Tech Giants Fighting Fraud

Anastasiya Kryukova is a J.D. Candidate, 2021 at NYU School of Law.

With the growth of the internet and the increasing prevalence of online shoppers, platforms such as Amazon, eBay, and Alibaba have become significant players in the current-day marketplace. With the internet becoming a central, relied-upon hub for day-to-day activities and transactions, there are an array of problems that tech giants are struggling to address. For instance, YouTube is focused on addressing hate speech posted by users on its platform, LinkedIn is working to identify false accounts, and Twitter and Facebook are working on initiatives for policing political misinformation across their respective platforms.[1] Online shopping platforms Amazon, eBay, and Alibaba are likewise fighting their own battles, too, except theirs notably pertain to intellectual-property protection and enforcement issues.

On September 30, 2019, Panini America initiated its second trademark-infringement lawsuit against an eBay seller of custom-made basketball cards that featured Panini America’s trademarked phrases.[2] One Alibaba client recently identified more than a thousand fraudulent listings on the platform that were either misusing the client’s trademarks or displaying its patented products without authorization.[3] These issues have affected the platforms’ business. For instance, believing that the open marketplace structure of Amazon is jeopardizing genuine brands, Birkenstock publicly refused to sell its products on Amazon in 2016.[4]

The problem of counterfeit goods being sold across these online platforms is difficult to solve for several reasons. First of all, monitoring intellectual-property rights is particularly challenging online because people perceive online photographs to be publicly available for anyone’s use.[5] Second, even if a counterfeit product is identified, identifying the infringing seller is no easy task, as online marketplaces often permit third-party sellers to use arbitrary names. Third, the sellers are often not incorporated or residing in the United States, which creates jurisdictional law-enforcement issues. As a consequence, enforcing intellectual-property rights through litigation often requires crossing borders and therefore can be extremely time-consuming and expensive.[6] What’s more, even once an infringing seller is identified and blocked from a platform, there is no guarantee that he or she will not create a new seller account under a different name.[7] The lack of “visibility into the actual seller account setup process”[8] gives rise to the “whack-a-mole” phenomenon that has frustrated online platforms’ account-policing efforts.[9]

Undeterred by these challenges, each of the three major online shopping platforms have demonstrated a strong commitment to increasing consumer protections as well as the trademark rights of its clients. eBay’s Verified Rights Owner (“VeRO”) program allows brand owners to register their intellectual property, review other sellers’ listings, and, by submitting a so-called “Notice of Claimed Infringement,” report any listings that involve infringements.[10] Notably, this is not an automatic service, so the burden remains on the sellers to discover and report infringements that relate to their own property rights.[11]

Alibaba has likewise exerted significant efforts to monitor its platform for fraudulent third-party listings. In 2018, Alibaba referred 1,624 IP-related cases to law enforcement entities, leading to 1,953 subsequent arrests[12] as well as the seizure of counterfeit goods totaling $536.2 million in value.[13] Similar to eBay’s VeRO program, Alibaba’s “Intellectual Property Protection Platform” provides a streamlined online facility by which users can submit removal requests. Alibaba’s reporting mechanism seems to be highly effective, as ninety-six percent of its removed listings were taken down before any related sales had occurred.[14] Complementing the function of Alibaba’s Intellectual Property Protection Platform, its “Anti-Counterfeiting Alliance,” originally founded in January 2017, now has over 130 participating brands, spanning twelve industries, which “work together [across] six areas: online monitoring and protection, a product test-buy program, offline investigations and enforcement actions, industry-law enforcement workshops, litigation tactics and public awareness campaigns.”[15]

Of the three tech giants, Amazon can be argued to have taken the most aggressive approach to combating these intellectual-property issues. In its efforts to address intellectual-property concerns and protect its clients across the platform, in 2018 alone, the company spent over $400 million, and blocked over three billion suspicious listings.[16] Additionally, in September 2019, “Amazon hired former U.S. Patent and Trademark Office Director Michelle Lee to lead the artificial intelligence unit of Amazon Web Services, as vice president of its Machine Learning Solutions Lab.”[17] Amazon has also filed various lawsuits against counterfeiters, including a recent suit in June of this year against eleven entities that had allegedly been selling counterfeit smartphone-mounting devices, and last year, Amazon partnered with Very Bradley and Otterbox in three other lawsuits.[18]

Amazon sellers have access to tools similar to those provided by eBay and Alibaba. “Brand Registry” is a tool through which sellers can register their brand on the platform, and “Infringement Reporting” is another tool that allows sellers to submit issues they encounter directly to Amazon.[19] Over the past few years, the company has also launched three new initiatives geared toward accomplishing its ultimate goal of a completely counterfeit-free user experience. One of these initiatives, called “Project Zero,” which launched earlier this year, proactively scans listings and removes suspected counterfeiters. Project Zero has so far proven to be quite effective at identifying fraudulent listings, with Amazon blocking over four-hundred new listings for each listing that individual sellers flag.[20] As a preventative measure, Project Zero also automatically scans new sellers’ information during the registration process, well before they are able to begin selling their goods in the first place.[21] At the same time, Project Zero has user-directed functionality that similarly serves to protect intellectual-property rights and prevent fraud, except through a process beginning with user intervention. For instance, Project Zero assigns unique serial numbers for each product and enables users to check a product’s serial-number authenticity prior to purchase.[22] Another unique aspect of Project Zero is that selling products on Amazon is not a pre-requirement for access to these tools.[23]

A related initiative was launched by Amazon in early 2019: the so-called “Utility Patent Neutral Evaluation Procedure.” In its absence, patent owners had minimal recourse against counterfeiters,[24] since bringing a lawsuit was often expensive and lengthy. The Utility Patent Neutral Evaluation Procedure offers a low-cost and efficient way to resolve patent-infringement claims, without needing to engage in discovery or depositions. This evaluation procedure involves a patent attorney reviewing the claim and then determining whether the product in question is patent-protected as claimed.[25]

At the beginning of October 2019, Amazon launched a so-called “Intellectual Property (IP) Accelerator” program aimed at providing small and mid-size businesses with access to legal consultation concerning the trademark registration process.[26] The IP Accelerator program currently has ten participating U.S. law firms, all who have agreed to provide specified services for locked-in rates (i.e., “$500 for a trademark search, $600 for a trademark application, and $1,800 for a comprehensive brand review”).[27] While a company does not have to be selling their items on Amazon to employ the services of one of the IP Accelerator law firms, Amazon has also agreed to provide participating businesses with “brand protection” across Amazon stores even during the waiting period before the trademark has been officially issued.[28] In fact, since Amazon has “thoroughly vetted these law firms,” companies that employ their services may also be more likely to obtain registration of their marks.[29]

Beyond providing clear benefits for Amazon’s clients, the IP Accelerator program is likely to generate beneficial consequences for Amazon itself. Having more sellers that have registered trademarks on the Amazon platform benefits Amazon by generating an increase in the number of parties that are motivated to partake in rooting out fraudulent listings on Amazon’s marketplace on account of their own trademarked interests. Thus, increasing the number of sellers with trademarks to protect on Amazon’s platform may produce a “scarecrow” effect, deterring counterfeit sales through the appearance of countless policemen.[30] Furthermore, the high level of expertise among the IP Accelerator law firms may increase the quality of the trademarks across the platform as well. Though this program is fairly young, Amazon appears to be on a fast track to eliminating fraud wherever it exists, and it has no plans of stopping. In fact, Amazon has indicated plans to expand the IP Accelerator program’s operations to jurisdictions beyond the U.S.[31]


[1]  See Nat Levy, Amazon Responds to Investigation Revealing Thousands of Banned and Unsafe Items on its Marketplace, GeekWire (Aug. 23, 2019), https://www.geekwire.com/2019/amazon-responds-investigation-revealing-thousands-banned-unsafe-items-marketplace/ [hereinafter Investigation].

[2] See Rich Mueller, Panini Files Second Lawsuit Over Trademark Infringements, Sports Collectors Daily (Oct. 1, 2019), https://www.sportscollectorsdaily.com/panini-files-second-lawsuit-over-trademark-infringements/.

[3] Brian Platt, The New Enforcement Paradigm: Using Amazon to Defend Your Invention Rights, Lexology (Oct. 7, 2019), https://www.lexology.com/library/detail.aspx?g=c2be3f98-7c0e-43ee-a1e4-7378b2eaec82.

[4] See Ari Levy, Birkenstock Quits Amazon in US After Counterfeit Surge, CNBC (July 20, 2016), https://www.cnbc.com/2016/07/20/birkenstock-quits-amazon-in-us-after-counterfeit-surge.html.

[5] SeeFrank Ready, Amazon Wants Sellers to Add Trademarks to Their Cart, Legal Intelligencer, Oct. 16, 2019 (National News), at 4 (Attorney Moreira discussing the difficulties companies face when undertaking the trademark registration process without counsel).

[6]  See Platt, supra note 3.

[7] See, e.g., Nat Levy, Amazon Sues Alleged International Counterfeiting Ring, Escalating Battle Against Knock-off Products, GeekWire (June 26, 2019), https://www.geekwire.com/2019/amazon-sues-alleged-international-counterfeiting-ring-escalating-battle-knock-off-products/ [hereinafter Amazon Sues] (on “the battle against counterfeiters”).

[8] Tim Santoni, Brand Enforcement in the Amazon Age: What You Need to Know About Project Zero, IPWatchdog (Aug. 1, 2019), https://www.ipwatchdog.com/2019/08/01/brand-enforcement-amazon-age-need-know-project-zero/id=111793/.

[9] Platt, supra note 3.

[10] Verified Rights Owner Program, eBay Inc., https://pages.ebay.com/seller-center/listing-and-marketing/verified-rights-owner-program.html (last visited Oct. 21, 2019).

[11] See Understanding the eBay VeRO Program, IPWatchdog (Mar. 18, 2016), https://www.ipwatchdog.com/2016/03/18/ebay-vero-program/id=67226/ (discussing how VeRO works).

[12] How Alibaba is Fighting IP Infringement on Two Fronts, World Trademark Rev. (June 28, 2019), https://www.worldtrademarkreview.com/anti-counterfeiting/how-alibaba-fighting-ip-infringement-two-fronts.

[13] Alibaba Anti-Counterfeiting Alliance Seized $536.2 Million in Fake Goods Last Year: WTR Exclusive, World Trademark Rev. (Mar. 28, 2019), https://www.worldtrademarkreview.com/anti-counterfeiting/alibaba-anti-counterfeiting-alliance-seized-5362-million-fake-goods-last [hereinafter Anti-Counterfeiting Alliance].

[14] How Alibaba is Fighting IP Infringement on Two Fronts, supra note 12.

[15] Anti-Counterfeiting Alliance, supra note 13.

[16] Investigation, supra note 1.

[17] Rick Mitchell, Wake Up Call: Amazon Hires Former US Patent Office Chief to Lead AI Unit, Bloomberg Big L. Bus. (Sept. 18, 2019), https://biglawbusiness.com/wake-up-call-amazon-hires-former-us-patent-office-chief-to-lead-ai-unit.

[18] See Amazon Sues, supra note 7.

[19] See Platt, supra note 3 (discussing Amazon’s enforcement alternatives).

[20] See id.

[21] See Amazon Sues, supra note 7 (on Amazon’s statements in court filings regarding efforts to proactively identify counterfeiters).

[22] See Nat Levy, Amazon Unveils New ‘IP Accelerator’ to Battle Fraud on its Platform, Help Sellers Trademark Products, GeekWire (Oct. 1, 2019), https://www.geekwire.com/2019/amazon-unveils-new-ip-accelerator-battle-fraud-platform-help-sellers-trademark-products/ (Mehta’s discussion of Project Zero’s automated tools).

[23] See id.

[24] See Platt, supra note 3.

[25] See id.

[26] See Ready, supra note 5.

[27] Robert Ambrogi, With IP Accelerator, Amazon Edges into The Legal Services Arena, Above L. (Oct. 7, 2019), https://abovethelaw.com/2019/10/with-ip-accelerator-amazon-edges-into-the-legal-services-arena/.

[28] Id.

[29] Id.

[30] Ready, supra note 5.

[31] See Ambrogi, supra note 27.