Amazon is not pleased with the decision from the Trump administration to list a number of its foreign websites as havens for counterfeit products in its annual report on “notorious markets” released Wednesday. The report, which looks into intellectual property protection and hot spots for counterfeiting and piracy, put Amazon’s Canada, UK, Germany, France, and India websites on the list as online markets for knockoff goods. It’s the first time a US business has been put on the notorious markets list.
“The Review of Notorious Markets for Counterfeiting and Piracy highlights 38 online markets and 34 physical markets that are reported to engage in or facilitate substantial trademark counterfeiting and copyright piracy,” reads the press release from the Office of the US Trade Representative. There is no financial penalty or regulatory oversight as a result of being placed on the list, but it does harm Amazon’s reputation and lumps it together with notorious counterfeit-friendly websites.
“This activity harms the American economy by undermining the innovation and intellectual property rights of US IP owners in foreign markets. An estimated 2.5 percent, or nearly half a trillion dollars’ worth, of imports worldwide are counterfeit and pirated products,” the release goes on to say. The report’s focus remains on mostly on the “distribution of pirated content and counterfeit goods online,” with a new focus on “the nexus between online piracy and malware.”
Amazon, in a statement, accused the Trump administration of advancing the president’s “personal vendetta” against Amazon and its chief executive, Jeff Bezos. “This purely political act is another example of the administration using the US government to advance a personal vendetta against Amazon,” a company spokesperson told Politico. “Amazon makes significant investments in proactive technologies and processes to detect and stop bad actors and potentially counterfeit products from being sold in our stores.” The company even went so far as to publish a blog post calling its inclusion on the list “wrongful.”
“The Administration today wrongfully named Amazon’s stores in Canada, France, Germany, India and the UK to the U.S. Trade Representative’s (USTR) annual Notorious Markets List, despite the fact that more than 99.9 percent of pages viewed worldwide by customers on Amazon have never had a report of counterfeit,” the blog posts reads. “We strongly disagree with the characterization of Amazon in this USTR report.”
Amazon says it invested $500 million in 2019 and now employs 8,000 people for the purpose of combating fraud and abuse. The company also says its automated systems and its manual review policies have also blocked 2.5 million suspected “bad actors” from listing on its third-party Marketplace platform, which generates more than half of all Amazon retail sales and includes sellers from all over the world. In doing so, Amazon claims it “blocked more than 6 billion suspected bad listings before they were published to our stores.”
But the company has a history of turning a blind eye to knockoffs, especially in the apparel and footwear department, and it was the US American Apparel and Footwear Association that urged the Trump administration to investigate Amazon’s role in the surge of online sales of counterfeit clothing and shoes.
In some cases, Amazon has struck deals with companies, like Apple and Nike, to perform so-called brand gating that prevents third-party sellers, whether genuine or otherwise, from selling products under a trademarked banner. Just last November, however, Nike ended its participation as a wholesaler on Amazon over a reported lack of control over third-party sellers, some of whom trafficked in Nike counterfeits, and the stiff competition on Amazon’s platform.
Additionally, the results of such deals can have the effect of kicking out legitimate resellers, as Apple’s did. That’s a situation the Federal Trade Commission began looking into last summer as a possible antitrust violation. But regardless, cutting a deal directly with Amazon, if that deal persists and doesn’t sour as Nike’s did, does indeed appear to protect a company's brand identity on the platform. Other programs the company runs to cut down on knockoffs include its Project Zero initiative, launched last year, that lets companies flag and remove counterfeit listings without requiring Amazon’s intervention.
Yet sandal-maker Birkenstock notably left the platform altogether over counterfeiting issues it claims Amazon refused to help with. Shoe company Allbirds also accused Amazon of ripping off its signature design for one of its private label brands. Just last week, a Wall Street Journal report found that Amazon’s own employees accessed third-party seller information to help develop private label copycat products, and Sen. Josh Hawley (R-MO) is now urging the US attorney general to investigate the company over antitrust concerns. Even Amazon’s own private label brands, including its hugely popular AmazonBasics line, have been hijacked by counterfeiters looking to cash in on the name and the associated trust and search ranking it carries.
Still, Amazon considers this recent move by the White House to be a punitive measure related to Bezos and Trump’s long-running feud. The company cites the lack of resources put toward charging caught counterfeit traffickers as one reason why the practice continues unabated and why, in this case, Amazon considers this more of a move to harm its reputation rather than a way to actively protect legitimate retail brands.
“Our store is a safe place to shop and that’s a testament to our continued innovation, collaboration, and commitment to fighting counterfeit and other forms of fraud,” reads Amazon’s blog post. “We are an active, engaged stakeholder in the fight against counterfeit. However, in the last year for which data was published, only 0.1 percent of filed federal criminal cases in the US involved charges for trafficking in counterfeit goods, and 56 percent of counterfeiters sentenced that year received no jail time.”