Vulnerability of Intellectual Property on Amazon
How to Defend your Brand in an Online Marketplace
When an online marketplace increases the number of sellers of the same product in an exorbitant way, inevitably the illicit conducts in the matter of IP increase substantially.
That is why it is rather curious that it has taken years to have judicial decisions from the highest courts on these issues where Amazon is concerned, arguably a worldwide reference as an online marketplace. This is even more so in the case of such a platform, which has introduced its own brand system into its operation.
Does Amazon have its own brand system?
Naturally, Amazon Brand Services is the name given to the system of creation and protection of brands that operates within the platform itself. It is a relatively lax system, from the point of view of applicable trademark law, compared to traditional trademark offices, but it has proved to be moderately efficient, albeit with limitations.
How does this system work?
Brands to be registered at Amazon will normally be word marks, that is, without images or logos to identify them, just the name. Since Amazon focuses on the visualization of the product itself, and the logo plays a rather secondary role, this eminently word-based system makes a lot of sense.
Even so, with the functions of creating online stores, by founding a whole portal within Amazon itself where to promote products of a single brand, it has been possible to give visual content to the brands already on the registry.
Once a brand has been filed, products can be placed under it. The owner of the registered brand will be the one who can launch a new product of the brand in question, and when creating this product, a "Details Page" will be generated, which describes the product as accurately as possible.
In this branding system, users or consumers will be able to access all the products of a registered brand at Amazon.
What kind of protection does this system offer?
A priori, a rather weak protection. As indicated on Amazon Brand Services' own website, the brands registered at Amazon will correspond to those "actively" registered in each country in which they are registered.
This has two consequences. On the one hand, it is clear that Amazon's brand registration system operates in a country only, and registering " Blue Ocean " in Spain, for example, does not mean protection in Italy. On the other hand, the brand in question must be previously registered, but what does this mean?
It is clear from the conditions explained on the Amazon website that the brand must be registered with the Trademark Office of the country where it is intended to be registered, although brands pending registration are also accepted. This is quite surprising, because the reality is that most of the brands registered at Amazon are not officially registered at the corresponding national offices. And, in any case, what would be the point of registering such a trademark at Amazon if it already has the superior protection of the national Trademark Office?
This irregularity in the control of access to the registration system already represents a serious crack in trademark protection, but the absence of an officially recognized system for cataloguing products and services, such as the Nice Classification, makes the situation much worse.
Nor are there any clear criteria on when to admit/reject a mark because of similarities to another previously registered mark. Nor is there any publicity about registration applications that would allow other vendors to try to protect their trademarks.
Is there at least a Channel for complaints?
If there is something that every e-commerce has, it is that, a "Channel for complaints" to inform about the violation of some right. The problem with Amazon's Channel is revealed when we access their page on the Notification of Infringement of Rights.
First of all, to be protected by the Amazon system, you must be a seller. Without this requirement, however interested you may be in having a brand name not registered in the Amazon system (because, for example, an owner has an identical or similar brand name registered in the seller's country office), there is literally nothing you can do.
As a seller, you can log in and make the appropriate notification, alerting Amazon staff that your trademark rights may be being infringed. Amazon will make a decision, notifying you of the outcome and the actions it will take.
In accordance with Amazon's entire trademark policy and terms and conditions, Amazon's actions will be limited to removing the infringing products. Removing the infringing product completely from the market and obtaining compensation is relegated to the courts of the country concerned.
Can Amazon trademark rights be enforced in ordinary courts?
No. Amazon Brand Registry is a private registry of the platform that offers the protection decided by the marketplace, i.e. the ability to request the removal of other brands. You cannot expect the application of consequences of IP laws, since there are IP offices for this purpose, and in any case Amazon does not provide sufficient regulation to draw clear consequences on the violations of trademarks that occur on its platform.
In addition, the EU has been amending the laws of intellectual property through Directives, so that protection is channeled to the registered trademarks in the Offices recognized and entitled to do so.
Is the Amazon protection system therefore insufficient?
By itself it is ineffective, and it also has serious deficiencies if it is intended to protect the sellers' brands.
Firstly, Amazon's Intellectual Property Policy establishes some controversial points such as the following:
- You can sell a trademarked product without being authorized by the trademark owner. It is sufficient to sell an original product, and to indicate the brand.
- The sale of the product of a third party's trademark does not have to be done through a product with its own detail page. As a seller of that product, you can use the details page created by the trademark owner.
These summary points make it impossible to guarantee full protection of trademark rights holders' rights. There are many cases that can lead to infringements outside the above statements, beyond the possible right of trademark exhaustion. Allowing third parties, without authorization or legitimate right, or even if they could or were causing a damage, to start selling a product identified with a third party's trademark may lead to very serious violations of the owner's rights, opening a range of infringements.
In addition, the fact that third parties may use the details page of the owner of the registered brand may generate a serious problem of confusion for consumers. Consumers may be interested in the quality of the product, for which they can check the brand itself, the manufacturer, materials, etc., all of which can be seen on the product's details page. Surprisingly, on the details page, the identity of the seller does not appear, which leads consumers to believe that they are buying from the brand's manufacturer, when this may not be the case.
Could Amazon be held accountable for this?
This question was recently raised by a German court in the case of Coty Germany vs. A German distribution company had an exclusive license to use Davidoff perfumes, a Community trade mark registered with the EUIPO. Despite this, at least a couple of sellers at Amazon were selling the perfumes under the same brand, and with as much advertising and transparency as possible.
Coty Germany's goal was to obtain substantial damages from Amazon, however, on April 2, 2020 the European Court of Justice (ECJ) dismissed this claim.
The judgment of 2 April 2020, in case C-567/18 of the CJEU , concluded that, as Amazon is a platform whose sole purpose is to host products sold by third parties, and in many cases to store them, it could not be considered to have a direct interest in the marketing of these products. This made it impossible to hold Amazon liable for trademark infringement committed on its platform, even when using the company's warehouses.
Can legally recognized IP rights be applied to Amazon sellers?
Unlike the Amazon Brand Registry system, which is private in nature, IP legislation is public and applies to everyone. It is completely irrelevant, in this respect, what the system developed by Amazon may provide.
If in view of national or EU legislation, the practices of a seller on Amazon violate the rights of a trademark registered in a national office, or in the EUIPO, these may be reported to the courts.
Only for registered trademarks?
As we mentioned before, trademark law has been evolving, moving away from the protection of unregistered trademarks. It is increasingly difficult to effectively protect the infringement of IP that is not properly registered.
The most plausible ways to attack the infringement of rights in the case of unregistered trademarks are those involving Unfair Competition. And yet, every day the courts reduce the possibilities offered by this type of legal action. Nowadays, several unfair competition practices can still be prosecuted, but the Spanish courts understand that they do not automatically generate compensation claims.
However, consumer deception or misleading is a practice of Unfair Competition that allows to stop the violation of rights while obtaining compensation for damages. These unlawful practices occur quite often in many marketplaces, including Amazon, and sometimes there are genuine commercial identity theft.
Does Unfair Competition apply to the platforms themselves, such as Amazon?
No commercial practice should go unpunished if it is proven to be against the law. The Unfair Competition path deserves further analysis as far as Amazon is concerned. On February 21, 2020, Section 28 of the Madrid District Court condemned Amazon for failing to comply with competition rules regarding pricing and copyright.
But there could be a clearer path with regard to the trademarks in Amazon's own system: liability for Amazon's possible breach of contract.
Taking up Amazon's IP Policy, while admitting the possibility of selling third party products without their authorization, provided they are original, Amazon committed, however, to ensure the originality of such products.
In this respect, it should be analyzed when this originality check of the product should be made. Should Amazon check before the product is put on sale? Should it check within a reasonable time after the product is put on sale, or should Amazon check after the complaint of the genuine owner of the trademark?
And in any case, if Amazon's monitoring fails to do so, or does not solve the problem by allowing "counterfeiting" to occur, could liability for the failure to comply be enforced?
In our legal opinion, Amazon's control of originality must necessarily be, either before the product is put on sale, or within a reasonable time after it is put on sale, in cases where a third party seller other than the owner of the brand is involved, and does not prove to be an authorized distributor. The entire Amazon Brand Protection Policy makes clear the aim of efficiency that the system has. Furthermore, it makes no sense to wait for the actual owner of the brand to file a complaint, since by that time a very high level of damage could have been caused to the brand.
In cases of absolute lack of monitoring or inefficiency, Amazon would be liable for breach of contractual obligations. For all purposes, Amazon's IP Policy and the terms and conditions set out on its website, are clauses of a contract between the system user who registers a brand at Amazon, and Amazon. Therefore, failure to comply with the obligation to monitor and verify the authenticity of products that sellers other than brand owners register in the system and sell on the platform would result in a responsibility of the marketplace.
The information provided on this blog does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this blog are for general informational purposes only. All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed. The content on this posting is provided "as is;" no representations are made that the content is error-free. The views expressed at, or through, this site are those of the individual authors writing in their individual capacities only – not those of their respective employers or Gowper®.