Increased trademark enforcement destroys small businesses – increased costs and risks push start ups out

[28/12/2020, Patent and Trademark Office, “Engine Advocacy”, https://downloads.regulations.gov/PTO-T-2020-0035-0008/attachment_1.pdf, accessed 7/9/2024, LR]

II. Current legal doctrine is working, and changes in this area of the law would put startups and their users at a significant disadvantage

The prevailing approach U.S. courts take to contributory trademark infringement makes sense. Trademark owners are best suited to initiate the process of removing infringement from an e-commerce platform, because they know their own marks, and know what is infringing versus authorized, etc.13 Platforms, especially startups, are not able to do that, but they are able to remove allegedly infringing posts they know about and can communicate relevant information to trademark owners, accused infringers, and law enforcement.

Shifting the current balance and imposing more liability on e-commerce startups would impose unsustainable costs and put early-stage companies at a distinct disadvantage. It would create an impossible and unaffordable task for all but the largest, established e-commerce platforms. For one, startups would be forced to try and constantly monitor user posts to detect potentially infringing ones. This would include expenses startups, operating on thin margins, could not cover, such as hiring teams of content moderators, developing or purchasing imperfect yet costly filtering technology, and setting aside litigation reserves to cover future legal exposure for user conduct.14

Trademarks are pervasive across the globe. There are over 2.6 million active trademarks in the U.S. alone.15 It would be impossible for a new e-commerce platform to learn, monitor, and identify alleged infringement of that many marks in the millions of products that are (or could be) posted on these sites.

Volume is not the only problem—it is complex to identify specific instances of trademark infringement. Trademark owners are much better suited to know what might confuse their consumers and know what products they have authorized.16 Without trademark owners identifying infringement in the first instance, platforms will both over- and under-police, unintentionally blocking legitimate content and letting some infringement slip through the cracks.17

Likewise, technology and filters are not a solution, as these are both very expensive and inherently limited.18 As we have previously explained in the copyright context:

Technology and filters have many inherent limitations which make them incapable of fully addressing online infringement. Filtering technology is imperfect, with often high false positive rates. It is categorically incapable of answering fact-specific questions of infringement, like fair use, licensing, and the exclusion of unprotectable ideas. But these filters are also out of reach for most startups. The most sophisticated tools are so expensive that the development costs are orders of magnitude above what a startup could afford. Offthe-shelf tools, which cannot screen much content on a multimedia platform, are also too expensive for early-stage companies to license and maintain. All filters are limited in the type of content they screen. And for many types of content, there are no filters. Finally, technology is easily circumvented. Users intent on uploading infringing content can easily modify files to avoid the filters.19

Indeed, the measures certain platforms deploy to try and prevent trademark infringement are not perfect, and counterfeiters already find ways around these measures. Even for platforms spending the most, and deploying the most sophisticated technology, it is impossible to keep trademark infringers off ecommerce platforms. For example, counterfeiters can just change their name or repost infringing items under a new name or different account.20