The AAFA has submitted comments to the US Patent and Trademark Office (USPTO) regarding secondary trademark infringement liability in the e-commerce setting

The AAFA has submitted comments to the US Patent and Trademark Office (USPTO) regarding secondary trademark infringement liability in the e-commerce setting

Online marketplaces could be held liable for fakes sold on their platforms, should a call for the introduction of legislation for secondary trademark infringement liability in the US be heeded by government.

The American Apparel and Footwear Association (AAFA) says the online sales of fake products are a major contributor to the observed growth in total counterfeit sales.

It is calling for legislation to hold online platforms liable for counterfeit goods sold on their sites. 

The AAFA submitted a letter with comments to the US Patent and Trademark Office (USPTO) yesterday (25 January) on the application of traditional doctrines of trademark infringement to the e-commerce setting. 

"The growth of e-commerce has connected consumers across the world to brands, platforms, marketplaces, and other consumers, which has many positive benefits. At the same time, however, the rise of e-commerce has sadly connected US consumers with an ever-growing network of criminal counterfeiters. E-commerce marketplaces provide an ideal setting for counterfeiters—anonymity, easy distribution, and a low cost of entry," reads the letter.

It adds online marketplaces have become facilitators of sales and that they are "storefronts, providing access for sellers to the US market and US consumers," while the current legal regime for online marketplaces has enabled circumvention of many aspects of the legal and regulatory structure.

"Counterfeit goods are now offered to consumers via a range of different methods on social media platforms, including targeted sponsored ads, personal pages and profiles, dedicated sales pages and profiles, and private and secret groups. Of particular concern is the issue of online fraudulent advertising on these platforms. The increase of fraudulent advertisements on social platforms are driving consumers to rogue, counterfeit, or otherwise illicit websites. Given the growing role social media channels play in the sale of counterfeit products, these platforms must also be taken into consideration when evaluating the current e-commerce landscape," adds the letter.

According to the Office of the United States Trade Representative (USTR), an estimated 2.5%, or nearly half a trillion dollars' worth, of imports worldwide are counterfeit and pirated products. USTR published its 2020 Review of Notorious Markets for Counterfeiting and Piracy (the Notorious Markets List) last week, which highlights online and physical markets that reportedly engage in, or facilitate, substantial trademark counterfeiting and copyright piracy.

"The foundation of our trademark system predates e-commerce and is not equipped to address the online counterfeiting issues experienced today. While brick-and-mortar stores are generally liable for the products they sell, the same cannot be said about large online third-party marketplaces," says Steve Lamar, president and CEO of the American Apparel & Footwear Association. "Current law does not adequately incentivise third-party marketplaces to take the steps necessary to keep counterfeits off their platforms. Further, this lack of liability results in limited efforts by online platforms to proactively monitor for counterfeits, moving the cost and burden to our members. This landscape makes it difficult for our member brands to pursue trademark infringement claims against these online platforms who facilitate the sale of fake product."

Christina Mitropoulos, AAFA's head of brand protection and manufacturing initiatives, adds: "The proliferation of counterfeits is becoming a crisis due to the expansion of online third-party marketplaces. This is why AAFA strongly believes that it is necessary to pursue changes to the application of the secondary infringement standards to online platforms."

The submission follows an earlier one calling for a consumer awareness campaign to alert Americans to the dangers and prevalence of counterfeit product on trusted online marketplaces and social media platforms.