Brand Enforcement / 03.12.2020

Shop Safe Act Would Impose Liability on E-commerce Marketplaces for Sale of Counterfeit Goods

By Alex JonesShop Safe Act

Four House members recently co-sponsored proposed legislation, the Shop Safe Act of 2020, that would hold companies like Amazon, eBay and other e-commerce websites liable for counterfeit goods sold on their marketplaces. This comes on the heels of a recent report from the Department of Homeland Security (DHS) titled “Combating Trafficking in Counterfeit and Pirated Goods,” which outlined a series of recommended actions to address what the DHS called an “illicit trade epidemic,” and an Executive Order from the Trump administration directing executive agencies to take action to curtail the importation of counterfeit goods into the United States.

As internet marketplaces have risen to dominance in the retail industry, it has also brought about an increase in unauthorized resellers, gray market goods and counterfeit products. According to the Organization for Economic Cooperation and Development (OECD), 3.3% of global trade consists of counterfeit and/or pirated goods. Businesses that sell on these platforms have long been aware of, and taken proactive steps to address, these problems, such as through the implementation of reseller agreements and minimum advertised price policies (MAP Policies).

Fortunately, it appears the U.S. government is now taking the problem of counterfeit and inauthentic products seriously. Courts have typically avoided imposing liability on companies like Amazon and eBay for the sale of counterfeit goods on their platforms. The Shop Safe Act changes that; if passed, it would shift liability to these websites. According to the co-sponsors of the Shop Safe Act, it would:

  • Establish trademark liability for companies who sell counterfeits that pose a risk to consumer health and safety;
  • Require online platforms to establish best practices to vet sellers to ensure their legitimacy, remove counterfeit listings, and remove sellers who repeatedly sell counterfeits; and
  • Call for online marketplaces to take steps necessary to prevent the continued sale of counterfeits by the third-party seller or face contributory liability for their actions.

The passage of the Shop Safe Act would benefit all brands that sell on e-commerce platforms. Until then, brands will need to continue to monitor and police their listings to ensure that only authentic products are being offered for sale. If you need assistance in going after unauthorized resellers or taking down counterfeit listings, contact Alex Jones (aej@kjk.com; 216.736.7241) or KJK’s Brand Enforcement team.

 

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