As of Sept. 1, each seller’s page on Amazon.com must now display the respective seller’s name and address. This new seller transparency policy, announced by Amazon on July 8,, brings some of Amazon’s U.S.-based practices into conformity with policies in other jurisdictions, including Europe, Japan, and Mexico. It also comes on the heels of record-setting online retail sales and the restructuring of traditional retail as we know it.
According to the retailer, Amazon intends its new seller transparency policy to “help customers learn more about the businesses of a seller and the products that they are selling . . . [and] make informed shopping decisions.” The move also provides intellectual property rights owners with improved ability to investigate and pursue potential counterfeiters and infringers. With increased transparency, rights owners can avoid the endless whack-a-mole game to enforce their intellectual property on the platform.
Counterfeiters and infringers represent a reputational threat to ecommerce platforms. And Amazon has often been on the leading edge of addressing infringing conduct in its marketplace. In addition to its standard reporting process, Amazon also offers rights owners the ability to participate in its Brand Registry and Project Zero initiatives, and the piloted Utility Patent Neutral Evaluation program. Other platforms have also adopted their own versions of these enforcement programs, including eBay and Alibaba. Amazon’s announcement falls in line with its now-regular cycle of introducing new tools for combatting counterfeiters and infringers. This new initiative also appears to generally track a growing, tectonic shift to online retail sales and emerging legislative interest in online ecommerce platforms.
An existential risk to platforms like Amazon
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.
A gaping hole
In that vein, Amazon’s new seller transparency policy is progress and aligns with at least some of the SHOP SAFE Act’s goals. At the same time, it falls short of capturing the other important elements of the bill. Chiefly, it is not readily apparent whether Amazon will verify the names and addresses provided by sellers, or whether there will be any consequence for incorrect or fraudulently provided information—a gaping hole that may render the new policy ineffectual.
Ecommerce platforms serve as important conduits between the countless sellers and troves of buyers. They are also the natural extension and evolution of our traditional retailer marketplaces. As the platforms continue to grow and devour market share, the physical world’s intellectual property-related issues will continue to creep online.
The intellectual property issues that apply elsewhere are essential and should ecommerce platforms should not ignore them. Indeed, ecommerce platforms appear to prefer self-regulation in this regard. Thriving online marketplaces depend on a strong understanding of how online commerce can make use of traditional rules and laws by the platforms and the buyers and sellers.
This is a fast-paced area of the law, with changes developing at an increasing frequency.
Husch Blackwell is a law firm with offices in 18 cities nationwide.