Counterfeit market is a flourishing business. Right from designer wear replicas to first-copy luxury watches, there are people who brazenly copy & sell unauthorized/fake products.
The advent of ecommerce made it even easier for replicas to travel across the world somewhat freely. And marketplaces are turning out to be a safe haven for phony sellers. The result: Growing cases of brand infringement.
What qualifies as brand infringement?
Let’s understand some of the things that falls under brand infringement:
Selling without brand authorization letter or obtaining distribution rights
Counterfeit products where sellers copy brand’s designs
Trademark infringement where a seller uses an identical or similar trademark
Online marketplaces, a safe passage
Yet we have heard about cases such as: Nalli silks accused Snapdeal of trademark infringement, furniture brand Housefull took etailer Mebelkart to court, Flipkart filed case against a discount listing site for copyright and trademark infringement, owner of Laxmipati sarees filed a case against Flipkart & Amazon and many more.
The trouble starts when marketplaces refuse to take action
We get it that it can be extremely hard to keep track of thousands of sellers & products and spot copyright issues. But if brands contact marketplaces and inform them, then why an ecommerce player doesn’t take any action?
An Amazon seller ‘Mithas by Suneeta Gupta’ wrote on its Seller Central forum,
“We have developed our own brand for which we have also purchased Trademarks in two separate classes. Of late we have noticed that a few sellers are trying to sell our listings under their accounts…However, since we have not given permission to any of these sellers and none of them own the trademark of our brand name, they are simply selling our products illegally on Amazon.in. We have sent our complaint to Amazon along with all the relevant documents and Amazon has given to us in writing that they will not be removing these sellers from our listings.”
The seller added,
“Other marketplaces have been quick and fair in solving such problems of Brand Infringement but Amazon is not taking any action at all.”
In the above case, the seller did all the right things:
- Got trademark registration done as recommended by legal experts
- Haven’t given the permission to anyone to sell any of their products
- Informed Amazon about the issue by registering a compliant
- Furnished the documents required to prove trademark ownership
In spite of taking the necessary steps, why Amazon didn’t remove the fraud sellers?
The support team’s reply to Mithas’ complaint was,
“Please note that every trademark infringement complaint is different and the actions taken are dependent on multiple factors. We encourage sellers to report for a brand infringement issue when they have a valid trademark registration. Amazon only considers infringement reports only from brands which are having the TradeMark status as “Registered”.”
Private labels at risk
It highlights the apathy towards online sellers. Few merchants are misusing the online retail platform and marketplaces are enabling them. And who is paying for it? Legal brand owners, who have invested months or years of blood, sweat and creativity in creating their product line and building a reputation.
Take for instance fashion designer Masaba Gupta who decided to launch an affordable clothing line in 2014 in a bid to counter the counterfeiters. If famous designers have to think of an alternate way to tackle fakes, then what are the options for a small humble seller?
Marketplaces such as Flipkart, AskMeBazaar and Alibaba are spending money on fighting fakes. But it is mostly for high- end brands. What about independent designers & small sellers who pour in a lot of money and effort in developing their private label and some other seller just swoops in & copies their listing?
Amazon’s argument, ‘we don’t enforce’
Whether it is the fear of losing revenue or sellers, Amazon states that the marketplace can’t enforce. Even in the US, sellers have been urging the ecommerce leader to penalize infringers from years but it has refused to take any serious action.
In the below image, you can read about Amazon’s ‘We Do Not Enforce’ under its Report Infringement tab:
Tara Johnson, Lead Reporter, Retail at CPC Strategy wrote in one of her blogs,
“For several years, brands have asked Amazon to help them find and punish unauthorized resellers for their violations. Unfortunately for brands, Amazon takes a percentage of third party sales within their marketplace and is hesitant to enforce seller pricing agreements and risk losing revenue.”
Alans Ng, an Amazon.com seller left a comment below the article:
Amazon India sellers too are tired of the standard replies ‘We are unable to take action based on your complaint because’ or ‘A dedicated team is working on that issue and it would be resolved soon’. Being asked to ‘test buy’ is another pain point for merchants.
We wanted to hear the other side of the story as well to understand a marketplace’s viewpoint. Here’s what a spokesperson of Amazon India had to say,
“We take the issue of fake & counterfeit products being sold on our marketplace by sellers very seriously. Sellers are mandated to sell only genuine and original products on Amazon.in and they sign an undertaking to do so. If it is brought to our notice that sellers are using our marketplace platform to sell fake or counterfeit products, we work with the sellers to bring such products down from our website. In case of repeat offenders we do not hesitate to take strict action and may even go to the extent of delisting them from our marketplace. There have been several instances where sellers have been delisted.”
Legal rights of a brand
As per the law, people who sell counterfeit products have no immunity whether it is offline or online platform. In this IOS article on ‘Laws of Indian ecommerce’, Rakhi Jindal, Senior Associate (TMT) at Nishith Desai Associates had clearly stated,
“If a seller is selling counterfeit goods on an e-commerce platform, the seller will not face immunity due to the fact of transacting on a marketplace. The general laws in relation to counterfeit products, copyright law etc. equally applies to e-commerce space.”
Amazon India too has authority to ban/remove infringing sellers. But there’s a catch with regards to selling ‘genuine’ products by unauthorized dealers. A person usually has the right resell branded products in an unchanged state.
Like the Amazon’s support team wrote,
“Review that you are reporting against a different product being sold against your listing and not against another seller for selling the same product without your authorization. Please note that Indian laws don’t allow any restrictions against selling of a genuine product.”
However, the emphasis is on the word ‘unchanged’ or ‘different’. If it comes to your notice that your products are being sold even with a slight difference, you have every right to demand that the listing is taken down. That’s why Amazon insists that sellers try a ‘test buy’. So that they can spot the alterations and report the same.
Online sellers, law is on your side even if marketplaces aren’t in case of outright trademark violation. If your brand value is deteriorating and you are losing sales due to infringement, please consider taking the legal route and filing an official complaint. Be persistent with your complaints and keep collecting evidence. If you haven’t done it yet, please register your trademark and clearly state the selling & reselling rights.
As for marketplaces like Amazon, we hope they take this brand infringement issue seriously. Ecommerce sites have very few differentiating factors and are crowded with similar products. It can use private labels and distinct brands to stand out. If brand owners won’t be able to protect their creation, then what will motivate them to join marketplaces? Please think.