“In as much as Amazon’s Brand Registry has already had an impact on trademark registration practice in the U.S., it is likely that the IP Accelerator program’s shortcut to the Brand Registry will have an even greater impact.”
E-commerce giant Amazon is “known for its disruption of well-established industries,” as the company’s Wikipedia entry will tell you. What started out as a humble online bookstore has become one of the world’s premier e-commerce sites. Along the way, it has expanded into cloud computing, consumer electronics, and film production, among other diverse ventures. It is responsible for the U.S. Post Office delivering packages on Sundays, and recently sent countless states and municipalities into a frenzy over a competition to host the company’s second headquarter site. Now, Amazon seems primed to disrupt the market for IP legal services with the launch of its IP Accelerator.
Amazon’s Brand Services
As a brief introduction, Amazon describes its recently launched IP Accelerator program as a way to connect small businesses that sell on the site with a handful of IP law firms that Amazon has vetted. The stated primary goal of the program is to help Amazon’s sellers file trademark applications. As an incentive for using the IP Accelerator program, sellers have access to the coveted Brand Registry as soon as a trademark application is filed, but only if the application is filed using one of the firms participating in the program. Prior to the launch of the program, all brand owners had to wait until the U.S. Patent and Trademark Office (USPTO) issued a registration before they could apply to the Brand Registry.
To understand why the IP Accelerator program is a significant development for IP legal practice, it is important to take a step back and explore how Amazon is already affecting trademark rights, including the importance of its Brand Registry. First, Amazon is unquestionably one of the premier online marketplaces in the world, and virtually anyone from anywhere can sell in the marketplace. Consumers can browse Amazon for any number of products from a wide variety of vendors, ranging from some of the world’s biggest companies to individual sellers. This low barrier to entry creates complications for both trademark owners and sellers. On the one hand, sellers are working within an extremely competitive marketplace to get noticed. At the same time, the marketplace has become a hot spot for counterfeits, and owners of valuable brands are constantly attempting to keep counterfeit or gray market goods off the platform.
Balancing the desire to maintain free market competition on the site while also keeping consumer trust is a major challenge for Amazon. Over the years, the company has created several initiatives to try to reduce the number of counterfeit products on its site. For example, Amazon announced earlier this year that it would permit brands themselves to remove fake listings from the site via the Project Zero initiative.
One of the primary ways that Amazon promotes brand trust is via the Brand Registry. The Amazon Brand Registry is a program whereby brand owners can use their active federal trademark registrations to access additional rights protection mechanisms. For example, Brand Registry users can provide Amazon information for automatically flagging potential unauthorized sales. Brand Registry users can also search the site for listings that use the brand’s logos or ASIN numbers to easily identify infringers and request takedowns.
The Brand Registry is also an important marketing tool for sellers because it unlocks advanced features and content, such as videos, enhanced images, and access to exclusive customer data. In other words, the Brand Registry is often critical for sellers to stand out in the vast Amazon marketplace and police their brands. However, these valuable tools can only be unlocked for users who own a trademark registration for their brand. This seemingly minor administrative requirement that Amazon uses to verify a brand has significantly affected the practice of trademark law.
Given the importance of the Brand Registry from both a brand protection and marketing perspective, the need for a trademark registration to enter the Brand Registry has seemingly made trademark registrations more valuable and even necessary for many businesses to operate. For example, U.S. trademark applications originating from China have dramatically increased over the last five years, and many of those marks are associated with goods only sold on Amazon. The need for a trademark registration has driven some of those applicants to take unusual methods designed to reduce the time to registration. Many of these new applications are supported by digitally altered “fake” specimens of use when no legitimate specimens are available. This has significantly impacted the veracity of the Trademark Register, and the USPTO has made several rule changes in an effort to reduce the number of applications that are supported by seemingly fake specimens. Likewise, some brand owners have even reported that Chinese companies are offering to buy lame duck trademark registrations for defunct brands in order to have quicker access to registrations and the Brand Registry. It is clear that Amazon’s policies, even if well-intentioned, have already created challenges for brand owners and trademark practitioners.
In as much as Amazon’s Brand Registry has already had an impact trademark registration practice in the U.S., it is likely that the IP Accelerator program’s shortcut to the Brand Registry will have an even greater impact. The ability to join the Brand Registry without having to wait a year or more for the USPTO to issue a registration will likely drive many small businesses to use the program. Likewise, Chinese applicants who once relied on fake specimens to obtain a trademark registration may also be inclined to use the IP Accelerator program as a more efficient means of accessing the Brand Registry. So, what additional disruption will this create in the legal profession, and will it be good or bad for customers, businesses, and legal practitioners?
It is important to consider that Amazon has already offered access to “trusted” service providers in the past, including in the fields of accounting, shipping, tax, and compliance. For example, sellers who want to enhance photos on their page can hire one of a dozen firms that specialize in photography editing and enhancing. What makes the IP Accelerator program markedly different from these other ventures in the service provider referral market is that Amazon has created a substantial incentive for businesses to use the IP Accelerator law firms, namely, early access to the Brand Registry. Firms that participate in the IP Accelerator program can offer their clients a substantial benefit over their competitors.
By steering potential clients to IP Accelerator firms, Amazon is likely to create at least some disruption in the market for legal services, some of which may not be positive. For instance, it is possible that by participating in the IP Accelerator program, firms may create conflicts when asked to act adverse to Amazon, or Amazon may have grounds to disqualify those firms in litigation. More generally, while Amazon’s legal department is undoubtedly a sophisticated purchaser of legal services for itself, it is impossible to say whether a law firm that Amazon considers trustworthy is the best choice for small businesses in New York, Iowa, or China. Guiding sellers to Amazon’s curated law firms might sometimes prevent potential clients from engaging with local law firms that are more suited to their needs, possibly to their detriment. The business model also raises some antitrust concerns for a company that has already been accused of using its market power to hurt competition.
The IP Accelerator program also creates the potential for abuse. The ability to enter the Brand Registry by simply filing an application makes the Brand Registry’s vetting process less reliable. The justification for requiring a trademark registration in order to access the Brand Registry was arguably reasonable given that a U.S. trademark registration provides a legal presumption that the trademark is valid and is owned by the registrant. A trademark application that has not been examined and approved by the USPTO provides virtually no assurance that the applicant is the exclusive owner of the mark or that the mark sought for registration is even capable of functioning as a trademark. For example, applications for generic or descriptive terms could be used to gain access to the Brand Registry. Presumably, Amazon is trusting that its curated law firm partners will vet the mark before an application is filed, but there is no requirement that a seller conduct a search or seek counsel on the inherent registrability of a mark before filing an application. There is even more potential for abuse if trademark applications filed though the IP Accelerator are treated as the equivalents of trademark registrations for the purpose of conducting takedowns, but that remains to be seen.
The Bright Side
However, there is also a potential for the program to be beneficial for trademark practitioners, brand owners, and consumers. The program may reduce some of the brand protection problems that have come along with Amazon’s rise to prominence. For example, sellers may be less inclined to file trademark applications with questionable specimens if there is an alternate means for entering the Brand Registry. Likewise, increased access to IP professionals may make sellers savvier about IP rights, leading to better enforcement on the platform and fewer counterfeits.
Law firm clients may also benefit from the fee caps that are part of the IP Accelerator program, which cover preliminary and comprehensive searches, as well as legal fees for filing applications. Clients have been pushing for fixed fees for these and other types of routine services for years. The fact that Amazon’s program is offering a transparent fixed fee arrangement is likely to persuade more firms to offer comparable fee arrangements in order to keep up with their competitors and with client demands.
Disrupting the Market: Fees and Reviews
While a transparent fee structure might be good for clients, such a highly visible comparable fee schedule may complicate things for law firms not participating in the IP Accelerator program. Fixed fee arrangements are always a delicate balancing act; the right price can vary depending on the nature of the relationship with a particular client, the law firm’s goals in setting prices, and the extent of services that the fees actually cover. For example, the fees offered by firms that use routine trademark prosecution work as a loss leader are not comparable, in kind, to firms that intend to make a reasonable profit from sophisticated prosecution counseling. That is to say that there may not be a reliable market rate for routine trademark prosecution matters, yet Amazon’s pronouncement has seemingly established one.
Another interesting aspect of the IP Accelerator program from a client-relations standpoint is that sellers who hire a law firm as part of the program can leave reviews in which their experience is rated from one to five stars. There is an option to provide a narrative review, just as buyers can review items purchased on Amazon. If a firm does not meet expectations, other potential clients will know about it, and may engage with a different firm. For firms outside of the IP Accelerator program, it also offers a fascinating perspective on what is important to clients when working with a law firm on trademark matters. Many of the early reviews focus, not surprisingly, on fast response times, expertise, and ease of communication. One particularly insightful reviewer complains that his company had not been granted access to the Brand Registry, “which is the major benefit of using the (above market price) Amazon IP Accelerator Program.” Even with the limited reviews available to date, the client responses are already providing some feedback on the pricing structure and the benefits of the program, namely, access to the Brand Registry.
Time Will Tell
Ultimately, time will tell whether the IP Accelerator program benefits sellers and makes Amazon’s marketplace more reliable. For trademark practitioners, it is another example of the commoditization of the practice, and certainly not the last one. Like it has done in so many other fields, Amazon’s disruptive nature will force law firms to adapt by becoming more efficient, business focused, and open to alternative fee arrangements. While the IP Accelerator program may provide some potential benefits to consumers, sellers, and the legal community in general, the program may also encourage abuse and other negative outcomes. One thing is for sure—many in the trademark community will be watching the program and Amazon closely.
Image Source: Deposit Photos
Photography ID: 170049214