With all the talk of “fake news,” it is important to note that the law has not caught up with the wild, wild west that is the Internet. Nowhere is that more evident that the world of E commerce, where Amazon is vying for the title of “World’s Largest Retailer” at a record-breaking pace, after first blockbusting the publishing and bookselling business, and by now, apparently, going after the made-to-wear and grocery business. If you are selling goods online, Amazon is, most likely, the most important online site for you to list your products on; even more important than EBay or other online retail sites, such as Walmart.com.
When you open your seller account with Amazon, you sign away your rights to sue Amazon in court because the business agreement Amazon requires all sellers to adhere to contains an arbitration clause. That means that, if you have a flack with Amazon, your ultimate remedy is not the courts, but private arbitration before the American Arbitration Association, which is generally cheaper than going to court in the long run but their fees can be cost prohibitive for small sellers and even pricier for private arbitrators if you end up going to a hearing. Once you shell out these costs, and tack on your own attorney’s fees, depending on the amount in controversy, you can be looking at tens of thousands of dollars just to get Amazon to the mat.
Amazon looks at your relationship with it as a privilege, not a partnership. You see, you need Amazon more than the giant e-tailer needs you. That is why, with Amazon, which has established a “buck stops here” appeal system with Seller Performance, if you have been accused of violating their policies, you are guilty until proven innocent, and they don’t want to hear you protest your innocence. They would rather have you confess your sins and give them a plan of action showing that the likelihood of you sinning again is non-existent.
Before arbitration, Amazon has a considerable amount of power over the legalities of your selling account and its own way of handling disputes between you and customers and even other sellers. For example, if they receive a takedown notice under the US Digital Millennium Copyright Act of 1988 (DMCA) or a trademark infringement notice, Amazon can suspend your seller account immediately, and will not usually reinstate the account unless and until you are able to convince the alleged intellectual property rights owner/accuser to withdraw the complaint. Amazon states that it won’t get involved in intellectual property disputes, but this practice and policy makes Amazon a seller’s judge and jury, leaving no avenue of dispute other than arbitration, which could take an average of seven months, during which time you are out of business, and at a cost that would come close to breaking the average seller.
This de facto “judicial system” that exists within Amazon makes its Seller Performance Team the ultimate arbitrator of your intellectual property rights and, as a result, ruthless sellers have been known to eliminate their competition on private label goods by reporting violations against their competitors, just because they can. The danger of this system is that it puts the decision making in the hands of laypersons who know nothing of the law of intellectual property and, who are, in fact, precluded by Amazon policy from making a decision if a seller stands his or her ground and refuses to give up on an intellectual property fight. When accused of intellectual property infringement, whether a complaint is fake or real never comes into the equation. Amazon takes the accuser’s side and, if the complaint is not withdrawn, the accused is guilty – period.
When I was a young lawyer, the local county court enlisted my aid to sit in place of judges as a Judge Pro Tem when they were short-handed. I remember one of the “real” seasoned judges holding a little “class” for temporary judges. He told us that if we had a hard time deciding any particular case, just remember that the plaintiff (accuser) usually “has something”, otherwise he or she wouldn’t have filed the case. That struck me as unfair and I decided right then and there I wouldn’t be the temporary judge who made a decision in that fashion, and that every case, big or small, would be decided on the facts and the law that should be applied to them. Amazon shouldn’t have to decide disputes between sellers, and it says it doesn’t, but the fact of the matter is by deciding to favor the accuser over the accused, it is doing the same thing that old judge told us to do, without regard to who is right and who is wrong, and this is not justice.
So what is a seller with a private label product to do? In this case, the old adage of “an ounce of prevention is worth a pound of cure” comes into play. Sellers should display copyright notices on the images they use in their listings and protect their private label brands with trademark registration, which can be done inexpensively online. If a product has a unique design that differentiates it from all other similar products, you may also wish to obtain a design patent. Armed with a registered trademark and/or patent, you can easily ward off intellectual property attacks from unscrupulous competitors.
Once you have protected your intellectual property, you can go one step further and enroll your brand in Amazon’s brand registry, which is a kind of “get out of jail free card” in case of intellectual property disputes. Amazon even has a handbook on how to create your own brand in seller help. Being listed on its brand registry also gives you the chance to add enhanced content to your branded listings. One may think that this is a great way to protect your intellectual property, and it probably is, but it also puts Amazon into the position of being an intellectual property register, something that, in the United States at least, is within the exclusive purview of the U.S. federal government.
One thing is for certain: whether or not Amazon’s “judicial system” or intellectual property registry potentially violates your rights as a seller or not, it is something you have to deal with if you plan to have any type of a relationship with the online retailer at all.
Kenneth Eade is an international attorney, practicing ECommerce law, helping Amazon sellers with legal issues. www.amazonsellers.attorney
