In light of the circumstances created by the coronavirus (COVID-19) outbreak and resulting mall and retail closures, Americans have been left with no choice but to resort to online shopping. Even as businesses begin to re-open, many individuals are not comfortable returning to brick and mortar stores, and will, therefore, continue online shopping to meet their ongoing needs. So, it is not surprising that e-commerce sales are projected to reach an all-time high, resulting in nearly 15% of total retail spending and equaling over $4 trillion in 2020. However, with this growing appetite for online sales and quick deliveries comes an increased risk of counterfeit products (spanning more than just luxury goods), which have seen a commensurate spike. Counterfeiters have become savvy in manipulating online platforms, such as Amazon or eBay, to post their disingenuous products, using the manufacturer’s photographs and descriptors to deceive consumers.
To combat this growing trend of phony goods, a new bipartisan bill was presented to the U.S. House of Representatives earlier this year – titled “Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce” or the SHOP SAFE Act.
Although only introduced, and still pending a vote in the House of Representatives, if passed, the SHOP SAFE Act would amend the Trademark Act of 1946 to hold e-commerce platforms liable for contributory trademark infringement by allowing the listing and sale of imitation goods, unless they can show that they have taken certain mandatory steps to prevent counterfeiters. These steps include posting the identity of, and information on, the third-party seller; requiring verification of the product; screening for authenticity; following timely takedown procedures; and reporting infringing third-parties to law enforcement and/or trademark owners. While these new requirements would impose additional work on the part of large companies, they are intended to provide even greater benefits to fashion brands and consumers alike, by creating established best practices to vet and monitor sellers and actively eliminate counterfeit postings, and providing an avenue for accountability for illegal conduct, which to date has been almost impossible to achieve.
These benefits would be felt across varying markets for almost all goods, but the fashion industry is arguably the most impacted. Fashion houses both large and small are no stranger to counterfeiters. However, the process to combat and eradicate knock-off goods is usually protracted and expensive, requiring investigation into the identity of the third-party retailer or seller, and seeking judicial intervention against usually-off-shore merchants through one of three available trademark infringement theories. By the time one knock-off seller is dealt with, several more have sprouted up in its place. With the passing of the SHOP SAFE Act, manufacturers would be able to look to the e-commerce mediums permitting the posting of disingenuous commodities for recourse, as opposed to hunting down the knock-off merchant hiding in the shadows, often to no end.
Genova Burns will continue to provide real-time updates on developments of the Shop Safe Act and impacts to our clients. For more information on the Shop Safe Act, or any fashion law or trademarking needs, please contact Counsel, Maria R. Fruci via email here or Associate, Christopher Zamlout via email here.