amazon liable for products sold by third-party sellers, it goes against similar decisions from the Fourth Circuit and the Sixth Circuit.

In the case, Oberdorf v. Amazon.com, the Plaintiff suffered injuries caused by a faulty dog leash. The leash was sold by a third-party reseller, The Furry Gang. The Furry Gang was no longer operating at the time of lawsuit; indeed, neither the Plaintiff nor Amazon was able to locate The Furry Gang or any of its representatives. The Court noted that Amazon’s Agreement with its third-party resellers effectively allows the resellers to “conceal themselves from the customer,” which leaves “customers injured by defective products with no direct recourse to the third-party vendor.” Ultimately, the Court found that in this instance Amazon was a “seller” under Pennsylvania law and could be held liable for the Plaintiff’s injuries.

It remains unclear whether other circuit courts will follow suit, but if this trend continues, it will not only be a win for consumers but could also potentially be boon to manufacturers and brands.

Companies’ brands are being hijacked by unauthorized third-party resellers on Amazon, like The Furry Gang. These resellers sell without the company’s consent, cut into the company’s profits and often do not adhere to a company’s resale policies, such as a minimum advertised price (MAP) policy. To this point, Amazon has done very little to stop the problem of unauthorized resellers, despite widespread complaints from manufacturers.

Decisions like Oberdorf might change Amazon’s thinking on the issue. Around 50% of all Amazon sales are made by third-party sellers, and if Amazon is potentially liable for each of those sales, then they may crack down on who they allow to sell on Amazon. Amazon may require that resellers are actual businesses, with an actual person standing behind the business. Amazon might increases its policing of counterfeit and knockout goods. And, Amazon may even assist companies in enforcing their resale agreements and policies. These would all be enormous help to companies dealing with unauthorized resellers.

This all remains speculation, but if other courts follow Oberdorf, then Amazon will be forced to rethink its current arrangement with third-party resellers. Until then, if your company is being harmed by unauthorized resellers or you have any questions about the topic, contact Alex Jones at aej@kjk.com or 440.832.0599, or reach out to any of KJK’s Brand Enforcement professionals.

 

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