It’s no surprise that during another year of pandemic living, ecommerce is booming. Consumers, avoiding crowded stores, take to the internet to buy even everyday items, such as toilet paper, groceries, hand sanitizer, prescriptions and, of course, protective facial masks. Unfortunately, shopping online, especially from online marketplaces, is rife with counterfeit goods.

Counterfeit products present real dangers for consumers, particularly goods that may impact consumer health and safety. 3M, which makes disposable respirator marks, undertook a massive campaign to combat counterfeit products, setting up a fraud hotline and instituting dozens of lawsuits. The PTO, hoping to educate the public about the dangers of counterfeit goods, teamed up with the National Crime Prevention Council and McGruff the Crime Dog for a nationwide PSA campaign, warning consumers that “counterfeits [] are cheating consumers and causing serious injuries and death, hurting U.S. businesses, and funding organized crime.”

Congress is also considering legislation that would address the issue, including the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-commerce Act (SHOP SAFE Act) and the Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers Act (INFORM Consumers Act). The latter, which has the support of certain online marketplaces, would direct online marketplaces to take steps to verify the identity of high-volume third-party sellers. The SHOP SAFE Act, however, would open online marketplaces to potential contributory liability if they do not implement certain “best practices,” such as using technology to screen goods for counterfeits before they appear in the marketplace, prohibiting repeat offenders from selling goods on the platform and screening to ensure that terminated sellers cannot rejoin.

Brand owners, frustrated by the proliferation of counterfeit goods, also sought to hold contributory infringers liable in court:

  • Omega v. 375 Canal, Case No. 19-969 (2d 2021): The US Court of Appeals for the Second Circuit affirmed a $1.1 million judgment against a commercial landlord for contributory infringement based on the landlord’s willful blindness to counterfeiting occurring at the leased property. Omega, well known for its luxury watches, alleged that the landlord continued to lease the space to vendors despite knowing that the vendors were selling counterfeit Omega products.
  • The Ohio State University v. Redbubble Inc.Case No. 19-3388 (6th 2021): The US Court of Appeals for the Sixth Circuit, reversing the district court’s grant of summary judgment in favor of Redbubble and remanding the case for further consideration, held that online print-on-demand marketplace Redbubble was more than just a “passive facilitator” of infringing goods bearing The Ohio State University’s trademarks. Redbubble provides an online storefront that allows third parties to upload artwork and sell goods printed with those designs. Noting, among other things, that Redbubble classifies its goods as “Redbubble products” printed with the artists’ designs, the Sixth Circuit stated that Redbubble “acted less like a hands-off intermediary and more like a company that creates knock-off goods.”
  • Atari Interactive Inc. v. Redbubble Inc., Case No. 4:18-cv-03451, (N.D. Cal. 2021): Atari sued Redbubble for copyright and trademark infringement for selling products featuring Atari’s intellectual property, including some of its well-known Pong and Asteroid game logo designs. The jury, however, found that Redbubble was not liable for contributory infringement and had not sold infringing products. Rather, for purposes of infringement, it was the individual designers—not Redbubble—that infringed Atari’s intellectual property.

Effectively combatting counterfeiting will require significant effort by the PTO, the US government and brand owners. Brand owners should take steps to maintain a vigilant enforcement system by working with ecommerce platforms where possible to remove counterfeit goods, working with established protocols created by Customs and Border Protection and possibly utilizing the ITC for disputes and exclusion orders relating to counterfeits. In the meantime, all parties will be watching to see what, if any, legislative changes are made in 2022 to help address the problem.