July 3rd, 5th, 6th and 7th large sellers all had the same issue: they had their Amazon sellers accounts suspended. Large sellers were suddenly being suspended from selling on Amazon due to one too many Intellectual Property complaints.
First, Amazon sellers need to know what Intellectual Property involves. Intellectual Property generally includes:
- Trade Secrets, and
Copyright law protects works of original authorship, such as novels, poems, or musical composition.
A trademark is “any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods.” Within trademark law is trade dress.
Trade Dress is defined as, “The overall appearance and image in the marketplace of a product or a commercial enterprise. For a product, trade dress typically comprises packaging and labeling. For an enterprise, it typically comprises design and decor. If a trade dress is distinctive and nonfunctional, it may be protected under trademark law.”
Trade Secrets are “a formula, process, device, or other business information that is kept confidential to maintain an advantage over competitors; information — including a formula, pattern, compilation, program, device, method, technique, or process — that (1) derives independent economic value, actual or potential, from not being generally known or readily ascertainable by others who can obtain economic value from its disclosure or use, and (2) is the subject of reasonable efforts, under the circumstances, to maintain its secrecy.” Finally, Patents protect ideas such as inventions or technological processes.
On Amazon, Intellectual Property complaints are usually taken very seriously. If someone makes a complaint against you, Amazon will suspend your account first, then have you work toward obtaining a retraction of the complaint and then, if you cannot, convince Notice-Dispute to ignore the complaint.
Amazon’s tactic protects it from liability when one Amazon seller violates another Amazon seller’s intellectual property rights. Amazon has been sued for the Intellectual Property infringement made by third-party sellers. In order to avoid liability, once notified, Amazon stops the infringing party.
Shortly before and immediately after the 4th of July, the large sellers that were suspended had the following in common:
- The sellers already had existing Intellectual Property complaints made against them (Ranging from 20-50 complaints);
- The sellers were highly successful businesses on the Amazon website, bringing in substantial profits.
The complaints that caused these suspensions, for the most part, have been baseless complaints. We have seen manufacturers file complaints and competition file fraudulent complaints. The brands and sellers seem to know that the allegations alone are likely to result in Amazon sellers being suspended. Amazon seems to have little or no investigation of the complaints. There seems to be little or no gatekeeper for the complaints. Instead. Amazon often suspends the accused. For many sellers, especially smaller sellers, one complaint results in a suspension.
What makes this new series of suspensions interesting is that these businesses already had multiple complaints made against them. This contrasts what we have seen in the past. Rather than one complaint kicking off a seller, it was simply the most recent complaint.
This poses multiple questions for sellers: Why did Amazon take this “one last complaint” more seriously than others? Is it because Amazon knows some complaints are baseless? Are they becoming less strict? Or perhaps it is that Amazon treats sellers differently based on how much money they bring to the website.
Amazon’s sellers have been left in the dark in relation to how they run their business. Why is it that sellers who make more money are able to run their business with a large quantity of complaints made against them, but smaller business have been kicked off with far fewer complaints? Has Amazon turned a blind eye simply because they were profiting off of these successful third-party sellers or has Amazon been negligent in responding to the intellectual property complaints? Perhaps the reason behind Amazon’s delay was that they are finally reviewing the complaints and only suspending sellers who they believe are actually infringing on other party’s intellectual property rights.
As for these sellers, and for many of the sellers we have seen before them, the complaints made were baseless. We have obtained reinstatements after having a portion of the complaints retracted. Amazon did not require that all of the complaints be retracted, just enough to demonstrate that the seller was making process towards the number of complaints asserted against them.
For example, one seller who had roughly 50 complaints made against them, with our help, was able to have over 10 of the complaints removed. Amazon wanted to know that these sellers took the issue seriously, which they all did. We stated in the Plan of Action that they hired a law firm to handle the legal issue, they had some complaints retracted, and they had the proper invoices to demonstrate they were in the business of selling authentic quality products. As a result, they were reinstated.
The reason that Amazon had suspended so many sellers at the same time, which all had similar businesses and complaints against them remains a mystery. The best-case scenario is that the ecommerce giant is finally looking into the complaints first, then suspending only if they believe the complaint is legitimate. As a seller, it is important to look ahead, try to predict Amazon’s next step.
Every seller is at risk of suspension because every seller is subject to fraudulent complaints made against them. It is important to only obtain products from authorized manufacturers. Sellers who use private labeling should consider looking into obtaining their own intellectual property rights. Be proactive with your business, because you never know if or when you too will receive the dreaded suspension email.
By: Nicole Kulaga, Paralegal, Rosenbaum Famularo, P.C.
Nicole Kulaga is a third year law student at University of Maryland School of Law and a paralegal at Rosenbaum Famularo, P.C., AmazonSellersLawyer.com.
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