E-commerce platforms support SHOP SAFE and protections against counterfeiting

While bricks-and-mortar and traditional retail stores temporarily shuttered under government orders addressing the spread of COVID-19, ecommerce platforms have generally thrived. This trend—coerced by government action, to be sure—likely evidences a semi-permanent change toward online retail offerings, as opposed to a mere hiccup in the traditional retail paradigm. In this new retail world, incumbent online platforms are poised to reap significant gains. However, with increased volume of sales also comes the increased potential or likelihood for counterfeiting and intellectual property infringement. Such bad actors pose an existential risk to the platforms and their established goodwill with customers, which should motivate the platforms to respond accordingly.

Recent platforms’ actions may be motivated in part by increasing external pressure from government regulators to do more to protect consumers and address infringers. This pressure only builds as ecommerce platforms expand their markets across borders. Specifically, as we continue to see robust regulations in cyberspace transcend national boundaries, ecommerce platforms do not appear to be immune from the reach of these laws. Further, the incomplete patchwork of varying internet-related laws developing across numerous countries will likely result in many ecommerce platforms treating the more restrictive government policies as the lowest common denominator for their transnational products and related enforcement procedures.

In the U.S., Amazon and other ecommerce platforms face new and more restrictive laws and regulations, including the proposed SHOP SAFE Act. The SHOP SAFE Act was introduced into Congress on March 2, 2020. Its goal was to alter contributory liability for ecommerce platforms relative to trademark infringement—a meaningful “carrot” to compel compliance. Its scope is somewhat limited, and it remains in committee as of the writing of this post. Still, the SHOP SAFE Act espouses certain principles mirrored in Amazon’s new seller transparency policy.

The SHOP SAFE Act provides that a third-party ecommerce platform will be exempt from this altered form of contributory liability if the alleged third-party counterfeiter or infringer is available for service of process in the U.S. and the platform takes specific enumerated measures to prevent underlying infringement. Of the 10 required steps to prevent infringement, the first is verifying “through governmental identification and other reliable documentation the identity, principal place of business, and contact information of the third-party seller.”

On the internet, anonymity can be endless and used for good as well as evil. In the context of ecommerce platforms, it is often the latter. Certainly, removing the mask of anonymity on ecommerce platforms can deter swindlers without imposing a significant burden on legitimate sellers. Amazon and other platforms likely realize this, which makes Amazon’s new seller transparency policy uncontroversial.