• Amazon.com store closed following IP complaint lodged by bogus law firm
  • Store was reinstated two months later, with estimated sales loss of $200,000
  • Highlights challenge Amazon faces to ensure IP complaint responses are both considered and quick

Over the past few days, media reports have focused on the case of an individual seller who saw his Amazon.com store shut down over an alleged IP-related violation lodged by a bogus law firm. His call for more considered investigations of complaints highlights the challenge facing the e-commerce giant, which is also under pressure to ensure speedy takedowns when infringement occurs.

CNBC’s Eugene Kim spoke to the owner of the Brushes4Less store on Amazon's marketplace, who received a suspension notice from the marketplace operator just prior to Amazon Prime Day in July. The result was that his toothbrush head replacement product was taken off sale and he was told that, in light of the alleged IP violation, he would have to contact the law firm (Wesley & McCain) that made the complaint to resolve the dispute. The challenge was that, on investigation, he found that the firm didn’t actually exist. The website, wesleymccain.com (which no longer resolves), used imagery seemingly taken from a legitimate firm’s site, the phone number did not work and the address belonged to another company.

The result was that the seller was unable to resolve the dispute and by the time Amazon reinstated his store – almost two months later – he estimated lost sales of approximately $200,000. His inventory was also inaccessible during that period, and he lamented: “Just five minutes of detective work would have found this website is a fraud, but Amazon doesn't seem to want to do any of that." The CNBC report also recounts instances of other sellers suspended due to “mistaken claims of infringement” and “victims of malicious complaints that some experts suspect are coming from rival sellers masquerading as lawyers”.

As per its usual policy, Amazon did not respond to the specific incident but told the media outlet that “fraud is prohibited on Amazon.com”, and that if it is discovered that “bad actors have abused our systems, we work quickly to take action on behalf of our customers, which includes sellers”. However, Chris McCabe, a former Amazon employee, told CNBC that “Amazon does little to vet the complaints to make sure they are legitimate, and typically they refer you to the accusing party for any info or resolution," adding that “if Amazon continues to process brand or buyer complaints as they are now, suspended accounts will continue to spike.” The call made by the impacted store owner in the CNBC piece is for Amazon to dedicate more time and resource to investigate IP-related complaints.

We have previously reported on the growing chorus of brand voices calling on the e-commerce giant to do more to address the availability of counterfeits on its platforms (a lawsuit filed last year by Apple in the Northern District of California, in which it accused a company named Mobile Star LLC of trademark infringement, suggested that up to 90% of items being sold as genuine Apple products by the e-retailer are fakes). McCabe was himself quoted earlier this year in a piece on Forbes titled ‘Amazon Is Losing To Chinese Counterfeiters Because Their HR Strategy Is Broken’. In that article McCabe highlighted the ‘investigations per hour’ targets given to investigators – suggesting that the times spent on complex investigations could lead to Amazon staff spending too little time on others. That piece suggested the result was counterfeiters slipping through the net. This latest example suggests the opposite is also occurring; that speedy processing is leading to the takedown of legitimate products based on bogus complaints.

In both cases the solution is increased resources dedicated to IP complain investigations, or new approaches to the handling of complaints. With respect to increased resources to revive complaints, it is also reported that the company is staffing up. In terms of new approaches to the problem, Amazon has expanded its anti-counterfeiting programme to allow rights holders to register their logos and intellectual property to expedite the removal of counterfeit listings. The Amazon brand registry means that participating brands are able to benefit from a ‘brand gating’ scheme that identifies authorised sellers and gives brand partners access to see action on complaints within hours. This approach enables Amazon to deliver speedy resolution while – by collaborating with trusted partners – reducing the risk that frivolous complaints will be lodged and quickly acted on. Of course, not all brands are enrolled in the scheme and the need for an open reporting system does mean that attempted abuse of the system is hard to eradicate.

As we have argued before, the size of the task facing Amazon and other e-commerce sites cannot be understated and there is a clear challenge for the company in reconciling the need for speedy takedowns while also maintaining the integrity of detailed investigations and ensuring that due process is properly served. However, many companies will be less sympathetic and the calls to rise to this challenge will not go away, whether from brands seeking to protect their rights or sellers that find themselves caught out by competitors gaming the system. Media coverage of these issues will certainly not go away either, meaning that for both reputation and commercial reasons a solution that appeases all legitimate sellers, brand partners and impacted parties remains the goal.