How to Respond to Amazon Suspending Your Seller Account

amazon gift card

More than ever before, third-party sellers on Amazon are generating higher levels of sales.  In 2018, small and midsize businesses (SMBs) made $1 million more in sales than they had in 2017.  In addition, the number of small and medium businesses operating as third-party sellers skyrocketed.  At first glance, this is a win-win result for both the sellers and for Amazon.  However, the downside to this story is that because third-party sellers are finding higher levels of success, they are relying on Amazon as their primary source of income.  With reliance, comes dependence.  As a result, should Amazon decide to suspend or, even worse, to ban, these sellers, these businesses could lose everything.  If a seller has been suspended by Amazon, it should take the following steps to get back into good favor as expeditiously as possible and resume its operations:

  1. Identify the issue that has caused the complaint:

If you are a seller who has been suspended, the first action you need to take is to identify the issue that caused the complaint.  Amazon will inform you of the cause for your suspension, but it may not always be perfectly clear how you violated Amazon’s policies.

The following are the top reasons that Amazon suspends its seller accounts:

  • Poor seller performance

Amazon is very strict on its seller performance metrics.  If you score low for customer feedback, cancel too many orders, or don’t have timely shipping, Amazon is likely to suspend your account.

  • Seller policy violation

Ideally, sellers utilizing Amazon should understand the company’s rules prior to commencing business.  It logically follows that the more familiar you are with Amazon’s rules, the less likely you will be to break them.

  • Selling/Displaying restricted products

Amazon is adamant about maintaining high quality for product information and inventory.  Restricted products are identified by Amazon to ensure that customers are not seeing products that don’t align with Amazon’s mission.  It is essential to ensure that you are not listing restricted products in your product information.  To dissuade this practice, Amazon even goes so far as to encourage other sellers to report violations (“Amazon encourages you to report listings that violate Amazon’s policies or applicable law…”)

Regardless of the cause for suspension, the seller must remember that Amazon’s policies favor the buyer in almost all cases.  There is no penalty for the buyer and everything for the seller to lose.  As a result, sellers should view identifying the cause of the complaint as a fact-finding mission.  You do not want to be argumentative or defensive.  Simply find out what the problem is so that you can take steps to resume your operation.

  1. Explain to Amazon the measures that you will take to resolve the issue

As a seller, the second step you must take is explaining to Amazon the precise steps it will take to remedy the issues identified in the complaint.  Take full responsibility for the harm done to customers and don’t pass blame to either the customer or to Amazon.  Use clear and succinct language and identify the exact plan of action you will take to deal with the complaint.  Make sure that your plan of action includes as much specificity as possible and addresses all relevant points.  In addition, you might want to include sandwiching in some of your positive store attributes on Amazon to highlight its value to the marketplace.  Jeff Coleman, VP of Marketplace Channels at CPC Strategy offers sage advice: “When making your case to Amazon for account reinstatement, don’t get defensive or accusatory, and don’t treat the person on the other end of the line as if they’re the cause of your problem.  They’re just another person responding to your request, so get them on your side.  Explain what happened and share what steps you’re going to take to correct the issue so it doesn’t happen again.  In other words, give that person a reason to support you.”

  1. Explain to Amazon how you will act to prevent these issues from happening in the future

When you are trying to get reinstated, you need to present a convincing and well thought out plan for how you are going to prevent future issues from occurring.  The primary goal for an Amazon suspension is to force the seller to take detailed steps that will improve their account operations.  Amazon takes great pride in its reputation and depends upon its sellers to provide a reliable buyer experience.  You need to convey to Amazon that you have taken measures to implement a set, methodical protocol to prevent future complaints.  You want to demonstrate that you understand what went wrong and why it went wrong.  In addition, keep your explanation short and sweet.  Get into your root causes quickly and show Amazon that you are already attacking each self-identified complaint.   By sticking to the facts and the specifics of your improvements, you will maximize your likelihood of success.

If you are a third-party seller on Amazon and your account has been suspended, do not panic!  There are tried-and-true steps you can take to have your account reinstated, however, the process can sometimes be complicated and require some finessing.  As a result, it is highly advisable to seek the assistance of an experienced attorney.  Contact Revision Legal for a free consultation at (231) 714-0100.

Buying or Selling an Online Business: Legal and Practical Considerations

online business

If you are considering buying or selling an online business, there are many unique legal and practical issues to consider. Generally, buying or selling a business involves several steps. Often, the first step is the signing of a letter of intent that sketches the major contours of the deal. Then, a purchase agreement is drafted that expands the letter of intent. After the parties have negotiated the purchase agreement, there is a period of due diligence during which the buyer confirms various aspects of the deal. For example, during due diligence, the buyer and its attorneys must review all of the relevant contracts, leases, deeds, titles and financial documents. This ensures that the target online business has legal possession of the assets that are being sold and that such are unencumbered by loans and other financing and that the assets can actually be transferred. Likewise, the buyer must confirm sales, revenues, client lists and the other aspects of the business model.

If you are considering buying or selling an online business, you will want to retain an experienced business and internet attorney, like those at Revision Legal, to help you through the process. Here are a few of the most important issues that are unique to buying or selling an online business:

Are Physical Assets Being Purchased?

Buying an online business can present legal and practical challenges since, often, there are no physical assets owned by the business. The target business may not have a physical store or office or warehouse. Indeed, the target business may not even have valuable computer equipment or servers. Even if the target business has physical assets such as inventory, those assets might be a negligible part of the value that is being purchased. Further, physical assets such as inventory might carry various financial risks, such as the possibility that some portion of the goods are counterfeit or are otherwise non-saleable. For these and many other reasons, the parties may wish to carve out the physical assets and exclude them from the purchase/sale. Either way, the purchase contract should clearly specify what is being purchased and how ownership is to be transferred.

Intellectual Property

Careful attention to proof of ownership and methods of transfer are also important with respect to intellectual property and other non-physical assets. Physical assets are generally easy to transfer. Sometimes that is true for intellectual property too. For example, a trademark can be transferred via a two-step process — an assignment is drafted and signed and then forms are completed and sent to the US Patent and Trademark Office.

Transferring other types of intellectual property can be more complex. For example, a domain name transfer requires several steps and the involvement of at least one domain host provider,  the registrar. If the buyer wants to use its own domain registrar, then another party must be involved. The process involves the disabling of transfer locks, use of various authorization codes, provision of new information and codes and the exchange of verification emails. Timing is important too, since the seller will resist giving over control unless and until the purchase price has been paid and received.

Other types of intellectual property cannot be transferred at all. For example, under current rules, ownership of an Amazon seller account/store cannot be transferred. If the ownership of a business changes, the new owner must establish a new seller account. However, an existing owner can allow and authorize new users. Obviously, this creates legal and practical issues for any purchase if a key asset is a seller account that cannot be transferred. A possible solution here is to have key employees remain in place after the purchase/sale has been consummated. Again, these issues should be fully explored and negotiated.

A similar set of issues exist with social media accounts (like a twitter handle), with copyrights, payment accounts, etc. The parties must take great care in negotiating the methods by which these various assets are to be transferred. Buyers, in particular, should be careful to ensure that the seller actually has ownership of these assets and that the transfers have been done correctly. Website content, for example, should be verified as belonging exclusively to the seller and should be transferred via copyright assignments. Indemnifications and hold harmless provisions against infringements should be included in the final purchase agreement to protect the buyer from those sorts of claims.

Trade Secrets and Consumer Privacy Issues

A number of additional legal issues arise with respect to trade secrets, particularly trade secrets involving customer data and personal information. Trade secrets are confidential and valuable information that gives the online business its market edge. This information might include customer lists, suppliers and vendors, shipping arrangements, business methods and a host of other data.

Most of these trade secrets can be transferred without difficulty. However, now that the California Consumer Privacy Act (“CCPA”) has become effective, the transfer of personally identifiable consumer data must be handled with care. The CCPA mandates that all business and not-for-profits that collect and sell/transfer consumer data must obtain consents from consumers at the point of collection. The needed consent applies to the collection and transfer/sale of the data. For now, the CCPA may not fully apply when a business is sold, but once the buyer takes possession of the data, thereafter, the CCPA will control. Further, new laws are being introduced in other States and a federal law is being considered. For these reasons, due diligence must focus on what personally-identifiable data has been collected by the target online business, where is it stored, with whom has it been shared, what procedures have been and are now in place to secure the data from exfiltration and more.

These sorts of data privacy issues will become more and more important in the coming years and may have significant impacts on the buying and selling of online businesses.

As can be seen, there are many unique legal and practical complexities involved when buying or selling an online business. If you have questions, contact the business lawyers at Revision Legal at 231-714-0100.

Protecting Your IP by Seizing Payment Accounts of Overseas Infringers

counterfeiting warning provided by US government

When trying to protect your intellectual property from infringement, an overseas infringer is one of the most vexing legal problems. Even if the infringer is brought under the jurisdiction of the US courts via one of many long-arm statutes, the assets of an overseas infringer may be difficult to reach if a judgment is obtained. One successful solution to this problem is to freeze and seize payment accounts. Many payment processors — such as PayPal, Payoneer, and Stripe — are US-based or have US-based accounts and are, thus, directly subject to the jurisdiction of US courts. Likewise, other payment processors are large enough and conduct sufficient business in the US to be subject to US jurisdiction via the various long-arm statutes.

Freezing and seizing payment accounts creates a readily-available pool of money to satisfy a judgment for damages if the case proceeds to verdict. Likewise, freezing ­payment will likely bring the infringer to the negotiation table in an effort to obtain release of the monies through agreement. Further, a well-drafted Order will provide powerful tools for gathering additional information about the infringers that will be immensely useful as the case moves forward.

To freeze and seize an infringer’s payment accounts, the owner of IP — such as a copyright or trademark — must file a federal lawsuit alleging infringement and must seek temporary and permanent injunctive relief. As soon as possible after the initial Complaint is filed, the owner must then file for an emergency temporary restraining order (“TRO”). A federal court may grant a TRO if the plaintiff demonstrates the following:

  • Plaintiff is likely to succeed on the merits
  • Likely to suffer irreparable harm in the absence of preliminary relief
  • That the balance of equities tips in favor of the plaintiff and
  • That an injunction is in the public interest

See Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008). To succeed on the first element, a plaintiff must show the ownership of some protected IP and must show infringing behavior by the defendant. To be successful in obtaining a TRO and freezing payment accounts, a good deal of advance planning is necessary prior to filing. Although the case is not yet at the TRO stage, a recent example comes from the case of Pearson Education, Inc. v. Doe 1 d/b/a Anything You Can Imagine, Case No. 18-CV-7380 (S.D. New York 2019). That case charged that the defendants, located in India, were selling counterfeit textbooks which infringed upon various and numerous copyrights held by the plaintiff. In the lead up to the lawsuit, the plaintiff bought several textbooks from the online stores and obtained several copies from Amazon and other online sales platforms. The books were examined and found to be counterfeit. Further, the purchase transactions were traced and payment processors and other third parties to the transactions were identified. In addition to seeking damages, the plaintiff asked the court for preliminary and permanent injunctive relief. As noted, that case is not yet at the TRO stage.

If a TRO is granted in the case of alleged infringement, the protection provided is likely to be very broad. Among other actions, the court is empowered to order the following types of relief:

  • Preventing financial institutions and service providers from doing anything with the monies in the payment accounts such as allowing withdrawal or transfer of the funds, use of the monies for payments, etc.
  • Freezing computer files, data, business records and other documents help by the financial institutions and service providers
  • Enjoining the targets from aiding and abetting any further infringing activity
  • Prohibiting the financial institutions and service providers from conducting business with the alleged infringer while the infringing behavior continues
  • Ordering the financial institutions and service providers to search for additional user accounts of the defendants and provide notice of same to the court
  • Requiring the TRO to apply to any newly identified user and/or payment accounts
  • Ordering various information be provided on accounts (such as full contact information on the account owners including all email addresses, sales history, balance information and more)
  • And much more

An example of an exemplary TRO can be found at Poof-Slinky, LLC v. ADAADA , Case No. 19-cv-9400 (S.D. New York January 3, 2020). As can be seen, a TRO that targets the financial accounts and service providers of an overseas infringer can be a powerful tool that not only freezes monies, but provides tools for uncovering necessary evidence for further prosecution of the infringement case.

If you have questions about protecting your trademarks, copyrights and other intellectual property from overseas infringers, contact the IP litigation lawyers at Revision Legal at 231-714-0100.

Do Your Company’s Gift Cards Need to be ADA-Complaint?

Amazon gift card in a greeting card

 

Gift cards are now under scrutiny with respect to whether they must be compliant with the Americans With Disabilities Act (“ADA”). See Bloomberg opinion piece here. Among other things, the ADA bans discrimination against the disabled in “places of public accommodation.” In this way, the statute entitles everyone to the “full and equal enjoyment” of services or facilities that are provided generally to the public.

As we here at Revision Legal have discussed previously, over the last few years, courts have been struggling with the question of whether websites and other online platforms must be accessible to the blind and other impaired individuals. The legal quandary results from the fact that websites are not “physical” locations. In a slow, case by case build-up of legal precedent, the courts have taken a somewhat middle position on this question. For now, a website — with nothing more — does not have to be ADA-compliant. However, if a website is integral to one or more physical locations and “drives” consumer traffic to those locations, then the website must be ADA-complaint. The courts have reasoned that, under those circumstances, a website is one of the features that allows consumers to have “full and equal enjoyment.” To make a website ADA-compliant, the site must be constructed with certain underlying software and coding that allows a disabled consumer to use reading software that converts visual elements into audio.

Recently, a spate of lawsuits have been filed attempting to extend this legal argument to gift cards. See report here. For example, over a hundreds cases have recently been filed in the Southern and Eastern Districts of New York against retailers. See report here. Among the targets are businesses like Krispy Kreme Doughnuts and Hooters.

The main allegation of the lawsuits concerns the physical cards themselves. In general, the plaintiffs are alleging that the cards should contain Braille in order to be compliant with the ADA. Other claims being alleged include legal theories with respect to the ability to check balances on the cards via the internet. These theories link up with the recent decisions about retail websites being ADA-compliant.

As of now, these legal issues are unresolved. There is some previous case law concerning bookstores and booksellers and whether they must sell books in Braille if they offer books for sale. Those decisions denied relief to the plaintiffs holding that bookstores do NOT need to provide books in Braille to be compliant with the ADA. See, for example, Ariz. ex rel. Goddard v. Harkins Amusement Enterprises, Inc., 603 F.3d 666 (9th Cir. 2010).

Gift cards are, of course, different than books and judges may or may not accept that the analogy between gift cards and books is the salient one. The recent focus of web-accessibility cases on whether a mechanism — such as the website — “drives” sales and traffic to brick and mortar locations might be a more apt analogy. Arguably, gift cards serve the same purpose — driving consumer sales. Thus, one might predict that courts will hold that gift cards should contain Braille on their face and on their packaging in order to comply with the ADA. The issue of being able to access the card’s available balance might be a more complex legal analysis. If the card is issued, supported and administered by the retailer, then — most likely — ADA-compliance would be needed since the websites themselves must be ADA-compliant. If the gift cards are administered by a third party, the analysis is a bit more nuanced since that website is not, in theory, “driving” sales and customer traffic to a physical location.

If you have questions about ADA-compliance and your company’s website, gift cards and/or mobile apps, contact the internet lawyers at Revision Legal at 231-714-0100.

Federal Government to Begin Crackdown on Counterfeit Goods and Piracy

image showing counterfeit goods

 

Following the signing of the first round of a new trade deal with China in mid-January 2020, the Federal government announced plans to begin cracking down on the sale of counterfeit and pirated merchandise on web-based retail platforms. See CNBC News report here.

The Department of Homeland Security (“DHS”) issued a 54-page report detailing the economic effects of counterfeiting. See report here. The report acknowledges that progress has been made in recent years and commends the many positive actions that have been taken by retailers and platforms. However, the report notes that not enough has been done. The problem is a “vital one,” according to the report, and “online availability of counterfeit and pirated goods continues to increase.” As such, the report states that “strong government action” is needed. The government has announced an action plan that is aimed at “… fundamentally realign[ing] incentive structures and thereby encourag[ing] the private sector to increase self-policing efforts and focus more innovation and expertise on this vital problem.” The report details the government’s plan which includes the following:

  • Enhanced attention to and identification by government agencies of counterfeit merchandise being sold online
  • Expansion of power of customs officials to physically examine shipments, not just at ports, but also at all US warehouses/fulfillment centers
  • Increased focus on cross-border mail and air delivery vectors
  • Directives that federal agencies are to pursue and apply civil fines, penalties and to seek injunctive actions against entities that are financially benefiting from the counterfeiting (not just the counterfeiters themselves)
  • Agencies are directed specifically to use legal theories like contributory trademark infringement and third-party liability theories to target selling platforms, payment processors and “other intermediaries”
  • Encouragement of retailers to engage in self-policing activity including destruction of copycat goods
  • Encouragement of online platforms to simplify their procedures and forms for submitting complaints by holders of IP rights and for taking down infringing sales listing
  • Implementation of a nation-wide anti-counterfeiting consumer awareness campaign
  • Creation and updating of “nefarious actor” and “repeat offender” databases
  • And more

Much of the enforcement efforts will fall to DHS, the US Customs and Border Protection, and Immigration and Customs Enforcement.

Legally, the new enforcement regime is a potential game-changer since it seems that the government intends to take an aggressive stand concerning third party liability and contributory infringement. Despite many online sales platforms having “zero tolerance” policies for counterfeit goods, the problem has only gotten worse over the last few years. Various parts of the report suggest quite strongly that the solution is to punish third parties financially through litigation based on these legal theories of contributory infringement.

Trademark Infringement and Contributory Infringement

In general, an owner of a trademark has the exclusive right to place its trademark on the goods and products that it sells. Trademarks are valuable since they signal to the consumer the unique commercial source of the goods and, generally, indicate a level of expected quality. A trademark owner can sue for trademark infringement and obtain damages and injunctive relief.

A trademark owner can also sue for contributory trademark infringement against a third party (not the actual person or entity who infringed). The basic idea is one of enabling. Several of the more famous cases involved flea markets. The successful legal argument was that, but for the flea market offering a place to sell the counterfeit goods, there would have been no infringement. As such, it was argued that the flea market contributed to the infringement and should be held liable. As noted, those legal arguments were successful and have been expanded over the years to include online sales platforms.

When courts are confronted with a claim of contributory infringement, typically the courts focus is on three factual issues:

  • Who controls the “instrumentality used to infringe” including who uploads the listing and who has the right and power to exclude or take down a listing
  • Knowledge of trademark infringement by the owner of the “instrumentality” — the courts will find knowledge if the platform is deemed “willfully blind”
  • After learning of the infringement, were sufficient remedial steps taken to stop the infringing activity?

Note that this legal analysis is not limited to flea markets and online platforms. The same analysis has been applied successfully to credit card processors. See Gucci America, Inc. v. Frontline Processing Corp., 721 F.Supp.2d 228 (S.D.N.Y. 2010).

If DHS is serious about pursuing these sorts of contributory infringement claims, the new enforcement efforts have the potential to have a major impact on reducing counterfeiting and piracy. Government enforcement is important. But holders of IP rights must be constantly vigilant and must pursue private enforcement actions. Holders of IP rights must retain experienced intellectual property litigation attorneys.

If you have questions about protecting your trademarks and other intellectual property, contact the trademark lawyers at Revision Legal at 231-714-0100.

Five Reasons to Register Your Self-Employed Brand as a Trademark

Office

Trademarks and service marks are essential to every business. A trademark identifies your business as the exclusive commercial source of the goods and services you are providing. That is a significant advantage in a competitive marketplace. This applies with equal force to individuals who are self-employed, particularly those working from on-line platforms trying to build significant followings. Creating and registering a trademark can help immensely. Here are five good reasons to trademark your personal brand:

Trademarks make your business sophisticated and serious

There are a lot of self-employed businesses chasing the same customers. Having a registered trademark distinguishes you from your competitors and helps drive your sales, revenue and personal profits. Why? Trademarks are sophisticated, serious, and legal. As such, owning a trademark makes YOU sophisticated, serious, and legal in your market niche. Trademark registration requires advance planning, creative effort, attention to detail, the retention of good trademark attorneys and enough business success to cover the costs. In other words, owning a trademark is a signal to your customers and potential customers that you are successful and that you are worth associating with. You are not just another gig worker or a 1099-contractor. If you can get a trademark registered, then you can do the job. This helps you get the contract and, over time, creates customer loyalty which, in turn, helps your business succeed.

Trademarks make you “findable,” no matter the device

Like unique avatars on message and comment boards, a good trademark quickly identifies you and your business regardless of what platform or device your customers are using. Your customers already trust you. Using a trademark ensures that they can find you on any sized device. A good mark will be scalable and usable on any platform and with any medium (such as video, audio, packaging, etc.). “Findability” matters for two main reasons. With your current and previous customers, they find you and stop looking for one of your competitors. That is the key. For your future customers, they see your mark, which is unique and interesting and stands out from the crowd, and they give you a try. Again, because of your excellent trademark, your future customers stop looking at your competitors.

Trademarks lead to growth and make marketing easy

With a solid well-established trademark/brand, marketing and expanding your personal business becomes much easier. Trademarks can help jump start the process of creating a marketing plan. The launch of a new logo can BE the marketing plan providing an opportunity to send out texts, emails, and mailers to your current, former, and future customers. Interestingly enough, sometimes, the mark itself can create a small revenue stream. People like to buy merchandise depicting positive-message brands and marks. Wearing the logo makes them personal brand messengers. Many people like that idea. In the same manner, a trademark increases the success-rate for entrance into new markets. Think, for example, a national seller of famous cookies can use that brand to try and seize a market share for crackers. Your personal business can use the same technique.

Trademarks protect your business

A trademark allows you to legally protect your trademark and the sales and revenue that it generates. You are the only person who is allowed to use your mark (unless you grant a license). As such, you can prevent others from infringing on your mark by sending removal demands, cease and desist letter and filing suit in federal court for trademark infringement. Protecting your business in this manner is much more difficult if you do not register your personal brand.

Trademarks are themselves valuable

Trademarks themselves are valuable business assets. As discussed above, marks are useful for building a business. This is essential for the self-employed entrepreneur. But, as an added benefit, while building the business, the brand itself becomes a valuable asset that, potentially, can be monetized in the future.

If you have questions about creating and registering a trademark for your self-employed business, contact the trademark lawyers at Revision Legal at 231-714-0100.

How Do I Arbitrate Against Amazon?

Amazon.com warehouse and fulfillment center in Shakopee, Minnesota.

The number of companies or individuals who sell their products on Amazon has increased exponentially in the last few years.  As Amazon has grown in power, so have its sellers.  Total profits continue to sky-rocket and third-party sellers are making millions of dollars every day.  All of Amazon’s third-party sellers, responsible for more than half the total sales on the website, must sign a contract that binds them to a mandatory arbitration clause in the event of any dispute.  With so many sellers, Amazon has created a marketplace that is too difficult to oversee.  Third-party sellers are vulnerable to many different injuries:  losing control of their listings, having their inventory mislabeled, having competitors write fraudulent reviews, or even having Amazon freeze their account out without prior notice or warning.

Because sellers have signed the arbitration agreement in their contract with Amazon, they have no alternative to arbitration.  Amazon’s Arbitration Clause provides that the arbitration will take place in Washington.  It also states, in relevant part:

Amazon and you both consent that any dispute with Amazon or its affiliates or claim relating in any way to this Agreement or your use of the Services will be resolved by binding arbitration as described in this paragraph, rather than in court, except that (i) you may assert claims in small claims court that is a Governing Court if your claims qualify and (ii) you or we may bring suit in the Governing Courts, submitting to the jurisdiction of the Governing Courts and waiving our rights to any other jurisdiction, to enjoin infringement or other misuse of intellectual property rights.  There is no judge or jury in arbitration, and court review of an arbitration award is limited …

The arbitration will be conducted by the American Arbitration Association  (AAA) under its rules, including the AAA’s Supplementary Procedures for Consumer-Related Disputes.  Payment of all filing, administration and arbitrator fees will be governed by the AAA’s rules.  We will reimburse those fees for claims less than $10,000 unless the arbitrator determines the fees are frivolous…

Are the arbitration proceedings fair to third-party sellers?

In short, not in all cases. The costs of arbitration can be exhorbitant and cost-prohibitive for many sellers.  Depending on the amount in controversy, the cost of an arbitration can be exceedingly high.  For example, if a company had $200,000 worth of inventory damaged or destroyed, it would face incredibly high costs in arbitration.  Arbitrators can cost between $300 to $800 per hour.  A hearing will typically last longer than one day and each party will be given an opportunity to submit evidence and prove its case.  In addition, in the case of a suspended account, Amazon holds all the power.  For most sellers, suspended accounts may mean a loss of their primary source of income.  Although Amazon claims that the purpose of its arbitration clause is to allow sellers to resolve issues more expeditiously and less expensively, this is far from the truth.  That said, given that arbitration is the only alternative, sellers should become knowledgeable about the steps for filing for arbitration against Amazon.

What are the steps for filing for arbitration against Amazon?

  1. Write your demand letter for arbitration: The demand letter is an official document telling Amazon what you are seeking in arbitration, how you believe you have been wronged and what parties are involved.  This document needs to be filed with both the American Arbitration Association as well as Amazon.com.
  2. Make sure that your demand for arbitration is complete:  Make sure to include every claim that should be addressed.  If you leave any claim out, you may be prohibited from adding it later on.  You do not need to go into a great deal of detail, but you do need to discuss the highlights of your case and how it has harmed you and your business.  This might include seller performance correspondence, documentation or other evidence which you provided to Amazon, invoices for your products, and anything that shows inaccuracies or false accusations on Amazon’s part.
  3. Read and re-read the Amazon Business Services Agreement: Make sure you are well versed on what you agreed to in the contract.  Claiming that you were ignorant about the contract’s terms is not a valid defense.  Anything stated in the document allows Amazon to argue that your dispute is void.
  4. Determine your arbitration filing fees: An arbitration proceeding generally involves two fees:  an initial filing fee, which must be paid upon sending your Demand for Arbitration, and a final fee, paid prior to the hearing.  In its Conditions of Use, Amazon states that they will cover a seller’s arbitration fees up to $10,000 unless the claims are deemed frivolous.  They also do not seek attorney’s fees and other costs from sellers as long as the claims are legitimate as determined by the arbitrator.

Going to arbitration with Amazon can be a difficult and intimidating experience.  It can feel very akin to David waging an uphill battle against Goliath.  If you have a potential claim against Amazon, it is highly advisable to obtain the advice of knowledgeable legal counsel knowledgeable to ensure that you are making your strongest case.  Contact the Amazon seller attorneys at Revision Legal for a free consultation at (231) 714-0100.

Is Your Business Ready for Foreign Trademark Registrations?

 

international trademark registration

  1. Do You Have a Us Trademark Registration or Pending Application?
    • Certain international treaties provide some advantages to filing based on your US trademark application or registration. Your international trademark is dependent on your domestic registration for the first five years. Anything that happens to your home trademark registration in the first five years of international registration will also affect international registration. If a competitor has good cause to attempt to have your home registration canceled during this dependency period, you can lose the international registrations too.
    • Three important treaties affect international trademark filing. The 1883 Paris Convention is the largest and oldest. It has 177 member nations. The Paris Convention established the right to claim an earlier filing date as a “priority right,” if it is filed less than six months after another filing in another member nation. The 1891 Madrid Agreement has 55 member nations and the 1989 Madrid Protocol has 98. Together, the Madrid Agreement and the Madrid Protocol comprise the “Madrid System” for international trademark registration. The World Intellectual Property Office (WIPO) is the authority that administers international applications.
    • You may want to vet your potential brand in the US before finalizing the mark. Vetting your brand before launch, or filing a trademark application, is the prudent thing to do. This helps make sure that you won’t waste valuable time and money advertising the brand, then learn someone else is already using it, and you have to start over with a different brand.
    • Before you file a trademark application or select a brand name, always have a clearance search done first. Clearance searches examine whether a mark is previously unused and available for registration. For maximum efficiency, a clearance search should include a thorough review of: (1) Unregistered brand that are already in use in the US and on social media, such as Twitter, Instagram and Facebook; (2) Previous trademark applications and registrations, both federal and state; and (3) Trade bureau label applications.
    • This availability evaluation process for a prospective trademark or brand can be very difficult, particularly since so many companies and individuals are doing business across the US and around the world, using marks that are unregistered. It’s best to obtain the assistance of a veteran trademark attorney to lead this process and evaluate the risks faced when using a proposed mark or brand.
  2. Are You Doing Business Outside of the United States Now?
    • If so, you’ll be able to prioritize regionally based on business priorities. We can discuss risks which we’ve observed, and which nations are most important for your business strategy. The economy is steadily globalizing, so keeping pace with a multinational business strategy is necessary to make a small company grow, and serve unsatisfied demands in foreign markets. Methods such as exporting, franchising, licensing, and direct capital investment in foreign nations, have proven to be successful in making small companies grow and perform well.
  3. Do You Sell Products Online Through Amazon, Alibaba, or Other Marketplaces?
    • Policies of private companies that affect your business may come into play when you decide how to protect your trademark abroad. The passage of time has revealed, through creation and evolution of e-commerce sites, that gray-market goods, counterfeits, and goods that infringe upon trade dress always find their way into such marketplaces. The VERO (Verified Rights Owner) program was one of the first by an e-commerce site to give brand owners the power to monitor, review, and take down the sale of infringing goods through VERO. Amazon’s Project Zero, as well as efforts by Alibaba, are parallel programs to remove counterfeit and infringing goods from their sites, so that major brands continue to sell goods on their sites.
    • Are these enforcement and take-down services genuinely effective? They will work if participating companies actively use the tools that are offered, and enforce their rights to their own brands and trademarks. If a product or brand rapidly becomes popular, it can help your company grow but it also entails two substantial infringement risks. First, you may not yet have trademark registrations in the nations where your mark is being infringed. Such registrations are needed for brand defense. Second, you may not have enough resources allocated to monitor, review, and take down the infringing goods.
    • Brand owners interested in enrollment in Amazon’s Project Zero need to have a registered trademark and enrolled their brand(s) in Amazon Brand Registry. The Project Zero program requires a registered trademark for brand owners to enforce their rights, so even a well-known brand lacking registration can’t be enrolled.
    • Owners of established, well-known brands need to prove their identity and the registration of their marks, and they need to have a response team available when an infringer is found. Brand owners with these assets have found that the tools provided by VERO (eBay) and Project Zero (Amazon) can be effective, but the site managers often err on the side of caution in enabling such take-down efforts. Rogue sellers on these e-commerce sites can challenge your take-down, and file a challenge or appeal. You must be prepared to offer a comprehensive response.
    • Such rogue sellers are never identified to the brand owner by either VERO or Project Zero, even if they file a challenge or appeal. Identifying the rogue sellers through other means is very important in monitoring and enforcing brands against infringement, both online and in brick and mortar stores. These rogue sellers can establish fake profiles on e-commerce sites that are almost untraceable, so these sites have become their “happy hunting ground.” If their products are taken down for infringement, they simply set up new profiles and keep selling their infringing goods. Brand owners must remain vigilant, and the best practice is to clearly identify the actual name and location of the rogue seller.
  4. Are You Concerned About Using Your Mark in China?
    • China presents some unique risks. Because of rampant IP fraud and their investment in heavy manufacturing, registering your marks in China prior to entering the market is a wise precaution. The Chinese government is getting tougher on IP theft because it is on the rise, and such protection now also protects jobs in China. As with e-commerce sites, it may be difficult to obtain the name and location of the infringer. The very concept of IP isn’t really consistent with Chinese culture or the communist government. But companies that encounter IP fraud should report it to the Chinese authorities immediately, and seek local legal counsel. Chinese courts can be slow to take action, but cases have been pursued with success, particularly where Chinese manufacturing jobs are at stake.
    • China is a WIPO member and has signed 16 international copyright and trademark agreements. China has also passed laws providing equivalents to American “passing off” protection, which protects trademarks even if they are not registered in China. Thus, American companies can have the same protections under law that they enjoy at home. If you can prove that your mark is already registered in your company name, and that infringers in China intend to defraud your potential customers, you can theoretically defend your mark effectively. The key is effective legal counsel to ensure that the national laws are enforced at the local level.
  5. Do You Plan to Start Selling, Distributing or Manufacturing Outside the United States?
    • If you haven’t already globalized your business, we can help with creating a strategy for the future that fits in your budget and maximizes your legal protections. Today’s international competition in many industries is very different from the 1950s and ’60s. To succeed, an international company may consider transforming from a multi-domestic competitor, which enables company subsidiaries to independently compete in regional domestic markets, to a global competitor, which builds and engages with a worldwide network of market positions and products against competitors.
    • The global company seeks to manipulate leverage points, from its foreign competitors’ cash flow, to international production and economies of scale. Unconventional or counterintuitive steps, such as lowering prices, can make a competitor’s response more difficult, time-consuming, and costly. The goal of the leverage point strategy is to strengthen your own company while weakening competitors.
    • Some companies should consider foregoing a global strategy and remain in their home nations. Competing globally offers both great rewards and great risks, and often requires substantial policy and operational changes are required. For example, personnel policies which work well in the US may result in a labor strike in France or South Korea. A multinational business strategy may require unconventional management methods to occasionally enable:
      • Profit goals that vary substantially among different nations due to local tax burdens, labor costs, or resource opportunities.
      • Products that are underpriced or over-designed in some markets.
      • Investments that produce zero or even negative returns.
      • Building production facilities in both high and low-cost labor markets.
      • Perceiving nation-by-nation market positions as interdependent, rather than stand-alone elements of an international bundle, to be expanded, contracted or closed based solely on the profitability of each element.
    • Some international companies are simply not naturally well-positioned for global competition. These are naturally multi-domestic and are likely to stay that way, competing on a regional basis within their home countries. These businesses often have products which have high transportation costs, differ substantially between regions, or fail to provide sufficient economies of scale to yield a competitive advantage in international trade.
    • To help mitigate the risks of foreign infringement, it’s important to know those risks before expanding internationally. To avoid trademark conflicts with any foreign competitors on their own turf that they can easily win, company management must clear and monitor their own trademarks. The best method for risk mitigation is a thorough clearance search by a firm that focuses on such searches, followed by an evaluation of the search results by a trademark attorney who is knowledgeable in the relevant product classes, and can properly counsel management on the risk levels faced by a proposed mark or brand.
    • Armed with a clearance search report, an experienced trademark attorney can also advise management about the relative strength or weakness of the proposed mark, and possible alternatives that would be easier to protect. The bottom line is that a particular mark doesn’t need to be identical to an existing mark, owned by a competitor, to infringe on that mark. Business managers often fail to realize that infringement doesn’t require an exact match, so a new mark must be chosen carefully and then monitored.
  6. Do You Have Business Partners Outside of the United States?
    • You will want to make sure that partners you work with are using your brand in a way that protects it as opposed to causing potential risk. After you’ve produced goods, obtained exclusive rights to those goods, or created a brand, you can license other companies or people in other countries to produce, market, and sell the same goods under your brand. In return, you get royalties or other forms of compensation. These licenses work well to profit from your goods and your brand, and to expand your markets. However, agreements for foreign licensing carry certain risks and your company and its brand require protection. By partnering with foreign companies who have established distribution networks, you only need to license them to market your goods using their networks, and then wait for the royalties to start producing revenue for your company. Carefully select your business partners, negotiate a contract under the terms and conditions that protect your company and its brand, and monitor your foreign partners’ progress in marketing and using your goods and your brand.
    • The expertise of your foreign partners must always be verified. You probably don’t know them personally, so you need to get references and their experience with licensing other goods of the same type. This is much the same as vetting a new employee before offering the job, but it is far more important. Licensing companies should be willing to give you client lists and contact information for those clients. Seek out the candid opinions of those clients about a prospective foreign partner’s general quality of service, including accounting practices and timeliness. If your prospective partner is relatively new, check out its leadership and their business connections. If a former top executive of another licensing company is in charge, this indicates that the new company is competent despite its lack of an established track record.
    • Registering your trademarks in countries where you are planning to partner with foreign distributors or manufacturers helps you maintain control of your brand. Foreign trademarks can also be used as leverage in your licensing agreements. All of these measures are best pursued under the direction of an experienced U.S. trademark attorney.
  7. What Is Your Budget and Potential Future Budget for Brand Protection and Legal Risk Mitigation?
    • If we help give you the information, you can better plan for protecting your marks through trademark registration. Also, we can help avoid costly litigation. Brand protection must be tailored to the needs of the brand owner and the business plans of the company. Most companies have staff members who are assigned to brand protection, but each company has its own set of goals to pursue. These goals vary from industry to industry, but also vary from company to company within the same industry.
    • These differing goals lead to differing strategies when countering and mitigating risks to these companies’ brands. Your company’s philosophy and specific set of goals should be carefully reviewed and fully understood before developing and implementing a brand protection program. The true definition of success can be challenging and the support of competent counsel is necessary, particularly if a return on investment (ROI) is unlikely.
    • Some sort of effective strategy must be developed and implemented to protect your investment in your brand. Actively protecting your company, your brand, your image, and your investments is absolutely vital. Foreign trading activity in your industry must be monitored and infringement must be countered promptly and aggressively, or the legal standing and reputation of your brand can be irreparably damaged.
  8. Have You Performed International Market Analysis or Trademark Searching for Your Brand?
    • Conducting trademark searches is an essential part of the process of choosing and protecting new brands. It is often the most tiresome step of the brand protection process, since it is possible that a proposed trademark is already in use, and the company needs to choose a new mark and try it again. Before selecting a new trademark, it’s important to learn its availability for both registration and use. Spending precious capital on brand creation and marketing is pointless if the company later learns that the new brand is unavailable, because it infringes a previously registered trademark. The reason for clearance searches is to learn whether the selected mark would infringe an existing mark registered by a third party, and whether an application to register the selected mark is probably going to be blocked, either by the trademark office or by a third party.
    • Registering a trademark provides the exclusive right to use the mark in commerce for the goods described in the registration, and also extends to similar trademarks and similar goods. If the mark is fairly distinctive or unique, the owner may enjoy a broader degree of protection, going beyond prohibiting use of an identical mark for identical goods, to prohibiting a merely similar mark for merely similar goods. Also, in most countries, the applicant is not required to use a registered mark for five years after it is registered, so a registered owner can prevent others from using the mark, or one like it, to market the protected class of goods even if the owner is not using its registered mark at all. Therefore clearance searches are vital before the official launch of a brand.
    • Many types of searches are available, depending on the company’s budget for this purpose. The most inexpensive are free online trademark searches, using online search engines and databases provided by the USPTO and WIPO, and can be done by any company manager or a paralegal in the company’s legal department. These services can provide your company a rough idea of the trademark landscape around the company’s selected trademark, but this view is limited to finding registered marks that are basically identical or nearly identical. In other words, relevant marks which are registered or unregistered, and could present a serious risk of infringement, may not be uncovered. A full clearance search by a professional search company is more expensive, but is much more dependable, and seeks to identify any prior trademark applications and registrations which may be relevant, as well as public domain terms that are already in use.
    • An existing user of a brand might be able to successfully object to the registration or use of your new trademark through unregistered trademark rights, even if that user never filed an application to register the mark. In the US, these common law rights are based on unregistered legal rights such as passing-off rights. However, the mark is not registered, it will not be revealed in a trademark register search and can only be found, if at all, by a professional search of commercial activity, such as phone directories, online search engines such as Google, trade directories, and searches of company names and Internet domains or trade directories. Such common law searches are not 100% reliable but they can make infringement risks much more manageable.
    • Launching a new brand without any prior searches at all can be disastrous. For example, the company might be sued for infringement by an existing owner of a registered trademark owner, or by an unregistered user who claims that your goods are being passed off as theirs. Such a lawsuit, if successful, usually produces an injunction: a court order prohibiting any and all commercial use of the offending mark. Also, such a lawsuit also can yield money damages for your competitor, and even confiscation of all infringing goods and promotional materials. Potential catastrophes such as this mean that paying for a full pre-launch clearance search is money well-spent. Without such a search, your company could have its trademark application blocked by the trademark office, or successfully opposed by an existing trademark owner or unregistered brand user.
  9. Is Your Trademark a Foreign Word and What Is the English Translation or Translation?
    • If there is a chance that consumers might become confused, the doctrine of foreign equivalents prevents the registration of foreign words or phrases if the equivalent words in English have already been registered or used for products that could be believed to come from the same company. If an American consumer might understand the descriptive or generic term, registration of that term as a trademark is not allowed. There are exceptions, however.
    • The doctrine calls for a trademark examiner to translate the term into English to learn whether it is generic or descriptive, and whether it is sufficiently similar to existing trademarks in English to cause confusion. The doctrine only applies if an American consumer would translate the term into English. Previous decisions indicate that if an applicant argues that typical American consumers do not speak a particular language, the argument will probably be rejected. Examiners have researched the percentage of American consumers who speak that language and, even if it is a small percentage, decided that the language is not obscure enough to allow registration. If the evidence is inconclusive, examiners may seek out additional evidence, such as whether the home nations of that language are significant trading partners with the United States.
  10. Do the Words or Designs in Your Trademark Have Any Cultural Connotations That May Affect the Brand Impression Overseas?
    • When considering expansion to a foreign market, the proposed mark should be presented to a native speaker of the language, to find out whether it has any negative connotations. It can be humiliating, and very expensive, to register a mark and learn later that it translates into an obscenity, or its pronunciation is similar to a word or phrase with other negative connotations. The most notorious example may be the “Nova” brand of Chevrolet vehicles, since the phrase “no va” means “doesn’t run” in Spanish. Another example is the “Esso” brand of petroleum products marketed by the Standard Oil family of companies in the 1970s. After an extensive clearance search, which was done after (rather than before) the brand launch and problems were encountered, this was changed to “Exxon,” which has no meaning in any language. Many trademarks are selected because they have specific national cultural connotations. If your company’s goods are seen as carriers of cultural meanings–particularly if they refer to the home, family, or religious values, if they are used in the home, or if they are considered indispensable such as food, fuel, and reliable transportation–trademark translation must focus on different customs in different cultural backgrounds, in order to avoid negative associations and misunderstanding.

If you seek help with international trademark registration, contact one of our trademark registration attorneys today at +1 (231) 714-0100.

ShopBase: A New Potential Avenue for Print on Demand Infringement

Copyright infringement warning sign

Everyone from artist and designers to brand owners and inventors know that protecting intellectual property rights on the internet can be an uphill battle. You may have finally figured out how to get Amazon to take down a listing that copied your product photos and then you have another infringer selling counterfeit products under your trademark. This can be exhausting and is a normal part of doing business online. Well, Amazon’s marketplace is not the only site you need to be watching for infringing activity.

ShopBase.com is a Vietnamese based online print on demand and dropship company. These services make it easy for infringers to create knock off or counterfeit products, infringe copyrights and trademarks, and make money doing it. Unless ShopBase has a stringent review policy, it is likely that Vietnamese infringers and other infringers all over the world will take advantage of their services, which can facilitate the illegal infringement of IP owner’s rights.

Currently the ShopBase Print on Demand and Dropship private group on Facebook has over 2,500 members and membership appears to be steadily growing. The ease at which print on demand and drop shipping services are provided increases the risk that careless service providers could facilitate infringement. The potential infringement facilitation by ShopBase could be significant for brand owners and copyright holders in particular.

As any Amazon or Alibaba seller knows, keeping up with the marketplace’s policies related to reporting infringement is often a full time job by itself. Now it is more important than ever for IP rights holders to monitor and respond to infringement. Companies like ShopBase must be aware of the potential for infringers to misuse their services and must be vigilant. ShopBase should have a rigorous IP rights policy in place, but you, the owner of the IP, must be ready in the event an instance of infringement is discovered.

Our attorneys are well versed in online sales platforms, dropshipping and print on demand related infringement. We have helped clients battle to protect their trademarks, copyrights, patents and other IP rights. If you think that your rights have been infringed or you want to make a plan to protect your rights through registration or other means, please reach out to our trademark infringement lawyers today to discuss how we can help.

Facebook Infringement: Facebook Commerce and IP Tool

John DiGiacomo: Hey everyone. My name is John DiGiacomo, I’m an attorney with Revision Legal and I want to talk to you this Friday about something that is new from Facebook. It is the Commerce & Ads IP tool and the purpose of this tool is to allow brand owners, typically trademark owners to search their brand in Facebook Ads, marketplace posts, group sale posts, and to more easily report instances of trademark infringement or other sorts of infringement as they identify those through their own searches through this new tool.

John DiGiacomo: And before I talk about the actual tool, I want to back up a bit and talk about service providers generally and how they manage content moderation. And there are two major pieces of law that apply to service providers when they undertake this role to moderate content. The first is Section 230 of the Communications Decency Act. Section 230 says that a service provider is not a speaker in some sense of the content being posted by its users and there therefore it cannot be held liable for the tortious content that is uploaded to the service by its users.

John DiGiacomo: That means that if I upload some defamatory statement on Facebook where I say my neighbor ate a dog, that’s just not Facebook’s problem, it’s my problem. And because of section 230 Facebook doesn’t really have to do anything about that at all. But companies like Facebook have established moderation teams because if they don’t try to at least curtail some of this type of nefarious behavior, the platform starts to look like the Mos Eisley Cantina, a place of scum and villainy, and no one wants to be on a platform like that. So Facebook has undertaken and other service providers have undertaken these duties, which they don’t actually have to moderate this content.

John DiGiacomo: From the IP side, there’s also the Digital Millennium Copyright Act and the DMCA as it’s called, allows a safe harbor to Facebook for the uploading of infringing content. And what that means is that Facebook only has to remove content when it’s notified by a DMCA, a take down or by actual knowledge of infringement occurring on its platform. If it doesn’t receive those notices, it cannot be held liable, or what we call secondarily liable for copyright infringement through its platform.

John DiGiacomo: And then from the trademark side, there’s really no safe harbor. Trademark law says that if you are indicating the origin or source of goods or services in a way that confuses the consumer, you can be held liable for direct trademark infringement. And if you’re making money off of trademark infringement or if you’re facilitating it, you can also held liable for what we call vicarious infringement or contributory liability.

John DiGiacomo: So these are the main three areas that a service provider like Facebook tries to deal with when they undertake a policy for moderating content. And some of these service providers have gotten really good at this. They have now artificial intelligence search tools, which you can upload an image if you’re a brand owner and they might search for your logo. Other platforms like Facebook are allowing direct search within their results across the entire platform, which gives brand owners an additional tool to search for instances of infringement. And they’ve really tried to use technology and not people, to help curtail these instances of infringement on their platforms.

John DiGiacomo: So Facebook’s new tool, this Commerce & Ads IP tool allows a brand owner and like I said, typically a trademark owner to search for infringement across the entire Facebook platform, identify that infringement and then inform Facebook that the infringement needs to be removed from the platform.

John DiGiacomo: So let’s look at the tool, as of right now it’s just an application and I haven’t seen what actually the tool looks like, but as you can see on the screen here, it’s a application to get access to the tool. It requires certain information such as your name, the brand or company that you are, it also asks for your Facebook or Instagram profile. It asks for your trademark registration number, your trademark jurisdiction and it also asks you to provide a direct link to your trademark registration or upload a PDF showing that you actually have a trademark registration.

John DiGiacomo: So it looks a lot like Amazon’s Brand Registry application and in practice it’ll be interesting to see how the tool actually works. When we figure out more about the tool we will certainly let you know. In the meantime, we recommend if you are a brand owner, to sign up for this tool so that you can begin searching Facebook to determine whether or not there’s wide-scale infringement occurring of your trademark or your brand, and you have to do it yourself, unfortunately, as of right now, the brand owner must do it directly. It cannot be done by an agent or an attorney like me. So if you are a brand owner, like I said, we recommend that you go to the website. I’ll drop a link in the video description, go to the website, fill out the form, get into the system, perform some searches. If you see some wide-scale infringement, definitely contact your attorney. My name is John DiGiacomo. Thanks for listening. Happy Friday and have a great weekend. Thank you.

If you need help with Facebook infringement, contact one of our Internet lawyers today.