Service Provider Sued by Amazon | Violation of Anti-Counterfeit Policy and Trademark Infringement

Amazon is suing a service provider! In this new lawsuit, what is Amazon claiming? That an online-seller service provider creates and submits false documentation on behalf of sellers with bad intent. Allegedly, the Defendants offer a so-termed“ungating” process to sellers. So they may get around Amazon’s authentication process and sell counterfeit products to consumers. Further, Amazon alleges that the service provider has engaged in trademark infringement. How did they do that, too! Well, per Amazon the Defendants wrongfully used the Amazon name, logo, and other visual intellectual property assets on their own website. 

So, Amazon is suing a service provider for two primary reasons:

1. The service provider claims to help with “ungating” the approval process. Amazon states they doctor documents and falsify invoices. All in the name of getting their clients approved as sellers so they may then sell counterfeits on Amazon. 

2. For trademark infringement for using the name Amazon in association with the services. 

In the legal complaint, the Defendants’ actions are described as a “knowing and deliberate facilitation of the sale and distribution of counterfeit and other fraudulent products in the Amazon.com store.” Let’s dive into the specifics of the service provider’s actions, based on the allegations. And, let’s provide some general context. The Defendants are basically Amazon seller “experts” who offer services to online sellers to streamline their operation. 

Amazon’s Authenticity Requirements and the Alleged Fraudulent Scheme

As you may know, Amazon has very strict requirements for selling on their platform. For several categories of goods, Amazon needs sellers to provide “documentary proof of authenticity.” In order to evade these authenticity requirements, Amazon says the service provider works to assist “bad actors” (sellers with ill intent). By deliberately violating the platform’s contracts, the Defendants are deceiving consumers into believing the products they’re buying are legit! 

The conduct of the service provider is deemed a “Fraudulent Scheme” by Amazon. Apparently, the Defendants target advertisements to sellers who aim to sell counterfeit goods on Amazon. The service provider even publishes copy on their site with statements like “We guarantee success and will ensure you get approval within a few days,” and they are “willing to do all of the work for you to help you avoid any hassle.” How is that a scheme exactly? As described in the legal complaint, the Defendants charge sellers a fee. Then they obtain their login information, go into the seller’s Amazon account, and submit false documentation. Though the service provider claims to submit all necessary documents to Amazon to get authentication approval, the Plaintiff says the Defendants don’t request the documents from the sellers themselves. 

Service Provider Accused of Deliberately Violating Agreements

Now, is the service provider that Amazon is suing aware that they’re violating agreements? Amazon says they are totally aware! That’s a major point in this lawsuit – that Amazon considers the Defendants’ conduct unfair because it deceives Amazon and its consumers. Not only that, but also that the service provider is harming Amazon’s brand to generate profit based off of the sale of inauthentic, counterfeit goods. It boils down to a matter of compromising the trust and integrity of Amazon. To clarify, “Amazon asserts claims against Defendants for violations of the federal Lanham Act, common law fraud, intentional interference with contractual relations, and unjust enrichment.” 

Amazon has many protocols in place to ensure the products sold on their platform are authentic and not infringing on anyone’s intellectual property. Things like Brand Registry, Transparency, and Project Zero are all designed and implemented to protect sellers and customers.

The platform’s Anti-Counterfeiting Policy states, in part, the following: 

• The sale of counterfeit products is strictly prohibited.
• You may not sell any products that are not legal for sale, such as products that have been illegally replicated, reproduced, or manufactured[.]
• You must provide records about the authenticity of your products if Amazon requests that documentation[.]
• Failure to abide by this policy may result in loss of selling privileges, funds being withheld, destruction of inventory in our fulfillment centers, and other legal consequences. 

Amazon Says Service Provider Submits False Documentation…

By offering these ungating services, the service provider takes money from “bad actor” sellers and falsifies the needed documents. Per Amazon, the Defendants get added as a secondary owner to the seller’s Amazon Seller Central account. From there, they “doctor[] invoices and falsif[y] product images in an attempt to obtain approval for the bad actor.” Not only did Amazon identify invoices and product images as false, they also conducted an investigation. The Amazon investigator paid for the Defendants’ services, added them to their Seller Central account, and then they began to submit approval requests for the investigator. Although, Amazon says the service provider “never asked the investigator to identify the actual product he sought to list.” Rather, they just provided Amazon with false photographs of goods and an invoice, which was rejected. 

Amazon Says Service Provider Has Committed Trademark Infringement, Too

As we mentioned above, Amazon is not only suing the Defendants for violating their counterfeit policy. The platform is also suing the service provider for exploiting their brand and trademarks in a “confusing and deceptive manner.” Here’s what the Plaintiff says: 

By using the Amazon Marks prominently throughout the Website, Defendants confuse internet users into mistakenly believing that [the site] is approved by Amazon or that some legal and/or economic affiliation exists between [the site] and Amazon.

Considering the international renown of the Amazon Marks, Defendants intended to cause confusion by using the Amazon Marks, and took advantage of such confusion as to the source or affiliation of [the site] in order to attract internet users [], for Defendants’ commercial gain.

Given that Amazon’s belief is that the service provider exists and operates as a fraudulent business, they see no justifiable reason, commercial or creative, for their use of the trademarks. And, Amazon notes, the versions of the logo used by the Defendants on the website are knock off versions. 

Are you a service provider being sued for allegedly providing violating “ungating” Amazon services to sellers? Or, are you an Amazon seller being accused of paying for such services as a “bad actor”? Whatever the case, we may be able to help! 

Contact our team at Stockman & Poropat, PLLC today for a free consultation! 

Up next we will be discussing the Amazon Updated Product Bundling Policy of 2024.