The list of best-sellers on Amazon is different day-to-day – and it is not merely new trends replacing old ones. Instead, it is brands that did not exist until very recently pushing out other newly-launched and short-lived brands in order to take the top spots. What do almost all of these brands have in common? Their names are unrecognizable, unpronounceable, and unmemorable – and the brands, themselves, are only exclusively for the purpose of selling on Amazon.

In the headphones category on Amazon, for instance, 1,800 different products from almost 700 brands were among the top 100 best-sellers in the last twenty-four months. The category consists of nearly three new products from almost one new brand every day replacing current items in the best-sellers list. Those brands are pseudo-brands with names like NUBBYO, LAFITEAR, NANMING, AIWONS, or HWCONA, and they are numerous. In fact, only five brands – Apple, Samsung, Sony, Soundcore, and Tozo – had a product in the headphones best-sellers list for the entire twenty-four months. Just twenty have been in it for over 500 days (70 percent of the time). More than half of the brands were on the list for only five days or less, which means that hundreds of brands gained some momentum, and then ultimately got lost among the sea of lookalikes a few days later. 

Headphones are not an outlier. Most Amazon categories exhibit this behavior, and there does not appear to be a slowdown in terms of the share of each category’s top-selling list that consistently gets replaced by newer brands. While top brands – which are often well-established names – across the board retain their positions, new entrants enter the best-sellers list on a daily basis over the past few years on a very consistent basis.

Brand moats on Amazon, then, are rare but not impossible. Unsurprisingly, Apple, Samsung, and Sony are always on the list, but there are also brands like Soundcore (owned by Anker, one of the Amazon-native brands, which has since publicly listed on the Shenzhen Stock Exchange) and Tozo that do not have the pedigree of established brands. There are hundreds more that gain some success but fail to establish market position, and thousands more that try every month to replicate some of that success – and again, this pattern is not only playing out when it comes to headphones, but across a wide array of categories on Amazon – from apparel and beauty products to electronics and toys. 

The consistency with which so many new brands are launching on Amazon is having an impact beyond the Seattle-based titan’s platform, itself. In order to be eligible for Amazon’s Brand Registry, an initiative that enables sellers to “gain better control over their product listings” and to gain increased “access to advertising solutions, which can help you increase [a] brand’s presence” on the sweeping e-commerce marketplace platform, Amazon mandates that companies must be able to show that they have a registered trademark in the U.S. As a result, no shortage of these Amazon sellers are making a beeline for the U.S. Patent and Trademark Office (“USPTO”) and seeking to register new trademarks in order to be eligible for Amazon’s Registry. 

This has led to a spike in trademark applications being filed with the USPTO, mostly from applicants in China. “As of June [2021], the increase [in trademark applications] was roughly 63 percent higher than the previous year, which translates to about 211,000 more applications,” the national trademark body stated in a blog post. “And in December 2020, alone, the USPTO revealed that it received 92,608 trademark applications, an increase of 172 percent over December 2019.” In July 2021, the backlog of pending trademarks at the USPTO has surpassed 900,000 for the first time.

(There has been a rising emphasis on the potential for fraud in connection with many of these applications, with applicants attempting to get around the USPTO’s actual use requirement by submitting photoshopped images that appear to show how their trademarks actually being used. Chances are, this type of fraud is likely at play when it comes to some of the unpronounceable terms (think: UMQN, AHY JS, AIVYU, JGTG, and FKRF, among others) that appear on the list of more than 15,000 trademarks in a final order for sanctions that the USPTO issued in December against Yusha Zhang and Shenzhen Huanyee Intellectual Property Co., Ltd. for engaging in the unauthorized practice of law.)

For those brands – many of which appear to be a randomly generated string of letters (take VBIGER and MAJCF, for instance), the brand name, itself, is not important, and the only reason they go through the USPTO registration process is to unlock the Brand Registry service on Amazon, among other benefits. They succeed or fail on Amazon despite the brand name. (Most often, they fail.) Because of this, shopping on Amazon is unlike any other retailer. At the same time, the definition of what “brand” stands for – both in terms of the source of the goods themselves, which is more often than not largely unknown to the buyer, and any potential for goodwill associated with that brand, which is slim given the short shelf life of these brands, for one thing – is also proving to be increasingly distorted on Amazon, too. 

Amazon’s marketplace is evolving, however. Many more sellers are thinking about moats beyond the number of reviews, and aggregators buying those Amazon-native sellers are building portfolios of brands with the hope of turning them into recognizable brands. (Funding for Amazon aggregators is down over 80 percent in 2022; last year by September 2021, aggregators had raised nearly $9 billion in new funding. This year, the figure is only $2.3 billion.) Hero Cosmetics, for instance, the acne care brand born on Amazon, was acquired for $630 million in September week. Hero launched on Amazon in 2017 with one SKU that has since become the No. 1 beauty product on Amazon.

These developments are not going to curtail the chaos on Amazon, but the incentives are starting to look different. It has never been easier to launch a brand on Amazon like it is today, and yet, it has never been harder to launch the next Anker.

Joe Kaziukenas is the founder of Marketplace Pulse, a business intelligence firm focused on e-commerce. 

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.)