ILMA Compoundings June 2018 - 14

INDUSTRY RUNDOWN

Is Amazon Aiding and
Abetting Counterfeiters?
According to the International Trademark Association,
trade in pirated and counterfeit goods could reach
$1 trillion by 2022. The association says many of those
counterfeit products are being sold on Amazon's
Marketplace and similar websites.
The online sale of counterfeit goods has become such a
problem for brands and consumers alike that Congress asked
the Government Accountability Office (GAO) to look into
the flow of counterfeit products to the U.S.
To see what brands and consumers were up against, the
GAO purchased a "nongeneralizable sample" of four types
of consumer products - shoes, travel mugs, cosmetics
and phone chargers - from third-party sellers on five
popular e-commerce websites (the GAO did not specify on
what sites the purchases were made). Out of the 47 items
purchased, 27 of them were counterfeits.
While the GAO did not name names, the Counterfeit
Report, a consumer watchdog that works for brands to

JUNE 2018

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investigate fakes, does. Counterfeit Report says that it has
removed 34,000 counterfeit products from Amazon on
behalf of the rights holders.
A policy posted on Amazon's website says that the "sale of
counterfeit products is strictly prohibited." Violators face the
possible loss of selling privileges, withholding of funds and
the destruction of goods in Amazon's possession.
But the onus is on brands and retailers to find and report
counterfeit sellers. To aid brands in that endeavor, Amazon
launched a new "Transparency" program last year, which
allows participants to label packages with a barcode to verify
a product's authenticity.
For now, participation in the program is by invitation
only. It is unclear whether Amazon plans to offer the
program to all sellers in the Marketplace, but some analysts
expect that will happen.
For some brands, like Birkenstock, this program is a case
of too little, too late. Per a report by Retail Dive, Birkenstock stopped deliveries to Amazon in the U.S. and Europe,
citing a "series of violations of the law on the Marketplace
platform operated by Amazon which the platform operator
has failed to prevent of its own accord." The footwear brand
is also blocking its retail partners from selling on Amazon.
Other brands are taking additional steps. Daimler AG,
owner of the Mercedes-Benz brand, is going the legal route
by taking Amazon to court. In a suit against Amazon,
Daimler attorneys said that "Amazon sells and/or facilitates
the sale of an exorbitant number of counterfeit and infringing goods" because of the "lack of effective regulation."
Daimler's position is that the problem is not only thirdparty merchants selling fakes, but that Amazon is also
selling them under the guise of its "Ships from and Sold by
Amazon.com" labeling.
It all comes down to a business decision of whether a
brand or manufacturer decides to keep its products on
Amazon and do the due diligence to track and report
counterfeiters, and then pull their products from the market
as Birkenstock did or go the legal route like Daimler. The
big question, though, is this: Is the sales potential worth the
time and effort to hunt down the counterfeiters, and is that
worth the risk to a brand's reputation?

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ILMA Compoundings June 2018

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