Brand Enforcement in the Amazon Age: What You Need to Know About Project Zero

By Tim Santoni
August 1, 2019

“Marketplaces [like Amazon] need to give the trademark owners and brands the critical information that they need to actively enforce their rights.”

E-commerce - https://depositphotos.com/stock-photos/e-commerce.html?filter=all&qview=87894586As online marketplaces have been created and subsequently evolved over time, there always seems to be a point where counterfeits and diverted gray-market goods make their way onto those marketplaces. eBay was one of the first e-commerce sites that gave brand owners and trademark owners the ability to review, monitor and take down infringing goods. This program was called VERO (Verified Rights Owner Program). Alibaba and Amazon are now making their own similar efforts to rid their platforms of counterfeit and infringing goods in an effort to keep the big brands interested in selling on their sites.

So, the big question is whether these enforcement and take-down services being offered really work. The process and technology will be effective if the brands and companies are set up to use the tools and only if they actively monitor and enforce the process.

Typically, infringement occurs when a product becomes very popular very quickly. Most brands that grow quickly and become popular have two things working against them. First, they don’t have trademark registrations in the necessary jurisdictions for the products being infringed upon. This is a necessary piece in setting oneself up to enforce a brand (see below). Secondly, they don’t have the sufficient resources available to effectively monitor and take down the infringing goods.

Eligibility Requirements to Enroll in Project Zero (Amazon)

Interested Brands must have a government-registered trademark and have enrolled their brand(s) in Amazon Brand Registry.

For more details visit: Brandservices.amazon.com

Because the Project Zero program requires that brands have a registered trademark in order to enforce their rights, this means that popular brands without trademark registrations cannot enroll.

In my experience, giving brand owners tools like those outlined in the Project Zero (Amazon) initiative and VERO (eBay) works effectively for well-known and established brands that have teams available and have their trademark registrations in place.

In order for these take-down programs to truly work, however, the sites require the brand owners and companies to provide tangible proof as to who they are and what trademark registrations they possess. The trend is to err on the side of caution in these take-down efforts. In many cases, the sellers on these platforms can contest the take-downs and interact with the marketplaces to plead their case when appropriate.

An Ambitious Goal

There have been some claims made by Amazon stating that their serialization service of Project Zero will “stop counterfeiting for every product unit before it reaches a customer.” This is a very ambitious goal because it assumes that all brands being sold on Amazon cooperate and enroll in the service, which isn’t likely. For example, a few years ago, Birkenstock came out publicly and stated they will not sell on Amazon and any products found on the site bearing their brand and marks are not genuine.

The take-down tools being offered by the online marketplaces are useful but remember that these are reactionary efforts to a business and supply chain problem that can limit and potentially stop the flow of infringing and gray market goods onto these sites.

The best way to stop the creation and distribution of counterfeit and diverted/gray market goods is to target it at the source. This involves having a supply chain that is vetted, monitored and audited. In many instances I have observed how a rogue supplier or distributor trying to make some extra money can cause brand erosion and customer confusion through the creation and sale of counterfeit and diverted goods.

The Missing Link: Rogue Seller Identities

One issue is that both the VERO service and the Project Zero program do not reveal the identities of the rogue sellers. This critical information can be vital in actively monitoring and enforcing infringement both online and on the streets. Due to the fact that rogue sellers can set up almost untraceable profiles on these selling sites, it is basically a playground for infringers and diverters. Unfortunately, one trend that we have seen is that once a seller has had products taken down for verified infringement, they will simply set up another seller account under a new name and continue selling. There is no visibility into the actual seller account setup process that Amazon or others follow, but this visibility is crucial to stopping the creation of accounts by rogue sellers.

These marketplaces need to give the trademark owners and brands the critical information that they need to actively enforce their rights. Who the infringers are and where they are operating from is vital information that can be used to make additional undercover-evidentiary buys, send out cease and desist letters and conduct other enforcement. In my experience, the infringers will tend to seek out online platforms to sell their goods in order to make money because they know that these circumstances exist. Amazon’s program is definitely a deterrent, however, and it shows that they are committed to protecting brand integrity on their platform.

Image Source: Deposit Photos
Image ID: 87894586
Copyright: vlado85 

The Author

Tim Santoni

Tim Santoni is President/CEO at Santoni Investigations. Tim is passionate about Risk Mitigation and enjoys educating business owners on what they can do to mitigate risk in their businesses as well as how to protect themselves from those in their inner circle. Tim provides advice on how to be prepared for, investigate and deal more effectively with litigation and workers comp claims if and when they arise.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments. Join the discussion.

  1. Anon August 1, 2019 7:59 am

    Interesting article with which I agree with several points (including, generally, the overall theme), but I also take exception to several of the (loose) premises being floated as if they must be true (particularly, the notion that “grey” market appears to be both universally ‘bad’ and also covers the entirely proper second hand market in which a fully ‘proper’ item has had its legal rights exhausted through a genuine first sale, and the goods are being sold by a first or subsequent owner).

    Statements like those of Birkenstock are clearly wrong and seek an over reach and control that is not legally provided.

  2. Josh Malone August 1, 2019 11:26 am

    Even if Birkenstock refuses to sell on Amazon, they cannot prevent unauthorized distributors and individuals from selling authentic sandals on Amazon. Under Lexmark 2017 they cannot stop sellers of genuine product for patent infringement. In fact there are many listings right now on Amazon. As a result both genuine articles and counterfeits are being sold. The consumer doesn’t know until they open the box which one they bought. This is the conundrum that must be solved. How do you ban a flea market from reselling your brand?

  3. Anon August 1, 2019 2:55 pm

    Josh,

    The question you ask is highly pertinent.

    Not only for general goods, but also (especially!) for Big Pharma, who have in the past driven attempts to squelch secondary markets by NOT allowing a natural sales exhaustion effect to be in place (and to THEN continue its artificial geographic segmentation Business Plan, and CONTINUE to have US consumers fit an outsized portion of the profits.

  4. Tim Santoni August 6, 2019 12:30 pm

    Thanks for the feedback on the article. You guys make make some very good points. Grey markets are not necessarily bad or good. They tend to create customer confusion are often perceived as infringing or counterfeit goods by the general public.

    As far as Birkenstock goes they cannot prevent the sell of any goods on Amazon or other platforms. Just because they don’t sell on Amazon doesn’t mean that their products won’t show up there. Their stance about not selling on Amazon just shows their underlying feelings about Amazon in general.

    Thanks again for the feedback.

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