The current trademark laws work in reducing issues of infringement for e-commerce- Amazon proves

[Brian, 12/22/2020, Regulations.gov, “Letter to Andrei Iancu Re: Docket No PTO-T-2020-0035,” https://downloads.regulations.gov/PTO-T-2020-0035-0005/attachment_1.pdf, accessed: 07/09/2024, shl]

Amazon.com, Inc. (“Amazon”) welcomes the opportunity to respond to the United States Patent and Trademark Office’s (“USPTO”) request for comments on secondary trademark infringement liability in the e-commerce setting.

Since opening its virtual doors in 1995, Amazon has sought to be Earth’s most customer-centric company and to establish the online store www.amazon.com as the place where consumers can find virtually any authentic, lawful product they want to buy. For this reason, among others, Amazon goes well beyond its legal obligations and invests heavily in proactive efforts to prevent counterfeits from reaching its online stores. In 2019 alone, Amazon invested more than $500 million to protect its online stores and customers from counterfeits and other forms of fraud and abuse. Amazon’s primary focus is on preventative, technology-driven tools built on machine learning and data science to proactively scan the more than 5 billion changes submitted to Amazon’s worldwide catalog each day. In June 2020, Amazon launched a new Counterfeit Crimes Unit, dedicated to holding bad actors who attempt to list counterfeit and pirated products in Amazon’s online stores accountable. This global team is composed of former federal prosecutors, experienced investigators, data analysts, and other experts trained to catch and prosecute criminals. They are dedicated specifically to building and referring cases to law enforcement, pursuing civil litigation against bad actors, and undertaking investigations independently and with brand partners. In the rare case where a customer purchases a counterfeit in our store, Amazon protects customers by providing any customer who purchased a product that is not in the condition expected, including if it is a counterfeit, with the ability to receive a refund. While we expect our selling partners to share our customer obsession and our high standards of service, should they refuse to provide a refund, Amazon will refund the purchase price under our A-to-Z Guarantee. Every Amazon customer is protected by our A-to-z Guarantee. In fact, even if a customer does not report an issue to us, if Amazon believes a customer purchased a counterfeit, we proactively notify and refund customers, even when those products are sold by third-party sellers in Amazon’s stores.

Amazon makes these investments because they are good for our customers, but also good for the small and medium-sized businesses (“SMBs”) who account for approximately 60 percent of the physical gross merchandise sales made through our online stores. When SMBs thrive, our customers benefit from the products and services they offer, and Amazon is committed to protecting and investing in SMBs. This is also good for rights owners and brands that invent, manufacture, market, and distribute the hundreds of millions of products for sale in Amazon’s stores. Such proactive efforts to protect customers and rights owners should be the standard against which stores (whether online or offline) are measured

Counterfeiters are the root of the problem and will always try to circumvent legal protections. Stores cannot fight counterfeits alone. An industry-wide, comprehensive approach must encourage rights owners to properly use the brand protection tools available to them; ensure Unites States Customs and Border Protection (CBP) and other government authorities are adequately sharing data about seizures and other interdictions that would enable faster proactive removal of suspected counterfeit goods; provide sufficient resources to law enforcement to sufficiently prioritize and prosecute counterfeiting as a crime; and seek opportunities for information sharing amongst all industry participants that will enhance each individual participant’s ability to prevent counterfeiters from utilizing their services.

The law must assign responsibility for rights identification with rights owners, create bright-line standards for removal of infringing content, and offer critical protection to online stores that undertake proactive action to prevent and remove infringing content. Focusing anti-counterfeiting efforts on these principles, rather than shifting secondary liability regimes, will enhance the cooperation between all industry participants who have a common interest in fighting infringing material and targeting bad actors.

PRINCIPAL CHALLENGES TO ANTI-COUNTERFEITING

Retailers, the services that support them, and rights owners face four principal challenges in combating counterfeiting: (1) distinguishing counterfeits from authentic goods; (2) identifying sellers of counterfeits and other bad actors; (3) assessing the authenticity and merits1 of takedown claims at scale, given that bad actors may fraudulently obtain trademark rights or impersonate legitimate rights owners; and (4) scaling enforcement to target diversified counterfeiters and the often brief sales periods for counterfeits. Effectively addressing these challenges to combat counterfeiting is foundational to customer trust and protection.

The United States Department of Homeland Security’s report, “Combating Trafficking in Counterfeit and Pirated Goods” (the “DHS Report”),referenced in the USPTO’s request for comments, acknowledges some of the tensions arising from these challenges and the assumptions of some rights owners:

Rights holders further argued that the current rules, regulations, and practices governing e-commerce disproportionately place the burden of enforcement on rights holders. While e-commerce platforms that operate third-party marketplaces provide various tools for rights holders to report counterfeit listings of their brands, they have effectively shifted the primary responsibility to monitor, detect, and remove infringing products to the rights holders. 2

A core assumption of rights owners taking this position is that online stores are in the best position to prevent counterfeiting, so that shifting legal enforcement responsibility to online stores—and by implication allowing rights owners to pursue online stores instead of counterfeiters—is more efficient. This assumption is misplaced, and as a result will not help – and instead will hurt – efforts to get at the problem. The essential piece is knowledge of authenticity, and in order truly to attack this issue effectively it is critical to appreciate that rights owners have the unique expertise necessary to identify counterfeits. This unique expertise is among the reasons responsibility for policing trademarks rightly lies primarily with their owners. 3 Online stores may be unable to distinguish counterfeits from authentic goods and legitimate from meritless claims. On the other hand, online stores are better positioned to help rights owners apply their unique expertise to online listings at scale. For every one of the self-service takedowns by brands, Amazon’s automated protections proactively stop more than 100 listings.

Cooperation between rights owners and online stores is necessary to combat counterfeiting. Any regime of secondary trademark infringement liability that attempts to assign primary responsibility to online stores would not address the core criminal activity. To the contrary, it would undermine cooperation by encouraging rights owners to pursue online stores out of convenience instead of bringing their expertise and resources to bear on counterfeiting directly. This shift also would have a harmful chilling effect on the secondary market for safe, genuine goods by raising barriers to entry for honest sellers and online stores and by encouraging online stores to err on the side of caution, resulting in restricted price competition and selection to the detriment of consumers and SMBs.

As acknowledged in the DHS Report, “[t]he rapid growth of e-commerce has revolutionized the way goods are bought and sold,”4 and the central role of e-commerce has been underscored by the unprecedented challenges of the COVID-19 pandemic. Online stores are pivotal in providing consumers with genuine goods and necessities quickly and safely more than ever before. Shifting the trademark liability legal regime would impede the fight against counterfeiting. For this reason, among others, Amazon favors maintaining the existing doctrine of secondary trademark infringement liability.

THE CURRENT DOCTRINE CORRECTLY FOCUSES ANTI-COUNTERFEITING EFFORTS ON COUNTERFEITERS

Because counterfeiters always will strive to circumvent legal requirements, an effective legal regime must encourage all stakeholders—rights owners, governmental agencies, and all stores—to work together to stay ahead of and deter bad actors. Proactive tools and information sharing are among the most successful ways to combat counterfeiting. Shifting primary responsibility in this fight to stores would subvert essential partnerships and ineffectively focus efforts on pursuing stores, who are themselves harmed by counterfeiting, instead of pursuing the bad actors responsible. The current doctrine creates the correct incentives to target criminal actors.

Online stores invest in proactive tools to combat counterfeiting because counterfeiting harms customers and erodes their trust, which is hard to win and easy to lose. Amazon’s industry-leading, innovative programs and partnerships to prevent counterfeits from being sold in its stores include:

1. Brand Registry. This service powers proactive brand protection on Amazon’s online stores. Registration is free to any rights owner with a registered trademark, independent of any economic relationship with Amazon. Through Brand Registry, brands gain access to powerful tools including automated brand protections that use machine learning to predict infringement and proactively protect brands’ intellectual property. These tools grow more effective over time and proactively blocked over 400 percent more listings suspected of violating intellectual property (IP) rights in 2019 than in 2018. Brand Registry also provides enrollees a powerful Report a Violation tool that increases the accuracy of brands’ notices of claimed infringement and allows brands to search for potentially infringing products using state-of-the-art image search technology. More than 350,000 brands around the world are enrolled in Brand Registry, and they are finding and reporting 99 percent fewer suspected infringements than before the launch of Brand Registry.

2. Transparency. This product serialization service effectively eliminates counterfeits on enrolled products. Amazon provides participating brands unique 2D Data Matrix codes that brands place on every unit they manufacture of an enrolled product. Those codes allow Amazon, other retailers, law enforcement, and customers to determine the authenticity of each individual unit of that product in the industry supply chain simply by scanning the codes with a mobile app. Transparency has protected more than 25,000 products and prevented more than 500,000 suspected counterfeits from being sold in Amazon’s stores. Its enrollment has grown over 60 percent since last year with more than 10,000 brands now using the program.

3. Project Zero. Amazon launched Project Zero in 2019 to leverage the combined strengths of Amazon and brands to drive counterfeits to zero. In addition to a number of other capabilities, Project Zero provides brands with the unprecedented ability to directly remove counterfeit product listings from our stores in near real-time. This novel self-service counterfeit removal tool ensures that, should our proactive technology-driven solutions somehow miss a counterfeit, brands can take a product down on their own without the need to report a notice of counterfeit infringement and wait for us to investigate. Like all of our tools, Project Zero has safeguards in place to ensure that brands are operating with a high degree of accuracy and not harming honest selling partners in ourstores. Over 10,000 brands have enrolled since Project Zero launched – and Amazon is the only store that we are aware of that makes such a self-service tool available for brands.

4. IP Accelerator. In late 2019, Amazon created the IP Accelerator program to make it easier and more cost effective for SMBs to protect their inventions from the earliest stages of their product lifecycles. Entrepreneurs may underestimate and fail to prioritize intellectual property protection while developing products and may not know where to turn when they ultimately need help in protecting their intellectual property. Through Amazon’s IP Accelerator, entrepreneurs can connect directly with a curated network of trusted law firms that Amazon has vetted to obtain high-quality trademark registration services at pre-negotiated, competitive rates. Amazon provides this service at no cost regardless of whether the SMB sells on Amazon or not. When SMBs use these law firms to successfully file a trademark application, Amazon also provides their brands with accelerated access to certain brand protections in Amazon’s stores even before the trademark is issued – helping protect those brands many months or even years before receiving a final trademark registration. Since we launched IP Accelerator in the United States, we have been able to connect more than 7,000 SMBs with our network of vetted IP law firms. In addition, more than 5,000 SMBs have already submitted applications and received accelerated brand protection in our stores. We believe we are unique among marketplaces in providing this innovative service: another example of how Amazon is leading the industry in empowering brands to partner with us to stop counterfeits.

In addition, online stores are motivated to partner with both rights owners and governmental agencies such as the U.S. CBP to pursue and deter counterfeiters. To this end, Amazon’s Counterfeit Crimes Unit works closely with brands, the United States Departments of Justice and Homeland Security, and state and local officials, and has already had a number of early successes, including in several joint lawsuits and seizures of inventory from multiple sellers of counterfeit goods. For example, in June of this year, Amazon joined Maison Valentino in a joint lawsuit against New York-based Kaitlyn Pan Group, LLC and New York resident Hao Pan for counterfeiting Valentino’s iconic Garavani Rockstud shoes and offering the infringing products for sale on Amazon.com, in violation of Amazon’s policies and Valentino’s IP rights. In August, Amazon jointly filed a lawsuit with KF Beauty against 4 companies and 16 individuals for counterfeiting KF Beauty’s award-winning WUNDER2 beauty products, and then in October unsealed a jointly filed lawsuit with J.L. Childress against 11 individuals for counterfeiting J.L. Childress’ products, including travel bags for car seats and strollers. Last month, Amazon partnered with the National Intellectual Property Rights Coordination Center to stop counterfeits at the border, regardless of where bad actors were intending to offer them. This joint operation will leverage data and conduct targeted inspections aimed at preventing counterfeit products from entering the U.S. supply chain, and seek to hold bad actors accountable to the fullest extent of the law. This cooperation accelerates our collaborative efforts to stop counterfeiting and piracy.

CONCLUSION

The customer-centric focus that has driven Amazon over the past 25 years will continue to drive Amazon’s commitment to reduce counterfeits to zero. Amazon’s story reflects the interest that all online stores have in combating counterfeiting beyond legal requirements. The cooperation between stores and rights owners to root out counterfeits is a pivotal and generally successful partnership, while the current doctrine of secondary trademark infringement liability brings to bear stakeholders’ unique expertise to combat counterfeiting while preserving fair and robust commerce. Amazon appreciates the USPTO’s efforts in the fight against counterfeiting, and we believe all stakeholders in this fight, including the USPTO, can best continue this mission within the current doctrine of secondary trademark infringement liability.

Thank you for the opportunity to provide comments in this process, and Amazon would be pleased to answer any questions the USPTO may have and discuss our comments further.