NEW YORK— The housewares industry is closely following a lawsuit filed in December of last year by leading As Seen On TV marketers against Amazon, alleging trademark infringement by allowing counterfeit product sold through Amazon’s website.
Allstar Marketing Group, Ontel Products and IdeaVillage Products Corp. in the suit filed in the U.S. District Court for the Southern District of New York claim to have lost profits because of lower-priced counterfeit products sold on Amazon.com that consumers believe are the genuine products marketed by the plaintiff As Seen On TV companies.
Plaintiff products mentioned in the published reports include Snuggie blankets by Allstar, Copper Fit compression garments by IdeaVillage and Magic Tracks toy race car sets by Ontel.
The plaintiffs’ suit further notes harm to the reputation of the plaintiffs and their products caused by negative reviews of the allegedly counterfeit products from companies in China, Japan, Thailand and other countries.
The lawsuit also accuses Amazon of copyright infringement and violating New York state false advertising and unfair competition laws, according to published reports.
The plaintiffs seek to recoup unspecified lost profits and punitive damages in the millions of dollars, according to reports. Amazon declined comment, citing pending litigation
According to Amazon’s anti-counterfeiting policy, posted on its website: “The sale of counterfeit products, including any products that have been illegally replicated, reproduced, or manufactured, is strictly prohibited… It is each seller’s responsibility to source and sell only authentic products. If you sell counterfeit goods, we may immediately suspend or terminate your selling privileges and destroy inventory in our fulfillment centers without reimbursement.”
The lawsuit includes several details of the allegations against Amazon, according to a copy of the complaint obtained by HomeWorld Business:
- The suit details a process whereby multiple sellers on the Amazon website, including Amazon, first-party (1P) sellers and third-party (3P) sellers, can offer products for sale under the same product detail page (PDP); and PDP sellers may compete for a “Buy Box”— the seller with the highest performing metrics and most experience usually becoming the default seller of the product.”
- The lawsuit claims that Fulfilled by Amazon (FBA) sellers are set to use manufacturers barcodes to track (3P) products through FBA; and those 3P products are comingled with inventory of the same products from other sellers at Amazon fulfillment centers. Amazon is able to identify the original seller source and owner of the products, according to the complaint.
- As of November 30, 2016, searches on Amazon’s website for Allstar’s Snuggie blanket returned 7,467 listings; Ontel’s Magic Tracks toy race car set returned 551 listings; and IdeaVillage’s Finishing Touch women’s trimmers returned 148,030 listings, according to court documents.
- Under VCAs with Amazon, Allstar has sold some 240,000 As Seen On TV first-party (1P) Products; Ontel has sold about 196,000 1P products; and IdeaVillage has sold some 350,000 ASOTV 1P products for resale or distribution on the Amazon website. As such, the lawsuit alleges, Amazon has actual knowledge of the plaintiffs’ use of and rights in and to the plaintiffs’ marks.
- Plaintiffs, according to the lawsuit, have purchased numerous counterfeit products offered for sale by numerous FBA and other 3P sellers on the Amazon site, shipped from Amazon fulfillment centers around world or drop-shipped directly by 3P sellers located in China, Japan, Thailand and other foreign countries.
- Despite Amazon’s anti-counterfeiting policy, a growing number of As Seen On TV counterfeits and/or infringing products are still being offered for sale on the Amazon website at the time of the lawsuit, the complaint alleges.
- Allstar has reported approximately 2,114 counterfeit products using the Amazon reporting system, according to the complaint.
- Plaintiffs, according to the complaint, have repeatedly informed their respective Amazon vendor managers, and they have also in some cases been informed by Amazon that certain counterfeit products were being offered for sale through PDP associated with plaintiff products at “impossibly low prices;” and the PDPs were “hijacked” and in some cases had won the PDP “Best Box,” thereby becoming default sellers.
- Purchases of unauthorized counterfeit products often leave bad reviews on the hijacked (PDP), thereby driving down sales of the authentic versions of the product, the suit alleges.
- Amazon has either itself offered or allowed FBA sellers and 3P sellers to sell and drop ship infringing products from fulfillments centers directly to U.S. customers, the suit alleges.
- Allstar, according to the complaint, identified a 3P seller offering a counterfeit True Touch pet de-shedding glove dispenser drop shipped from China with a price less than half of the unit’s $14.99 suggested retail price.
- Ontel, according to the complaint, identified a counterfeit EverBrite solar-powered LED lamp, cited as number-one best seller on the site, drop shipped from China with a price of more than $4 less than the unit’s $12.99 suggested retail price.
- Amazon, through its vendor managers, has indicated certain solutions are available to stop or diminish the drop shipment of counterfeit products, the complaint alleges. As of the date of the complaint, no such solutions were instituted, according to the complaint.
- Amazon, according to the complaint, has taken no action with respect to those FBA sellers alleged to be selling counterfeit As Seen On TV products, such as terminating their relationship with Amazon, among other available appropriate actions.
