The holiday season is a pivotal time in the retail sector in both in-store and online forms, presenting retailers with key opportunities to boost revenue. As consumers shop year-end sales, competitors continuously find innovative ways to capitalize on the marketing and sales efforts of hardworking brand owners. While these unscrupulous tactics often give rise to legal claims, identifying the strategies used by competitors can be difficult, and pursuing a lawsuit is expensive. Fortunately, brand owners can proactively identify competitors engaging in unfair sales tactics and protect themselves from the financial repercussions of those who try to gain an unfair advantage in the market. This article will discuss the tactics competitors use to hurt leading business owners, the types of legal claims a brand owner might have against a competitor seeking to gain an unfair advantage, and immediate steps you can take to safeguard your interests before any such attack occurs.
How Competitors Unfairly Capitalize on the Success of Leading Brands
The e-commerce marketplace allows businesses to reach consumers worldwide around the clock, providing limitless opportunities for market expansion. At the same time, increased opportunity also comes with heightened competition. As a result, businesses must find new and innovative ways to reach the attention of customers. Unfortunately, struggling competitors often try to garner consumer attention by capitalizing on the reputations of successful brands and products when marketing and selling competing products. These unethical marketing and sales tactics commonly give rise to legal claims, including but not limited to the following:
Trademark Infringement
Trademark infringement occurs when a registered mark is reproduced or imitated without authorization, leading to potential confusion in the marketplace (as defined by the Lanham Act of 1946 § 15 U.S.C. § 1114(1)(a)). Competitors who seek to gain an unfair advantage may incorporate the registered trademarks of other brands in their own e-commerce listings, product advertisements, and product descriptions, optimizing trademarks as keywords. This marketing strategy can confuse and direct customers into purchasing a competitor’s products. Brands who register trademarks receive increased protections which makes enforcement easier when your brand is under attack. Thus, companies should register trademarks so that they can demand infringers cease using trademarked materials in future advertisements and sales of competing products.
Defamation
Defamation is the publishing of false information about an individual with the intent to harm their reputation. Some states also recognize defamation against a business, known as trade libel. Defaming competitors through various means such as posting false reviews, questions and answers, comments, and advertisements is a growing trend on e-commerce platforms like Amazon, and eBay.
Because companies often defame competitors by posing as genuine customers, fake reviews are not always obvious. As a result, it becomes extremely important for brand owners to engage in vigilant online monitoring .
Unfair Competition
Unfair competition arises when a competitor markets and sells their products in a way that the competitor appears as an affiliate or sponsored by a brand name product (as defined by the Lanham Act of 1946 § 15 U.S.C. § 1114(1)(a)). Use of another’s trademarks in the sales and advertising of their competing products can lead to consumer deception and wrongly inferring an association between the two sellers. This is another common claim brought against competitors for their unauthorized use of brand name’s trademarks.
As deceptive marketing tactics become more creative, they become harder to detect. Thankfully, brand owners have the means to proactively safeguard themselves from potential threats.
Four Things You Should Do Right Now to Protect Your Brand from Competitors
1. Protect Your Intellectual Property
Brand owners must take necessary steps such as ensuring names or slogans associated with the leading product are registered with the United States Patent and Trademark Office (USPTO). If the trademark has been registered, brand owners should make sure the protected intellectual property is properly maintained with the USPTO. Registering a trademark provides a legitimate property right to protect and can lead to greater damages if legal action is ever needed.
Brand owners should consider registering specialized designs of products and slogans specific to the brand owner’s product. Sometimes, copyright of a product description may be necessary as well. Competitors can easily plagiarize or use key words and phrases incorporated into leading brands’ marketing strategies for each popular product. Brand owners should consider speaking with an attorney regarding what types of things should be registered (a design, key word, slogan) or when it becomes appropriate to take steps on lesser common intellectual property registrations such as a product description.
Protecting intellectual property before the holidays is crucial, as the volume of infringement can increase during the holiday season. The potential recoverable damages only strengthen when pre-emptive measures, such as protecting intellectual property rights, are taken.
2. Monitor the Marketplace for Infringement
Brand owners should regularly monitor the marketplaces such as Amazon, eBay, Walmart, and other e-commerce platforms. As discussed, competitors capitalize on the strategic marketing tactics leading brands use to catch the attention of consumers in a world where there are limitless options of brands to purchase from. Leading brand owners need to monitor the marketplace to ensure intellectual property, slogans, catch phrases, and product designs are not incorporated into a competitor’s marketing campaign and listings of competing products. Further, setting the precedent that leading brands will not tolerate such conduct in the marketplace will assist leading brands in their efforts in enforcing their rights. Monitoring the marketplace is a crucial step in preventing the unauthorized use of a leading brands’ intellectual property rights to sell competing products.
3. Monitor your Company’s Online Reputation
Competitors can unfairly catch the attention of consumers by publishing false information about market leaders on e-commerce platforms. While this conduct can sometimes be obvious, this is not always the case. It is essential for brand owners to monitor and identify fake reviews so that quick action can be taken to remove them.
Customers have a First Amendment right to compare and review products, even if that review is negative. However, competitors posing as dissatisfied customers to disparage a leading product and direct sales to their own products is deceptive, goes against the policies of most e-commerce platforms, and likely gives rise to legal claims. If you notice a negative review, you should carefully examine it and determine whether it might have been published by a competitor.
Signs of fake reviews and Competitor Disparagement:
- Receiving negative reviews that promotes a competitor’s comparable product.
- The reviewer’s account has no other activity other than comparing your product to a competitor’s.
- The account holder utilizes a name or pseudonym not found in your customer records.
- Multiple similar reviews appear within a short time frame.
Competitor Disparagement in Product Listings:
- Using charts to falsely depict the competing product as superior to the leading brand product.
- Listing false information about the leading brand product when compared to the competing product within the advertisement.
Brands that actively monitor their online reputations can quickly identify and take legal action against competitors who disparage them.
4. Know When to Contact an Attorney
When infringing conduct by a competitor is discovered, brand owners have options. They can report the infringing conduct to the platforms, send demand letters to the competitor, or take legal action. Brand protection legal specialists can help brand owners evaluate and assess the options, assisting them in taking the essential steps to stop the infringing conduct. This becomes especially crucial when such conduct is found in higher volumes. A legal specialist is essential to successfully halt competitors from using a brand owner’s intellectual property in their deceptive sales and marketing schemes. If you are a brand owner experiencing these problems, know when to contact an attorney to ask for help.
Defend Your Brand in E-commerce Marketplaces
Selling products on e-commerce platforms provides numerous opportunities for competitors to enact infringing conduct against your brand. Without proper monitoring and strategies in place to enforce your brand’s rights, competitors can attract consumer attention at the expense of your brand using your own intellectual property in their sales and marketing campaigns.
However, brands that actively monitor the marketplace for deceptive sales and marketing tactics can find competitors at the onset of the infringing conduct and take necessary legal steps to permanently prevent such conduct.
As market opportunities continue to evolve in the e-commerce realm, competitors are constantly finding new and innovative ways to gain a competitive advantage against leading products and brands. The holiday season in particular sees a surge in infringement. Brand owners should prepare and take necessary steps to protect themselves against competitors seeking an unfair competitive advantage during this holiday season.
If you have any questions or would like to discuss this further, KJK’s e-commerce, intellectual property, and internet defamation and content removal attorneys can help your company protect and defend your brand against competitors. If you have any questions or would like to discuss further, please reach out to Hannah R. Albion (hra@kjk.com) and Ali A. Arko (ala@kjk.com).