Amazon sues alleged international counterfeiting ring, escalating battle against knock-off products

The suit targets sales of counterfeit smartphone mounts. Pictured here: the real thing. (Nite Ize Photo)

Amazon and Nite Ize, a Colorado-based maker of mobile accessories and LED products, filed a lawsuit today against 11 individuals and business entities across three countries, accusing them of selling counterfeit goods on the tech giant’s online retail platform.

The suit alleges that the group, whose operations spanned the U.S., Canada and China, manufactured, imported and sold counterfeit versions of Nite Ize’s Steelie hands-free smartphone mounting products on Amazon. The case shows the challenges of dealing with counterfeits in the surging online retail industry as it took independent investigations from Nite Ize, a key tip from U.S. Customs and Border Patrol and help from Amazon to get to this point.

“Amazon continues to invest and fight counterfeiters on all fronts — from developing technology to proactively prevent counterfeits, to working with brands, leaders in the public sector and law enforcement to hold bad actors accountable,” the company said in a statement. “Counterfeit has no place in our store and we will leverage every tool available to protect brands like Nite Ize, our customers, and our store.”

Amazon has gotten aggressive in recent years in the battle against counterfeiters. In 2018, it filed three lawsuits in partnership with Vera Bradley, designer of purses and other accessories, and OtterBox, which makes high-end phone cases.

However, a recent report from The New York Times described widespread counterfeiting problems in the company’s online bookstore, Amazon’s original business. The report claimed Amazon doesn’t check the quality or authenticity of books on the platform, and that the company is reactive rather than proactive, only taking on counterfeiters when others complain. Amazon responded to the story by outlining its efforts to fight counterfeit goods.

The latest lawsuit, filed in U.S. District Court in Seattle today, doesn’t say how Nite Ize originally got tipped off to the alleged counterfeiters. But starting in July 2018, the company conducted a series of test purchases from several Amazon accounts linked to the defendants and determined the goods weren’t authentic.

Then in October, U.S. Customs and Border Protection officials intercepted a shipment of more than 300 counterfeit Nite Ize Steelie car mount kits at its port of entry in Portland, Ore. They originated from Hong Kong with a destination of the Portland suburb of Tualatin, with one of the defendants listed as the importer.

Customs tipped Nite Ize off on the seized shipment. Nite Ize later notified Amazon of the alleged counterfeiting activity. The tech giant confirmed what it called the “unlawful sale of counterfeit Nite Ize products,” and blocked the seller accounts, per court documents.

“Upholding the integrity of our products against copycats masquerading as Nite Ize is of paramount importance,” said Clint Todd, chief legal officer of Nite Ize, in a statement. “We’ve been locked in an ongoing battle with counterfeiters for many years. When U.S. Customs and Border Patrol notified us of a counterfeit shipment of products it had seized, we weren’t surprised. However, the scope and complexity of the operation we uncovered was staggering.

He added, “Throughout our history with Amazon, the company has consistently supported our efforts to remove counterfeit listings and sellers. When alerted to the magnitude of the issue impacting one of our best-selling products, Amazon decided to join our fight against counterfeiters to ensure that our mutual customers can confidently shop with the knowledge that they are purchasing, and ultimately receiving, genuine Nite Ize products.”

Nite Ize’s Amazon page. (Screenshot Via Amazon)

Amazon and Nite Ize are asking for a full accounting of defendants profits so they can recovered and an order to seize all counterfeit items. Any damages collected in the lawsuit will go to Nite Ize.

The companies also want the court to block the defendants and those associated with them from opening new accounts, selling items on Amazon and manufacturing additional counterfeit goods.

“In Amazon’s experience … it is not uncommon for sellers of counterfeit products blocked by Amazon to attempt to create new seller identities to obtain access to the Amazon store,” according to court documents. “The fact that Defendants created multiple Amazon seller accounts, in violation of Amazon’s BSA, to facilitate their counterfeit sales of Nite Ize products demonstrates they are likely to continue to do so. Therefore, unless Defendants and all of their affiliated and/or successor entities are immediately and permanently enjoined from using Amazon’s store to sell goods, the harm Defendants caused to Amazon, legitimate third-party manufacturers/sellers like Nite Ize, and consumers is likely to continue.”

However, the company in the past has fought in court to reduce its legal liability for counterfeit goods sold on its platform.

In court documents, Amazon goes into detail about its efforts to proactively spot counterfeiters early in the process, as soon as when they sign up for an account.

Amazon prohibits the sale of inauthentic and fraudulent products and is constantly innovating on behalf of its customers and working with brands, manufacturers, rights owners, and others to improve the ways it detects and prevents counterfeit products from being sold to consumers. Amazon employs dedicated teams of software engineers, research scientists, program managers, and investigators to operate and continually refine its anti- counterfeiting program. Among other things, when sellers register to sell products through Amazon’s store, Amazon’s automated systems scan information about the sellers for indicia that the sellers might be bad actors, and Amazon blocks those sellers during registration before they can offer any products for sale.

Amazon’s systems automatically and continuously scan thousands of variables related to sellers, products, and offers to detect activity that indicates products offered by a seller might be counterfeit. Amazon uses innovative machine learning to improve its automated systems in order to anticipate and outwit bad actors. Numerous Amazon investigators around the world respond quickly to review any listing identified as a potential counterfeit product. These investigators also review notices of claimed infringement from rights owners, who are most familiar with their products. When Amazon determines a product offered for sale is a counterfeit, it removes the product immediately. Amazon regularly suspends or blocks sellers suspected of engaging in illegal behavior or infringing others’ IP rights.

Here is the full lawsuit from Amazon and Nite Ize:

Amazon Nite Ize Complaint by Nat Levy on Scribd

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