Platforms have a financial incentive to not cooperate without liability
Christina Mitropoulos, 2021 - Director, Brand Protection & Manufacturing Initiatives, American Apparel and Footwear Association. Written Statement submitted to the House Judiciary Committee. THE SHOP SAFE ACT: STEMMING THE RISING TIDE OF UNSAFE COUNTERFEIT PRODUCTS ONLINE, House Hearing, 5/27/01 https://www.govinfo.gov/content/pkg/CHRG-117hhrg45396/pdf/CHRG-117hhrg45396.pdf //DH
The foundation of our trademark system predates global, nearly instantaneous e-commerce and is not equipped to address the online counterfeiting issues experienced today. Under the current legal framework, online intermediaries are generally not liable for the products sold on their platforms by third parties. This often creates a disincentive for those intermediaries to proactively stop the sale of counterfeits and other harmful products. Instead, many online marketplaces have a huge financial incentive to allow these sales, while enjoying extremely low risk of legal liability- they make a profit off each sale and they benefit from the "network effect" of scale that discourages robust seller vetting. It is readily apparent that there is a need for legislation to address the issue of counterfeit goods sold on e-commerce platforms. Online counterfeiting continues to be a growing issue for AAFA members, and the COVID-19 pandemic has only exacerbated this problem. The pandemic has disrupted supply chains worldwide and forced physical stores and markets to close repeatedly or for long periods of time, drastically driving consumer traffic to online channels. While we embrace the growth of e-commerce, unfortunately, counterfeiters have as well, taking advantage of these circumstances globally and flocking to sell their fake goods online.