Amazon and Cartier have partnered to wage two new lawsuits over the “unlawful and expressly prohibited” sale of luxury jewelry and accessories illegally bearing trademarks of Cartier, including, counterfeit versions of its iconic LOVE bracelet, by sellers on the Amazon marketplace and an influencer peddling “hidden links.” According to the two trademark-centric complaints that they jointly filed on Wednesday with the U.S. District Court for the Western District of Washington, Amazon and Richemont-owned Cartier claim that the defendants, who are identified exclusively by their Amazon user names, “engaged in a sophisticated campaign” to sell counterfeit Cartier products on Amazon, while disguising the products in “an attempt to evade Amazon’s counterfeit detection tools.”

In the newly-filed complaints, Amazon and Cartier allege that from June 2020 through June 2021, the defendants worked together to advertise, market, and sell counterfeit Cartier jewelry by way of a network of Amazon Stores, including one operated by an individual identified by the handle “Phym9y3v,” and in the process, “used Cartier’s registered trademarks, without authorization, to deceive customers about the authenticity and origin of the products and the products’ affiliation with Cartier,” when no such affiliation existed. 

Echoing the practices that it alleged in the since-settled lawsuit that it waged against two influencers and a number of sellers on its platform back in November 2020, Amazon claims that “Phym9y3v” used her social media accounts “to direct followers to links for Cartier products – e.g., ‘a LOVE bracelet’,” with the “hidden links” taking customers to product detail pages for generic jewelry products on Amazon and other websites that were being run by the other named defendants. 

Love Bracelet Amazon
One of the generic LOVE bracelet listings on Amazon

However, despite the relevant Amazon listings “display[ing] seemingly non-infringing, non-branded products available for purchase,” including “carefully curated image[s] that hid the fact that a product bears the screw motif of the authentic LOVE bracelet,” Amazon and Cartier claim that the products that were ultimately shipped to consumers consisted of counterfeit Cartier LOVE bracelets that did, in fact, bear Cartier trademarks. In other words, once the products were ordered, “the defendants shipped counterfeit jewelry bearing unauthorized Cartier trademarks – just as [Phym9y3v] had advertised” in “an attempt to avoid detection by Amazon and to obscure their counterfeiting scheme,” Amazon and Cartier assert. 

(In addition to maintaining rights in the Cartier name, Amazon and Cartier assert that Cartier has rights in the “distinctive design” of its LOVE bracelet, which includes “a binding closure and screw motif.”)

All the while, Amazon and Cartier allege that Phym9y3v’s social media posts “leave no doubt that her promotion of counterfeit goods is knowing and willful,” noting that “the landing page for her Instagram account states, ‘high quality copy’ above the link to her Linktree page,” and contained a link with “a photograph of what appears to be a counterfeit Cartier bracelet.” 

Cartier claims that it “reviewed the images of the products and confirmed that the items are counterfeit,” further alleging that “the products’ serial numbers do not correspond to serial numbers assigned to genuine Cartier LOVE bracelets, and certain of the products’ aesthetic features differ from those of genuine Cartier LOVE bracelets.” 

Setting out claims of both direct and contributory trademark infringement, false designation of origin and false advertising, and violations of Washington Consumer Protection Act, Amazon is seeking injunctive relief to bar the defendants from “selling products on Amazon,” “opening or attempting to open any Amazon selling accounts,” and “manufacturing, distributing, offering to sell, or selling any product using Cartier’s brand or trademarks or which otherwise infringes Cartier’s intellectual property on any platform or in any medium,” including Amazon and social media platforms, such as Instagram, as well as monetary damages.

In a joint release on Wednesday, Kebharu Smith, associate general counsel and director of the Amazon Counterfeit Crimes Unit, said, “By using social media to promote counterfeit products, bad actors undermine trust and mislead customers. Amazon will keep investing and innovating to stay ahead of counterfeiters, and working with brands and law enforcement to hold bad actors accountable. We don’t just want to chase them away from Amazon—we want to stop them for good.”

The cases are Inc v. PHMN9Y3V, et al, 2:22-cv-00840 (W.D. Wash.) and Inc v. Yfxf, et al, :22-cv-00841 (W.D. Wash.).

Consumers using online retail marketplaces, such as eBay and Amazon, “have little effective choice in the amount of data they share,” according to the latest report of the Australian Competition & Consumer Commission (“ACCC”) Digital Platform Services Inquiry. While consumers may benefit from personalization and recommendations from these marketplaces based on their data, the data privacy-focused report states that many people are in the dark about how much personal information these companies collect and share for other purposes. 

The report reiterates the ACCC’s earlier calls for amendments to the Australian Consumer Law to address unfair data terms and practices. It also points out that the government is considering proposals for major changes to privacy law. However, none of these proposals is likely to come into effect in the near future. In the meantime, it is worth considering whether practices, such as obtaining information about users from third-party data brokers, are fully compliant with existing data privacy law. 

Online Marketplace Examination

The ACCC examined competition and consumer issues associated with “general online retail marketplaces” as part of its five-year Digital Platform Services Inquiry. These marketplaces facilitate transactions between third-party sellers and consumers on a common platform. They do not include retailers that do not operate marketplaces or platforms that publish classified ads but don’t allow transactions.

The ACCC report focuses on the four largest online marketplaces in Australia: Amazon Australia, Catch, eBay Australia and Kogan. In 2020–21, these four carried sales totaling $8.4 billion. According to the report, eBay has the largest sales of these companies. Amazon Australia is the second-largest and the fastest-growing, with an 87% increase in sales over the past two years. In furtherance of its report, The ACCC examined the state of competition in the relevant markets; issues facing sellers who depend on selling their products through these marketplaces; and consumer issues including concerns about personal information collection, use and sharing.

Consumers Don’t Want Their Data Used for Other Purposes

The ACCC expressed concern that in online marketplaces, “the extent of data collection, use and disclosure … often does not align with consumer preferences.” The Commission pointed to surveys about Australian consumer attitudes to privacy which indicate that 94 percent  did not feel comfortable with how digital platforms including online marketplaces collect their personal information. 92 percent agreed that companies should only collect information they need for providing their product or service, and 60 percent considered it very or somewhat unacceptable for their online behavior to be monitored for targeted ads and offers.

However, the four online marketplaces analyzed do not proactively present privacy terms to consumers “throughout the purchasing journey;” may allow advertisers or other third parties to place tracking cookies on users’ devices; and do not clearly identify how consumers can opt out of cookies while still using the marketplace. Some of the marketplaces also obtain extra data about individuals from third-party data brokers or advertisers.

The harms from increased tracking and profiling of consumers include decreased data privacy; manipulation based on detailed profiling of traits and weaknesses; and discrimination or exclusion from opportunities. 

You Can’t Just “Walk Out of a Store”

Some might argue that consumers must not actually care that much about data privacy if they keep using these companies, but the choice is not so simple. The ACCC notes the relevant privacy terms are often spread across multiple web pages and offered on a “take it or leave it” basis. The terms also use “bundled consents.” This means that agreeing to the company using your data to fill your order, for example, may be bundled together with agreeing for the company to use your data for its separate advertising business. 

Further, there is so little competition on privacy between these marketplaces that consumers cannot just find a better offer. The ACCC agrees, stating, “While consumers in Australia can choose between a number of online marketplaces, the common approaches and practices of the major online marketplaces to data collection and use mean that consumers have little effective choice in the amount of data they share.” Consumers also seem unable to require these companies to delete their data. The situation is quite different from conventional retail interactions where a consumer can select “unsubscribe” or walk out of a store. 

Do Our Data Privacy Laws Permit These Practices?

The ACCC has reiterated its earlier calls to amend the Australian Consumer Law to prohibit unfair practices and make unfair contract terms illegal. (At present unfair contract terms are just void, or unenforceable.) The report also points out that the government is considering proposals for major changes to privacy law, but these changes are uncertain and may take more than a year to come into effect.

In the meantime, it is worth looking more closely at the practices of these marketplaces under current privacy law. For example, under the federal Privacy Act the four marketplaces “must collect personal information about an individual only from the individual unless … it is unreasonable or impracticable to do so.” However, some online marketplaces say they collect information about individual consumers’ interests and demographics from “data providers” and other third parties. We do not know the full detail of what is collected, but demographic information might include our age range, income, or family details. 

How is it “unreasonable or impracticable” to obtain information about our demographics and interests directly from us? Consumers could ask online marketplaces this question, and complain to the Office of the Australian Information Commissioner if there is no reasonable answer.

Katharine Kemp is a Senior Lecturer in the Faculty of Law & Justice at UNSW Sydney. (This article was initially published by The Conversation.)

Macy’s has quietly settled a headline-making fight to block Amazon from advertising on the billboard located on the top of its “world famous” outpost on 34th Street in New York City. On the heels of filing suit against its Herald Square landlord Rockaway KB Company, LLC (“Rockaway”) in a New York state court in September in order to put a halt to a deal that would enable Amazon to advertise on the billboard, Macy’s and Rockaway appear to have resolved their differences out of court, prompting New York Supreme Court Judge Barry Ostrager to dismiss the case last month. 

In a decision and order filed on December 15, Judge Ostrager revealed that the preliminary injunction lodged by Macy’s – to prevent Rockaway from allowing one of its competitors to advertise on the billboard, which had been the site of its own advertising for some 60 years – and “the action as a whole are resolved” in accordance with the Stipulation of Discontinuance without Prejudice that the parties jointly filed with the court in late November. 

Macy’s had filed suit “enjoin Rockaway from its articulated intentions to allow a Macy’s direct competitor to advertise on the billboard situated on the land and building … in clear viola tion of [a] restrictive convent … that prohibits [Rockaway] from allowing such competitor’s advertisement.” That competitor was, of course, Amazon.

While Macy’s right to advertise on the Herald Square billboard expired on August 31, 2021, the New York-headquartered retail chain claimed that the expiration of the advertising agreement does not open the door for Rockaway to put just any ad on the billboard. As Macy’s asserted in its complaint, a restrictive covenant that has been in place since 1963 bars its competitors from advertising on the sweeping billboard that wraps around the side of the building that houses the Macy’s store. The long-standing covenant runs with the land, itself, per Macy’s, which means that it is not subject to the same expiration as its former deal with Rockaway.  

Macy's billboard

Allowing a competitor (i.e., “any establishment selling at retail or directly to any customer”) to advertise on the billboard “would not only violate a longstanding restrictive covenant,” Macy’s argued, but it also would cause damage to Macy’s “customer goodwill, image, reputation and brand” in a sum that would be “impossible to calculate.” 

More than merely a fight over a billboard, Macy’s shed light on the damage that it allegedly would suffer should Amazon (or another competitor) be allowed to plaster its ads on the side of the building, arguing that it operates in “a highly competitive environment and competes with, among others, department, specialty, and general merchandise stores, manufacturer and discount outlets, and online retailers, including Amazon, Target, Nordstrom, Kohl’s, etc.” Macy’s asserted that “the attack by online merchants on traditional brick and mortar stores like Macy’s is real and has been well documented.” 

“Macy’s online business grows every year, [and] now more than ever, Amazon and other online retailers are direct competitors of Macy’s,” the retailer argued. “Akin to conquering enemy, it would be as if a competitor hung its ‘flag’ on top of Macy’s flagship department store” – which Macy’s says is “more than [its] flagship store; it is the most recognizable and famous department store in the world, [and] it is Macy’s “crown jewel” – and “announced victory.” 

The terms of the parties’ settlement have not been made public, but as of the time of publication, Macy’s branding still appears on the billboard, suggesting that a resolution may have included a newly negotiated term for the parties’ previously-expired advertising agreement. 

The case is Macy’s Retail Holdings LLC, et. al., v. Rockaway KB Company,655669-2021 (NY. Sup.).

Last month a noteworthy case came to a close – one that did not exactly involve fashion or luxury goods, but that nonetheless, could have interesting implications for the industry, as it involved Amazon’s ability to sidestep liability for the goods offered up on its sweeping third-party marketplace. In a filing in December, Maglula Ltd. revealed that it settled the lawsuit that it had filed against Amazon in 2019, in which it accused the e-commerce titan of infringement and counterfeiting in connection with the sale of “cheap” counterfeits of Maglula-branded firearm magazine loaders and unloaders on its platform. 

In its complaint, Maglula argued that Amazon was offering up and selling counterfeits, as well as products that infringed its copyrights and patents, and that despite its “extensive and repeated requests” over a three-year period, Amazon failed to take reasonable steps to prevent or remedy the infringement, prompting Maglula to file suit against the Jeff Bezos-founded company.

Aside from struggling to get Amazon to remove the allegedly infringing products (some of which listed “Amazon Warehouse” as the seller and all of which “Fulfilled by Amazon”), Maglula alleged that the contact information that Amazon provided for the third-party sellers at issue was largely “nonfunctional,” with at least some of the information being erroneously linked to individuals who “were victims of documented identity theft.” Ultimately, Maglula argued that Amazon made it “impossible” to bring the third-party sellers “to court and investigate sources of the knock-offs.” 

And in a bid to preemptively chip away at Amazon’s longstanding (and largely successful) argument that it is not the “seller” of the products that appear on its marketplace and thus, is shielded from liability, Maglula claimed that Amazon is more than a mere middleman, as it “controls all aspects of the sales process with its partners,” and enjoys the exclusive right to “suspend, prohibit or remove product listings” and to “receive all proceeds from all of [the] sales on behalf of its partners” on the marketplace site.

Counterfeits Amazon

Following failed attempts by Amazon to compel arbitration and then to have the case transferred to a federal court in its native Seattle, Judge Liam O’Grady of the U.S. District Court for the Eastern District of Virginia handed Amazon another loss in May 2021. In a three-page order on Amazon’s motion for summary judgment, Judge O’Grady held while Amazon “identified apparent weaknesses in some of Maglula’s supporting evidence,” even those weaknesses were unlikely to make “one iota of difference to a jury” in light of the “overwhelming” evidence of “unlawful counterfeiting” at play. 

Among other things, the court shot down Amazon’s argument that Maglula should not be permitted to make sweeping claims of infringement about “thousands of disparate products from various third-party vendors and manufacturers” without showing on a “product-by-product basis what marks are at issue or how the alleged infringement occurred.” In his order, Judge O’Grady held that Maglula bears no such burden, and instead, is only required to show that a “representative sample has been infringed” in order to survive a motion for summary judgment. 

Characterizing the matter as a “straightforward counterfeit case,” Judge O’Grady stated that “this is simply not a case where Amazon can avoid liability” (at least not in the summary judgment phase), noting that the retailer “proceeded to sell [the infringing Maglula goods] online as genuine products,” despite being notified “on multiple occasions, to no avail, that it was selling counterfeit goods of inferior quality and ruining Maglula’s business.” 

A “Straightforward” Case of Counterfeits

On the heels of the court finding that genuine issues of material fact existed in connection with each of the causes of action (including whether Amazon and its third-party sellers have a relationship that allows for Amazon to be vicariously liability for the alleged counterfeits and infringement), thereby, making summary judgment inappropriate, and in the wake of court-ordered mediation, the parties settled the matter in its entirety in December. 

Finnegan’s Jeffrey Berkowitz and David Mroz, who acted as counsel for Maglula, have since hailed the court’s summary judgment decision as unprecedented, stating that the finding that Maglula’s case against Amazon was a “straightforward counterfeit case” is something that no other court has held when it comes to Amazon and its third-party platform. That determination could prove to be significant in light of the fact that over 50 percent of Amazon’s sales are generated by third-party sellers on its marketplace, and given enduring arguments that “Amazon does a lot more to broker the arrangements between buyers and sellers” than marketplaces like eBay, which avoided direct and contributory liability in a trademark case waged against it by Tiffany & Co. over a decade ago.

For a point of reference, some of the questionable third-party listings on Amazon currently include trademark infringing Gucci Dionysus bags, counterfeit Jacquemus offerings, infringing Telfar shopping bags and droves of copycat Bottega Veneta wares. 

Maglulga – which asserted in its complaint that Amazon has become “so overrun with counterfeit products, and its meager efforts to address this problem have been so ineffective, that counterfeit products are now leaving Amazon warehouses all over the United States at an alarming rate” – is not the only plaintiff to have pursued Amazon for infringement in the not-too-distant past.

The Cashmere and Camel Hair Manufacturers Institute sued Amazon and third-party seller CS Accessories in November 2021 on trademark grounds, accusing the defendants of offering up counterfeits and deceiving consumers by offering up products that it falsely marketed as “100% Cashmere,” and claiming that even after alerting Amazon of the issue, the retailer failed to promptly or “effective” action to remove the fake cashmere products. The case settled last month but not before a federal district court judge in Boston permanently barred CS Accessories from advertising or selling products falsely labeled as cashmere. 

The case is Maglula, Ltd. v., Inc., 1:19-cv-01570 (E.D.Va.)

“Purchasing is very often more than just a simple transaction between buyer and supplier,” with consumption being a social experience in many cases, and the influence of others playing a role in what we buy. That same goes for the consumption and sale of counterfeit goods, according to a recent report from the United Kingdom Intellectual Property Office, which surveyed 1,000 female consumers (“as the social media endorsements of counterfeit products are dominated by female influencers and a female audience,” the research population was limited to female consumers), to gauge the state of the market for counterfeits and determine the extent to which social media influencers facilitate the purchasing of such goods. 

The United Kingdom Intellectual Property Office (“UKIPO”)’s top-line finding in connection with its survey was that 17 percent of participants (70 percent of whom were between ages 16 and 33) reported that they had knowingly purchased counterfeits in the prior year – and 13.3 percent revealed that their purchasing behavior relating to counterfeit products has, in fact, been influenced by social media endorsements. In other words, that 13.3 percent of respondents reported that they had “purchased counterfeits either deliberately or by mistake following social media influencers’ endorsements,” which the UKIPO contends “clearly demonstrates” that influencers are an noteworthy force in endorsing counterfeits and an “important channel to market for counterfeit suppliers on the other side of the world.” 

In line with previously-reported figures, the UKIPO found that fashion and related accessories are top drivers of counterfeit consumption, with this category of goods being “particularly attractive” for younger consumers (i.e., those in the 16-33 age group), with 1 in 5 (20 percent) of survey participants admitted to buying counterfeit clothing or accessories in the prior year compared to 4 percent of older consumers.” (The UKIPO notes that it defined counterfeits to participants as “items that look identical to a genuine product with or without the official branding/logo, but are not made by the brand and may be of lower quality, for example, a handbag of identical design to a “Chanel” with or without the Chanel logo.”)

Aside from fashion apparel and accessories, which was the most popular product category when it comes to counterfeit consumption, according to the UKIPO, fake jewelry and watches, and beauty products were also noted as frequently purchased. 

Another interesting takeaway about the mindset of consumers when it comes to counterfeit goods from the UKIPO’s findings is that 18 percent of survey respondents “believe counterfeits do not harm businesses and jobs,” 22 percent “believe counterfeits are not a health and safety threat,” and finally, a larger 33 percent (or one-third of survey participants) revealed that the trade in counterfeits is actually “the manufacturers’ fault for overpricing high brand products.” 

The Rise of “Dupes,” as Platforms Eye Luxury

The timing of the UKIPO’s survey seems appropriate given the overarching rise of “dupes” both in terms of Google searches and on social media sites, including Instagram and TikTok, and influencers who have built sizable followings thanks, in many cases, to their posts on this topic. As TFL reported this past summer, while recent Google Trends data indicates that searches for the word “replica,” for instance, are steadily declining overall, searches for “dupes” have been on the rise in recent years.

“A browse through YouTube reveals innumerable videos presented by young, mainly female content creators that promote counterfeit clothing, accessories and beauty products to followers,” the UK IP body stated, pointing to one British influencer with 4.4 million subscribers on her YouTube channel, who “posted a video promoting counterfeit goods in May 2021 entitled, ‘I Bought Fake Designer Bags on Wish.’” The video – which features counterfeit Louis Vuitton, Jacquemus, Dior, and Balenciaga bags – has since been viewed 221,326 times. 

At the same time, brands and marketplace sites are coming together to send public messages to influencers (and the public at large) in connection with their role endorsing counterfeit goods. Amazon, for instance, filed a counterfeit-centric lawsuit in November 2020, accusing influencers Kelly Fitzpatrick and Sabrina Kelly-Krejci of “engaging in a sophisticated campaign of false advertising” in connection with which they have “conspired” with sellers on Amazon’s marketplace to evade Amazon’s anti-counterfeiting protections by promoting counterfeit luxury goods – from Gucci belts to Dior handbags – on Instagram, Facebook, TikTok, and their own websites. That case settled in September, with the terms of the largely confidential agreement putting in place a prohibition against Fitzpatrick and Kelly-Krejci from “marketing, advertising, linking to, promoting or selling any products on Amazon,” and in terms of monetary damages being paid by the defendants, Amazon revealed that it would donate the sum to various non-profit organizations, including an anti-counterfeiting initiative of the International Trademark Association.

Not to be outdone, Facebook, Inc. (now Meta) partnered with Gucci in April 2021 to file suit against a single defendant – a woman named Natalia Kokhtenko –for operating “an international online business, trafficking in illegal counterfeit goods,” which has seen her use the “Facebook and Instagram [platforms] to promote the sale of [luxury brand] counterfeit goods,” such as Gucci handbags, shoes, clothing, and accessories, and running afoul of trademark law and “Facebook and Instagram’s terms and policies” in the process. That case is still underway in the U.S. District Court for the Northern District of California. 

Given the strikingly limited scope of both cases (there are far more than marketplace sellers and influencers hawking counterfeits on Instagram and Amazon), the cases are almost certainly part of a larger trust-building exercise aimed to luring consumers and brands onto these platforms, and enabling them to be viewed as a source of legitimate fashion. In much the same vein as Amazon, which has not been quiet about its ambitions in the fashion and luxury space, Reuters reported last year that “groups like Facebook, Inc. are keen to make a bigger push into the luxury market and ‘social commerce,’ but to do so they need to show that their platforms are not a conduit for counterfeiting and are safe for brands, some of which are reluctant to sell their products through third-party players.” Targeting counterfeit-peddling influencers is one part of that effort.