Plan causes trademark bullying – brands will over-enforce and shut down legitimate secondary markets
Jonathan Berroya, 2021 - Senior Vice President and General Counsel, Internet Association. Testimony before the Subcommittee On Courts, Intellectual Property, and The Internet Judiciary Committee U.S. House of Representatives. The SHOP SAFE Act: Stemming the Rising Tide of Unsafe Counterfeit Products Online. 5/27, https://docs.house.gov/meetings/JU/JU03/20210527/112713/HHRG-117-JU03-Wstate-BerroyaJ-20210527.pdf //DH
Another key issue not addressed is that while most brand owners act in good faith, some abuse the system. For example, brand owners have brought trademark infringement lawsuits to stop the sale of parody products, or labeled 26 as counterfeiting the resale of their genuine branded products to control distribution channels in contravention of perfectly legal and valid commercial activity as to authentic goods.27
In addition, so-called “trademark bullying” is a well-recognized problem. Trademark bullies are brand owners (often large companies) who use the threat of trademark infringement lawsuits to pressure smaller companies or individuals to stop engaging in lawful activity that the brand owner does not like. Trademark bullying reduces competition and 28 29 harms free speech, imposing real costs on both companies and consumers. Because smaller companies and individuals lack the resources to fight a large brand owner, they are often forced to comply with the brand owner’s demands, no matter how frivolous. Changing the secondary trademark liability standards could make bullying behaviors worse.
Combating counterfeiting is incredibly important. But so is ensuring the continued availability of online commerce to many individuals and small businesses that depend on it as a core source of their income. The goal of the law must be to balance those concerns.