SHOP SAFE causes proactive enforcement

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2. The Current Doctrine of Secondary Infringement Liability is Ineffective in Combatting the Sale of Counterfeit Goods in the E-Commerce Setting

To protect consumers, some liability must rest with the marketplaces. Even if sellers are verified, they often remain outside the jurisdiction of the United States, meaning that a remedy for counterfeiting or for selling an unsafe product is unavailable to consumers or brand owners, or the cost of obtaining such a remedy is extremely burdensome. If an unsafe counterfeit product were to harm a child, requiring parents to seek a remedy from a counterfeiter in a faraway land is unreasonable and not fair; yet, if marketplaces are not liable, this is the result.

In its current state, the doctrine of secondary trademark infringement is inadequate and lacks clear standards, for holding online marketplaces liable for counterfeit goods sold on their platforms. Under the current doctrine, a trademark owner may only bring a secondary infringement action against an online marketplace once it has shown that the online marketplace has been put on notice of the counterfeit or infringing goods and failed to take down the listings. As such, the doctrine fails to incentivize online marketplaces to take proactive measures in preventing counterfeit and infringing listings from being posted at the outset, and inequitably shifts the burden to trademark owners to expend significant efforts to monitor and notify online marketplace platforms.

Moreover, with e-commerce being a relatively new retail platform, application of the doctrine to this emerging field is scarce and has left ambiguity as to when an online marketplace may be held liable for its role in the sale of counterfeit goods. Critically, the question of what level of knowledge suffices to find online marketplaces contributory liable remains open. Clarity is needed here to ensure online marketplaces are held accountable, especially where they have acknowledged the widespread sale of counterfeit goods on their platforms or are willfully blind to it. As it is, online marketplaces have largely been able to skirt liability, so long as they lack particularized knowledge of the counterfeit or infringing goods.

3. The SHOP SAFE Act Provides a Practical Legal Framework for Secondary Liability in the E-Commerce Setting

Additional mandates are crucial to ensure online marketplaces are taking steps to effectively safeguard against the sale of counterfeit and infringing goods. To the extent a platform obtained revenue from the sale of product,, responsibility and liability should exist.

The SHOP SAFE Act establishes clear contributory trademark infringement liability for e-commerce platforms unless the platform implements certain best practices. In this way, it strives to combat the proliferation of unsafe counterfeit goods for sale on online marketplaces by incentivizing marketplaces to engage in a set of best practices for vetting sellers and goods, punishing repeat offenders, and ensuring that consumers have the bestr most accurate information available to them when making purchases online.

The Toy Association believes SHOP SAFE provides a workable legal framework for holding online marketplaces accountable and distributes the burden of enforcement more equitably without stifling online marketplaces' ability to develop inventive solutions to combating counterfeit goods or hinder the growth of online businesses.