Andrew Rapacke is a Registered Patent Attorney at The Rapacke Law Group P.A. an intellectual property law firm with a focus on the toy space.
Black Friday marked the start of this year’s Holiday shopping season. But this year many businesses are noticing a dramatic shift in customer preferences for online shopping through big e-commerce internet retail platforms, over visiting traditional brick and mortar storefronts to make Holiday purchases. In fact, this year consumers broke online sales records on both Black Friday and Cyber Monday by making more than $5 billion dollars’ worth of online purchases on Black Friday and $6.59 billion dollars’ worth of online purchases on Cyber Monday!
With a trend that clearly shows that participation in the online marketplace is critical for achieving increased exposure to potential customers, and in turn for increasing sales, many businesses have created an online presence through the use of popular online retail platforms, such as Amazon or eBay. Online retail platforms offer businesses a convenient vehicle for driving and facilitating online sales.
As the Holiday shopping season is the biggest of the year for many small to mid-sized businesses, and companies often depend on being able to make their products available through these online retail platforms. Consumers often prefer shopping on online retail platforms because it is easy for consumers to find and compare one business’s product to its competitor’s product. Companies that operate in the e-commerce space are poised to boost sales during the Holidays, as well as all year round.
Unfair Business Tactics: Improper Use of Take Down Notices to Eliminate Competition
Like all retail environments, competition for sales is fierce online, and some online sellers will go to great lengths to give their products an advantage in the online marketplace. Some unscrupulous businesses have gone so far as to use manipulative tactics to unfairly knock out sales competition on big online retail platforms by inappropriately – or even falsely – filing a Notice of Intellectual Property Rights Violation Take Down requests with the online retail platform providers made against their competitors. The filing of a Take Down request prompts the online retail platform to remove the allegedly offending product from the site so that it is no longer available for consumers to purchase.
In the weeks leading up to Black Friday, Cyber Monday, and all throughout the Holiday shopping season, there is an increase in the number of unwarranted Take Down Notice requests that are filed and processed by big online retail platforms. As a result, countless legitimate online sellers are put at a disadvantage and deprived of the opportunity to make online sales during the busiest online shopping time of the year! For sellers who have had their products removed from an online retail platform, the lost sales opportunities are a serious problem.
The Typical Scenario
When Seller A, who is conducting sales on an online retail platform, believes that another seller, Seller B, is improperly and impermissibly using the IP rights belonging to Seller A, Seller A can file a Take Down Notice request, accusing Seller B of infringing Seller A’s intellectual property rights, with the online retail platform. Since these online retail platforms are so large and so many Take Down Notice requests are filed on a daily basis, the systems that are in place to review Take Down Notice requests rarely involve performing a thorough investigation into the veracity and truthfulness of the IP infringement accusations that are being made.
The unfortunate outcome of this back-handed, competition-squashing technique is that the online retail platform removes Seller B’s products from the online sales forum without any true justification for stripping Seller B of its ability to make sales through the online retail platform. Seller B is placed at a disadvantage by being eliminated from the online marketplace, while Seller A gets to continue on with its normal online business operations. Seller A further benefits now that Seller B’s product has been eliminated from the online retail platform.
While most online retail platforms offer a reinstatement procedure for refuting a Take Down Notice, the reinstatement process can be slow. Sellers who need to get their products reinstated may not be able to get their products back on the online retail platform in time to capitalize on the increase in sales activity that occurs during the Holiday shopping season.
When infringement claims are legitimate, Take Downs can be a useful mechanism for getting counterfeit or infringing products taken off the online retail platform website. In turn, sellers protect their hard-earned consumer brand confidence. However, not every seller in the online realm plays fairly, and countless honest and legitimate sellers have found themselves in a position where their products have been removed from online platforms for alleged IP infringement and they do not know what they can do about their situation.
Two Legal Options: Declaratory Judgement and Tortious Interference Actions
If there is an urgency to get back into the online marketplace – for instance, in order to participate in the
Holiday shopping season – disadvantaged online sellers who have had their products unfairly removed from an online retail platform through a Take Down Notice need legal recourse, and they need it quickly. In these situations, disadvantaged online sellers have two good legal options available to them:
- Seek a Declaratory Judgement. A Declaratory Judgement Action can be used to ask the Court to find that the disadvantaged online seller has not violated the IP rights of the seller that is alleging IP infringement. A Declaratory Judgement from a Court can expedite the reinstatement procedure to get the online seller up and running again on the online retail platform because it is a legal finding that the seller’s product does not infringe the IP rights of the seller that made the infringement allegations.
- File A Tortious Interference of Business or Contractual Relationship Action. The disadvantaged online seller can also, or alternatively, file a Tortious Interference of Business or Contractual Relationship Action against the seller that filed the unwarranted Take Down Notice request because their actions have interfered with the business relationship between the disadvantaged seller and the online retail platform, causing the disadvantaged seller economic harm through lost sales.
Either one of a declaratory judgement from a court, or a tortious interference action, can help online sellers who have had their products wrongly removed from online retail platforms achieve justice.
Dealing with the aftermath of a Take Down Notice can be frustrating, especially when your business depends on the sales generated through big online retail platforms during the Holiday shopping season. But do not be discouraged. There are legal options available to you that can either help get your product reinstated on the online retail platform or can help you recover damages for your lost online sales.