— by Michael Feigin, Esq.
How Amazon Deals with Intellectual Property
I love Amazon and buy just about everything there except for when I venture out into the physical world, in which case my store of choice is Costco. However, the way they deal with intellectual property is notoriously really, really bad. If you notify them of intellectual property infringement (patent, trademark, or copyright) they will invariably ignore real claims, while sometimes acting on spurious claims without telling you a reason why they took down your listing.
I have had clear cases where a client might have a trademark, and Amazon will sell goods of others using your trademark listing. I have had other cases where two Amazon sellers were buying an item with a specific product code from the same supplier in China and one seller claimed it was “his” product code. Amazon removed the listings of the other. Every now and then on lawyer lists there are talks of class action suits against Amazon, but none have materialized to my knowledge.
Recently, Amazon has taken Etsy’s approach to intellectual property infringement. Namely, “it’s not our problem that we took down your listing — go get an agreement with the person who complained about you!” Now to be fair, with Etsy if you hire a lawyer such as myself, I can talk to a knowledgeable lawyer on the other side who will discuss the matter with me and be reasonable. At least, that has been my experience. With Amazon, you can’t get past what is either a really bad artificial intelligence bot or someone they are paying minimum wage to copy and paste phrases into a response. Amazon’s handling of intellectual property is so dismal that there’s nothing to lose by writing this publicly. This is a real summary of one such discussion, albeit with the item name changed…
A Conversation with Amazon about Intellectual Property
Amazon to client: “Some lawyer says your product infringes his patent so we took down your listings. Get his agreement and we’ll put it back up.”
Me: “Hi, I’m a lawyer and I represent the client. He’s selling product X only. It’s a sharpened piece of metal A which has been known since about the Bronze Age. The patent being cited requires that the person use A+B+C+D together, so my client can’t possibly be infringing.”
Amazon: “For privacy and security reasons, we can only send information to the e-mail address that is registered to your Amazon account. Please write from the e-mail address that is registered to your account and we will be happy to assist you.”
Me: “I cannot write from my client’s email address! Here are links to see my attorney registration listings with each of the states of New York and New Jersey as well as with the U.S. Patent Office.”
Client, from his email address: “I appointed attorney Michael J. Feigin to take care of this issue with Amazon. Do I need to do anything else to prove he is my attorney?”
Amazon: “Amazon Seller Support is not in a position to offer you legal advice. If you are in doubt whether, and to what extent, you are complying with all your legal obligations as a seller, we would suggest that you engage legal counsel to advise you in the matter.”
Me: “I am the legal counsel! How can I speak to a lawyer on your side concerning a legal matter?”
Amazon: “We removed these items from our site because we were notified by the rights owner that the items infringed their rights. Please contact the rights owner directly for more information.”
Me: “As I showed in the one page letter, their claim of infringement is clearly false. There is no ‘rights owner’ who has a monopoly on sales of sharpened metal. Asking my client to come to an agreement with the ‘rights owner’ is like asking a hen to get the fox to agree not to steal its eggs.”
Amazon: “Amazon Seller Support is not in a position to offer you legal advice…”
Me: “I am the attorney. It is my strong opinion at this time, based on all information at my disposal about this matter, that my client is within all applicable laws and regulations with regards to sales of his sharpened pieces of metal. I am not seeking legal advice from Amazon. I am the legal counsel which has been engaged. We simply request that Amazon re-instate the listings.”
No further responses from Amazon.
Amazon Shoots Itself in the Foot
Upon further investigation, it turns out the “rights owner” filed a lawsuit against Amazon for patent infringement based on Amazon advertisements of various products together (e.g. on my client’s listing it might say “others also purchased…” and list the products required to infringe the patent). I would guess that the “rights owner” had a very similar conversation with the bot at Amazon that I did, leaving them with no recourse but to take them to court. If the plaintiff was able to have any meaningful discussion with Amazon in the first place, it probably wouldn’t have come to a lawsuit and wouldn’t have come to Amazon removing all sorts of very legitimate listings, harming numerous Amazon sellers and customers who buy and sell this ancient product.
The Amazon Indemnity Clause — the Seller is Always Responsible
There’s a great 60 Minutes interview of Jeff Bezos in the 1990s — Mr. Bezos worked in a room with a stained carpet and wobbly table because everything about Amazon was for the buyer experience. It is. Something seems strange if I don’t have a package on the way from Amazon. That being said, I’d have to think very, very, very hard before ever selling on Amazon given all the ‘horror’ stories I can tell.
Just read the bold words in their indemnity clause:
6.1 Your indemnification obligations. You will defend, indemnify, and hold harmless Amazon, and our officers, directors, employees, and agents, against any third-party claim, loss, damage, settlement, cost, expense, or other liability (including, without limitation, attorneys’ fees) (each, a “Claim”) arising from or related to (a) your non-compliance with applicable Laws; (b) Your Products, including the offer, sale, fulfillment (except to the extent attributable to the FBA service), refund, cancellation, return, or adjustments thereof, Your Materials, any actual or alleged infringement of any Intellectual Property Rights by any of the foregoing, and any personal injury, death (to the extent the injury or death is not caused by Amazon), or property damage related thereto; (c) Your Taxes and duties or the collection, payment, or failure to collect or pay Your Taxes or duties, or the failure to meet tax registration obligations or duties; or (d) actual or alleged breach of any representations you have made.
Indemnification classically comes in two forms: 1) you pay for insurance and the insurance company pays for damages that you caused; 2) you sell a product and if that product causes damage, you pay the purchaser.
In the case of Amazon, you are the insurance company and Amazon sets the terms. It’s the worst of both worlds. The fault can be 100% with Amazon and 100% due to their active harm. Too bad! Jeff Bezos went around knocking people out with the yo-yo that you sold on Amazon… you pay, not him! What’s that? You sold one yo-yo on Amazon ten years ago and the version he used was purchased at a thrift shop? Too bad! Not even your product — it was a cheap knockoff of your product? Well, that’s “related to” your product — so too bad! You are liable!
Here’s an example — the facts are changed, though the embellishment, not much: you innocently sold a bent paperclip on Amazon that you found on the ground. That was 10 years ago. Now Amazon finds that someone else copied the bends and sold $1 million worth. Problem: this bent paperclip infringed upon someone’s patent and that seller knew it! Amazon now comes after you for millions in damages!
Here’s another example: you sell paperclips and Amazon says, “hey, we suggest also buying this bow.” You had no control over Amazon saying buy that bow… in fact, they often tell people to buy Amazon’s own products. So now Amazon gets hit with a patent lawsuit because they’re telling others to infringe a hair bow with a paper clip in it. Guess whose fault it is? Yours!
Here’s yet another scenario: Amazon says “sell us $1 million in widgets.” You do. Amazon gets a cease and desist letter from someone in China who filed a design patent for your product — it’s total fraud. Amazon charges you everything they had paid you as well as new stocking fees, shipping fees to send the products back to you, and on and on. Imagine you’re selling $300,000 of products on Amazon a year and Amazon tells you that your account balance with them is negative $1 million… you’re not seeing money from your sales for years.
Before you sell on Amazon, read the indemnity clause and make sure you have someone to indemnify you when Amazon turns on you.
What You Can Do
If your listing has been taken down — or someone is infringing your patent, trademark, or copyright on Amazon or another marketplace — see our related pages on how online retailers respond to trademark and copyright infringement and cease and desist letters, or contact us.