December, 5th, 2018

By Christina L. Winsor

We’re entering into the season of hope and forgiveness.  But is that the reason Apple and Amazon have decided to put their years of feuding aside and come together… just in time for the upcoming holiday season?  Likely not.  But it is a deal that will have both companies jingling all the way to the bank.

Until now, Apple had a very limited presence on Amazon.  Like most other brands, it argued with Amazon over unauthorized retailers selling Apple products within the online massive marketplace.

Amazon takes the approach that their marketplace is a place of free enterprise. Okay.  And its attorneys vigorously stand by the first sale doctrine, regardless of the headaches unauthorized re-sellers make for brands and those who have contractual relationships with such brands, such as authorized distributors and retailers.  Amazon looks at its own contracts with its re-sellers as priority.  Hundreds of brands look at this stance as a detriment to quality control and an enforcement nightmare.  While brands are obligated to enforce their intellectual property, Amazon consistently makes brands jump through hoops just to take down a listing.

But according to recent news, Amazon made a deal with Apple that will break its own rules.  At the beginning of November, Apple and Amazon announced that they are teaming up.  In exchange for Apple selling more of its high demand goods directly through Amazon, such as the iPad Pro, a number of the iPhone series, Apple Watch Series 4, and Beats headphones (to name a few), Amazon has promised to remove ALL third-party re-sellers from its platform.  Starting January 4, 2019, this new deal will take effect on Amazon sites in the US, UK, Germany, France, Italy, Spain, Japan, and India.

From personal experience and conversations with Amazon’s attorneys, this move is contradictory to the enforcement hurdles it puts in place for other brands.  Therefore one must wonder how much longer Amazon will be able to use its discretionary enforcement powers if it continues to make deals like this.  If Amazon continues to lure in large brands like Apple (and Nike last year) and show the world how easy it is for it to break ties with its contracted third party re-sellers, it is going to be harder for it to simply say “no” to other brands when they ask for the same treatment.

We often encourage brands to stick to simple sales outlets, such as through their own websites, physical stores, or clearly marked authorized retailers.  This makes it easy for consumers to tell who is authorized and selling genuine goods.  Yet, it is often not so simple. Once a brand starts to branch outside these distribution lines, for example selling last season’s goods through discount outlets, the enforcement waters start to get a little murky.  Through no fault of the brand, goods are bound to end up somewhere they should not be.  From there it can become increasingly unclear to consumers who are the authorized retailers, especially once those good show up on the Amazon marketplace.  Are the sellers authorized?  Where are the goods coming from?  This is generally not Amazon’s concern. But if additional large brands come along like Apple and Amazon has no problem abruptly ending all of its third party re-seller contracts, it seems likely that it will become difficult to keep a straight face and tell other brands “no.”

But for now, perhaps as the season of perpetual hope draws near, we too can hope that Amazon will one day find itself in a dilemma and start doing for every brand what it is capable of doing for Apple. Until then, brands should keep logging their complaints with Amazon and submitting notice and takedowns.

If you believe your rights are being infringed by large marketplace platforms or the individual sellers on those platforms and do not know the best way to enforce and protect your rights, please give us a call and we’ll be happy to help.

WHIPgroup is leading counsel for U.S. and international technology companies. We specialize in patent and trademark law.

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