Amazon’s new seller transparency policy, announced July 8, 2020, requires by September 1, 2020, each seller’s page on Amazon.com to display the respective seller’s name and address. This 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 company, Amazon’s new seller transparency policy is meant 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 game of whack-a-mole to enforce their intellectual property on the platform.
Counterfeiters and infringers represent a reputational threat to e-commerce 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 e-commerce platforms.
While brick-and-mortar and traditional retail stores temporarily shuttered under government orders addressing the spread of COVID-19, e-commerce 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 e-commerce platforms expand their markets across borders. Specifically, as we continue to see robust regulations in cyberspace transcend national boundaries, e-commerce 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 e-commerce 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 e-commerce platforms are also facing 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, and was meant to alter contributory liability for e-commerce platforms relative to trademark infringement—a meaningful “carrot” to compel compliance. Its scope is rather limited, and it remains in committee as of the writing of this post, but the SHOP SAFE Act espouses certain principles mirrored in Amazon’s new seller transparency policy.
The SHOP SAFE Act provides that a third-party e-commerce platform will be exempted 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 certain enumerated measures to prevent underlying infringement. Of the ten required steps to prevent infringement, the first is “verif[ying] 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 e-commerce platforms, it is often the latter. Certainly, removing the mask of anonymity on e-commerce platforms can deter swindlers without foisting a significant burden on legitimate sellers. Amazon and other platforms likely realize this, which makes Amazon’s new seller transparency policy uncontroversial.
In that vein, Amazon’s new seller transparency policy is progress and aligns with at least some of the goals of the SHOP SAFE Act. At the same time, it falls short of capturing the other important elements of the bill. Chiefly, it is not readily clear whether Amazon will verify the names and addresses provided by sellers, or whether there will be any consequence for incorrect of fraudulently provided information—a gaping hole that may render the new policy ineffectual upon implementation.
E-commerce 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, intellectual property-related issues of the physical world will continue to creep online. These issues should not be ignored, and e-commerce platforms appear to prefer self-regulation in this regard. Thriving online marketplaces depend on a strong understanding—by the platforms as well as the buyers and sellers—of how traditional rules and laws can be utilized online.
This is a fast-paced area of the law with changes developing at an increasing frequency. Husch Blackwell’s Technology Industry team continues to monitor and report on these changes and legislative efforts to keep you tuned into progress and enforcement in this area, as well as new issues and trends affecting e-commerce platforms.