Deposit size is based on the lower of the calculation of sales for the online marketplace and the brand

The size of the deposit is paramount to the success of the program. If it is too large, it can be used to assert rights by larger companies more easily—because the amount is less burdensome to them—putting smaller companies at a disadvantage. This disadvantage is even more harmful because a large benefit of Online Marketplaces is the access they provide to smaller businesses.169 Having a deposit that is too small also can damage competition because companies, especially larger ones, can file many claims against competitors that they know will not succeed simply to deprive market access for a short time. While the smaller companies may get that money back afterwards, constant harassment of this type could still have sizable anticompetitive effects.170 Considering these issues with deposit size (and the asymmetric effects on different types of entities), a fixed deposit amount is ill-suited. Therefore, a better solution is a deposit that is more tailored to each situation.

There will be two deposit calculations made during each instance of claimed counterfeiting. The deposit that will ultimately be required is the lower of the two options. The first method of calculation consults the Online Marketplaces’ average weekly sales that the accused infringer would be expected to lose if the listing were removed from the platform. Three weeks’ worth of that quantity would serve as option one for the deposit. This period gives enough time for some review of the listing to make a preliminary determination of the quality of the claim. If the claim were to go to direct litigation, resulting damages (if any) would make up for the period starting after the three weeks and ending upon the final resolution of the dispute. The second way to calculate the deposit will be to determine 50% of the accuser’s weekly revenue from the good they claim is being infringed. The deposit total would be that amount for three weeks. If specific data for the goods in question is indeterminate (either because of lack of sales data or by counterfeiters creating many small accounts), Online Marketplaces would utilize internal data to approximate the sales numbers for use in calculating deposits.171 The longer this scheme is in place, the more additional data Online Marketplaces will have to make more accurate approximations when circumstances require.172 The deposit amounts are chosen to serve as a meaningful deterrent from frivolous claims without being prohibitively large. Another benefit of the deposit system is that the deposit totals can be modified in practice to maximize the efficacy of the program.173

Having this dual structure for the deposits serves to ensure that all parties can afford a takedown and serves to ensure that the amount is not trivial. The first option will often be paid by larger companies because smaller companies are typically less able to afford a portion of a larger company’s revenue from a given product. If the accused party were to receive this amount after an unsuccessful claim against them, they would get roughly the amount of money they would have made anyway, remedying the economic harm they suffered while their listing was down. The second option would be more often paid by smaller companies because they are more likely to have fewer total sales.