- September 15, 2016
- Posted by: Jason Bourgeois
- Category: Opinions and Analysis
IP Portfolio Manager
Recently, CNBC posted an article about the increase of Amazon’s distribution of counterfeit products through its third party seller platform.
It is clear that Amazon is significantly impacting small American businesses, which I have highlighted here and here. When most people think about counterfeit products, they think of criminal consequences. For example, the Federal Law that covers this issue is 18 U.S.C. §2320, which states:
(1)traffics in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services,
(2)traffics in labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature, knowing that a counterfeit mark has been applied thereto, the use of which is likely to cause confusion, to cause mistake, or to deceive,
(3)traffics in goods or services knowing that such good or service is a counterfeit military good or service the use, malfunction, or failure of which is likely to cause serious bodily injury or death, the disclosure of classified information, impairment of combat operations, or other significant harm to a combat operation, a member of the Armed Forces, or to national security, or
(4)traffics in a counterfeit drug, or attempts or conspires to violate any of paragraphs (1) through (4) shall be punished as provided in subsection (b).
The requirement of “Intentional” and “knowingly” is a threshold that may not be met. For this reason, I think Attorney General Loretta Lynch would be hard pressed to institute action against someone at Amazon. For Amazon, ignorance is bliss.
Recently, the state of Missouri passed a law that could bridge the gap, Mo. Rev. Stat. §570.103.1, which states:
- A person commits the offense of counterfeiting if he or she willfully manufactures, uses, displays, advertises, distributes, offers for sale, sells, or possesses for the purpose of selling or distributing any item, or services, bearing or identified by a counterfeit mark. A person having possession, custody or control of more than twenty-five items bearing a counterfeit mark shall be presumed to possess said items for the purpose of selling or distributing.
The threshold has changed from “intentionally” to “willfully,” but “knowingly” is absent. Amazon does offer for sale and it does much of the distribution of these counterfeit goods through its distribution network. The statute reads “if he or she willfully…offers for sale…any item or services bearing or identified by a counterfeit mark.”
Amazon does each of those things willfully.
The legal question is: does the willfulness requirement extrapolate to Amazon purposefully operating this way with counterfeit products? Or is performing these actions willfully with products that happen to be counterfeit enough? When compared to the federal statute, there is a separate requirement that the party know the product is counterfeit. The Missouri statute has no such separate requirement.
The Missouri statute will not be enacted until January 1, 2017. In terms of political clout and protection of small Missouri businesses, it might behoove the next Missouri Attorney General to apply pressure on Amazon to actively police their third party sales platform through the application of this law.