According to Federal government studies, almost 43% of items purchased from third-party sellers on popular eCommerce platforms (Amazon, eBay, Walmart.com, etc.) are counterfeit. Many eCommerce sellers’ first instincts are to utilize the relatively easy takedown procedures prescribed by the eCommerce platform as soon as they can. But there are takedown risks, and those risks include spending a ton of money stuck in litigation while their own listing and the infringer’s listings are both taken down.
Understand the risks.
it is important to understand why eCommerce platforms effectuate takedowns: to avoid their own liability. Specifically, the US Millennium Copyright Act (“DMCA”) limits the liability of eCommerce platforms that are found to have materials infringing copyrights on their site if they follow the procedures set out in the DMCA. 17 U.S.C.§512(c)(1). Thus, the eCommerce platforms are not effectuating takedowns to help sellers police their rights, but instead to cover the eCommerce platform’s own bums. So the eCommerce platforms follow a formula: as long as the minimum requirements of the DMCA are met, the eCommerce platforms will generally take the listing the “claimer” complains about (the “target”) down. However, once a takedown occurs, the target owner can at any time submit a counter-notice stating the removal was a mistake, a misidentification of materials, or otherwise illegitimate. 17 U.S.C. §512(g)(3). If a counter-notice is submitted, the claimer has 14 days to file a lawsuit and notify the eCommerce platform of the suit; otherwise, the eCommerce platform is required to reinstate the product pursuant to law. 17 U.S.C.§512(g)(2). Furthermore, the target can sue the claimer alleging that the claims made lack integrity and have interfered with their business. This doesn’t happen a lot but does happen (and has happened to EmergeCounsel clients). And once the case is stuck in litigation, the eCommerce platform typically suspends both the claimer’s and the target’s listings from its site until the litigation is resolved which not only means the loss of revenue but also time and legal fees to assert a legitimate claim.
So what is the lesson to be learned?
Do not effectuate a takedown without a strategy. There are three prongs: Assure that you have the registered relevant IP rights for the complained about intellectual property at issue; Submit to the eCommerce platform as thorough a claim as possible (including documentation related to those IP rights), and Make darn sure that you have a legally legitimate and prosecutable case against the target. Generally, this is a very hard and intricate task for a layperson, and creating these types of infringement strategies is why intellectual property attorneys exist. If you have created a brand and are selling on eCommerce, it is worth protecting it and then policing against infringers. Making sure there is a strategy and that strategy is supported by the facts and the documented evidence is the only way to make sure you don’t end up on the wrong side of your own, legitimate takedown efforts. If you are looking to establish, maintain, and/or protect your brand with eCommerce in mind, we provide free initial consults, schedule yours here.