Brand owners have no way to enforce trademark rights against online counterfeiters

The Growing E-Commerce Marketplace Has Increased Incidents of Trademark Infringement, Including the Sale of Counterfeit Goods, and Additional Protections for American Consumers and Businesses Are Needed.

The Section agrees with the Department of Homeland Security that e-commerce platforms and online marketplaces have “revolutionized the way products are bought and sold,” but at the same time have increased the opportunities for trademark infringers and counterfeiters. See January 24, 2020 DHS Report to the President of the United States, “Combating Trafficking in Counterfeit and Pirated Goods” (“DHS Report”) at 7. In particular, these bad actors compete with legitimate businesses by offering attractive, far-reaching “store-fronts” that often provide the seller with relative anonymity and low accountability. See id.at 11. As a result, consumers are often left with either (1) little recourse to hold the sellers who use e-commerce platforms accountable for the sale of infringing or counterfeit goods or (2) the burden of extensively researching goods to determine the legitimacy of their quality and safety prior to purchase, because they cannot rely on the trademark or listed brand to confirm those features. Brand owners are also left with harm to their reputations, little recourse to enforce and protect their trademark rights against these anonymized sellers and the huge burden to have to find all of these counterfeit and infringing listings themselves to provide notice to the third-party platforms, many of which have various hurdles that must be jumped through before such a listing is taken down.

To date, in addition to sellers, e-commerce platforms have also largely been able to escape liability for the infringing or counterfeit goods sold on their sites. As discussed in more detail below, the application of traditional doctrines of contributory liability make it difficult to hold an e-commerce platform liable for failure to take steps to protect consumers, absent direct and specific knowledge of wrongdoing.1 While many platforms have indeed taken proactive steps to protect against these harms, more can and should be done to either mandate or incentivize all e-commerce platforms to do so.

These issues will only be exacerbated as e-commerce continues to expand. Most recently, one need look no further than the current COVID-19 pandemic to understand the significant consequences of unchecked trademark infringement through e-commerce platforms. The pandemic created an influx of millions of dangerous infringing, counterfeit products into the United States marketplace, including counterfeit safety equipment and medical devices, unapproved COVID-19 test kits, unapproved medicines and substandard hygiene products. The vast majority of these products were sold online, corresponding with quarantined Americans’ desire to conduct as much shopping online as possible. Indeed, in a single week in March, Interpol shut down more than 2500 web links featuring such counterfeit items, including websites, social media pages, online marketplaces and online advertisements for illicit pharmaceuticals. See Global Operation Sees A Rise in Fake Medical Products Related to COVID-19, INTERPOL (March 19, 2020), available at https://www.interpol.int/en/News-and-Events/News/2020/Global-operation-sees-a-rise-in-fake-medical-products-related-to-COVID-19. More recently, Interpol warned of the existence of fake COVID-19 vaccines and fake negative COVID-19 test results sold online. See, e.g., INTERPOL warns of organized crime threat to COVID-19 vaccines, INTERPOL (Dec. 2, 2020), available at .

In March, Congress introduced the SHOP SAFE Act of 2020 to address some (but not all) of these issues. As the Section has previously informed Congress,2 it supports the enactment of this legislation and believes it addresses critically important needs of protecting both American consumers who purchase goods from e-commerce platforms and the trademarks that may be infringed through those sales. The Act fairly recognizes that if these third party e-commerce platforms are mandated or incentivized to provide more protection against counterfeits, the burden and harms will not fall solely on the consumers and brand owners. That being said, the SHOP SAFE Act does have its limitations. As currently drafted, it applies only to products impacting health and safety. While there is, of course, nothing more important than health and safety, even with health and safety construed in the broadest possible terms, this still leaves an insurmountable number of customers and brands unfairly lacking these protections. Notably, in the midst of the COVID-19 pandemic, online shopping continues to increase significantly across the board, resulting in record profits for large e-commerce platforms; the opportunities for counterfeiters and infringers continue to increase for products beyond health and safety products. See, e.g., Amazon Doubles Profit To $5.2 Billion As Online Shopping Spikes, NPR (July 30, 2020), available at https://www.npr.org/sections/coronavirus-live-updates/2020/07/30/897271729/amazon-doubles-profit-to-5-8-billion-as-online-shopping-spikes. For these reasons, the Section commends the USPTO’s decision to look further into the application of contributory liability for trademark infringement in e-commerce.