Amazon’s marketplace platform is notoriously inundated with counterfeit goods. Aware of this fact, but unable to resist the convenience of Amazon Prime 2-day shipping, you purchase something that “ships from and [is being] sold by Amazon.com,” under the impression that there is a greater chance the product will be authentic since it’s being sold by Amazon and not a random third-party. Have you ever done this? Mercedes Benz’s parent company, Daimler AG, thinks you have, and it’s suing over it.
Last month, Daimler AG filed suit against Amazon.com in federal court in Los Angeles, alleging that the Seattle-based e-commerce giant has engaged in trademark infringement by selling counterfeit Mercedes wheel caps. In addition to merely setting forth a basis for trademark infringement, the German automaker also claims that Amazon’s model for labeling products as “Shipped from and sold by Amazon.com” amounts to a “fraudulent business act” and enables Amazon to “capitalize upon and profit from Daimler [and other brands’] reputation and goodwill.”
According to its complaint, Daimler asserts that Amazon has been the subject of widespread bad press because of the sale of “an exorbitant number of counterfeit and infringing goods” on its site. A significant portion of those sales come from third parties that use the Amazon platform (due to a “lack of effective regulation”). However, “Amazon itself also sells infringing items as ‘Ships from and sold by Amazon.com’ products,” per Daimler.
As the automaker goes on to state, “Amazon develops, advertises, distributes, offers for sale, sells, and ships products designated in the product listing as ‘Ships from and sold by Amazon.com.’” While “some of these products are Amazon brand products (e.g., Amazon Kindle, Amazon Fire),” others are merely “products that Amazon purchases from manufacturers, wholesalers, and brand owners pursuant to vendor agreements, which Amazon then imports, exports, advertises, distributes, offers for sale, sells, and ships directly to consumers.”
One of the driving motivations behind consumers’ choice to purchase products that bear a “Ships from and sold by Amazon.com” designation is “to avoid the risk that they will unwittingly purchase counterfeit goods from unscrupulous third parties in the Amazon Marketplace, believing that items they purchase from Amazon will be vetted by Amazon and authentic.”
The problem, per Daimler: That assumption is incorrect because no shortage of the products listed as “Ships from and sold by Amazon.com” are counterfeit since “Amazon refuses to take reasonable steps to police intellectual property infringement or to source their ‘shipped from and sold by Amazon.com’ products only from authorized manufacturers, wholesalers, and retailers.”
Still yet, Daimler states, “Amazon has repeatedly claimed that it is not responsible for the infringing activities of its third-party sellers in the Amazon Marketplace and that any infringement can be addressed through Amazon’s infringement reporting form and procedures. But this ignores that (1) Amazon is itself selling infringing products with respect to Infringing Products that it sells as “Ships from and sold by Amazon.com” and (2) Amazon could establish processes that would better detect and deter infringement, rather than simply respond to infringement on a post-hoc, case-by-case basis, yet Amazon chooses not to do so. As of the date of this Complaint, Amazon has not instituted any sufficient solutions to Daimler’s infringement concerns, and has refused any commitment to install such solutions.”
By failing to take more robust steps – or any noteworthy steps – to weed out counterfeit goods from its site, whether they are marketed and shipped by third-parties or by Amazon, itself, Daimler claims that Amazon is “opening the door for masses of counterfeiters and scammers to exploit the system at the expense of legitimate brands and customers alike.”
With all of this in mind, Daimler has asked the court to find that Amazon is infringing Daimler’s Mercedes trademarks. Ideally, the complaint – the latest in reports that Amazon is simply not doing enough to fight fakes (Swatch’s Chief Executive Nick Hayek recently told the Wall Street Journal that the e-commerce giant’s failure to commit to “proactively polic[ing] its site for counterfeits and unauthorized retailers,” has prevented the companies from partnering despite months of negotiations) – will prompt Amazon to reevaluate its intellectual property enforcement procedure, a move that appears to be long overdue.
* The case is Daimler, AG, v. Amazon.com, Inc., 2:17-cv-07674 (C.D.Cal).