$3.8 trillion – that's how much e-commerce sellers and manufacturers lost collectively in 2020 due to unfair competition. Plagiarism and counterfeits on the internet are an everyday occurrence. The problem has grown to such a scale that some manufacturers don't advertise their products for fear of imitators. However, there are ways to defend against this.

It might seem that running a business, especially in the e-commerce sector, promoting your products is obvious. After all, the slogan "advertising is the lever of trade" has existed at least since the communist era in Poland, and it flourished fully when the Polish economy opened up in the 1990s. However, it turns out that – in times when advertising attacks us in every corner of the internet – there are sellers who operate by the principle "ride quietly, go further." And this is on Amazon – the global leader in e-commerce.

Advertising? No, thanks

– People are looking for well-selling products they can bring onto Amazon. If I told exactly what I make and sell, someone could counterfeit our product or enter the same niche. That's why we try to minimize this risk and don't talk about what we do. That's how it is in this niche – you simply don't talk about it. There are many sellers who operate in social media and don't boast about what they sell. Precisely because in groups dedicated to Amazon, people are lurking to find some nice product – says Ada, an Instagrammer who runs her business on Amazon together with her partner, but they don't use, for example, their "instastories" to advertise their products.

We can comfortably settle on Amazon since March. The Polish version of the service attracts both customers looking for interesting deals and sellers themselves. It's worth remembering that most products are not sold directly by Amazon, but by external sellers who list their products through the service.

According to Marketplace Pulse, there are about 6 million active external seller accounts. Their share in sales is about 55%. Amazon's European segment (Germany, United Kingdom, Italy, Spain, Sweden, Netherlands, and Poland) has nearly 1.5 million sellers who most often sell their products to more than one country. You can trade both goods imported, for example, from China, as well as your own product or items for which you have exclusivity.

The market is huge, and with the right apps, anyone can check what's selling best right now. Hence the temptation to take shortcuts, and on that path we can encounter counterfeits or plagiarism. You don't even need to produce them. You can import them by entire containers from the Asian market.

Advertise, but first secure your goods

Marek Czyżewski – CEO of Pravna.pl, which provides legal services for businesses, such as trademark registration – is surprised that sellers don't want to advertise their products. – If an entrepreneur manufactures and sells their own products, it's worth boasting about it in social media and other advertising campaigns. Such actions will influence brand recognition, its strengthening in the market, and also strengthen the so-called secondary distinctive character of the trademark – comments Czyżewski, but emphasizes that marketing activities are best implemented after the trademark has been registered.

Importantly, when registering a trademark, it should be linked to specific products or services. Thanks to this, any entity that sells or provides services impersonating a registered brand will be infringing the trademark.

– In the case of a culpable trademark infringement, one can demand compensation for the damage caused on general principles or through payment of a sum of money corresponding to the license fee or other appropriate remuneration – describes the CEO of Pravna.pl.

Unfair competition in e-commerce – how to defend against it?

The procedure for trademark registration at the Polish and European level looks similar. There are two differences. The fee in the case of the EU procedure is higher, but we receive the decision faster. After paying the application fee, it is examined by an expert for formal deficiencies and absolute grounds for refusal of registration. If there are no irregularities, the mark is subject to publication, which is equivalent to the start of a three-month opposition period. During this time, entities that believe the mark being registered infringes their rights can report this fact to the appropriate office.

– If no entity files an opposition, the Office issues a decision granting the right of protection for the trademark, as proof of which a certificate is issued. A trademark has the character of a monopoly, so such a right is an exclusive right and belongs only to its owner – notes Marek Czyżewski from Pravna.pl

Counterfeits are pure profit

However, the fear of plagiarism is justified. According to data collected by InfoTracer – a portal dealing with, among other things, cybersecurity – e-commerce fraud in 2020 was worth about $3.8 trillion. That's an increase of over 49.6% in the last 10 years. Counterfeits are not only cheaper products; often their quality endangers consumers' health. American media reported, among other things, situations where counterfeit kitchen gloves (visually almost identical to the original) caused burns. Meanwhile, AmSafe, an aviation equipment manufacturer, created a patented harness designed to ensure the safety and comfort of small children traveling on airplanes – without the need for heavy car seats. The equipment obtained all possible safety certifications, and hundreds of thousands of dollars were invested in research. It didn't take a few months before a counterfeit appeared on Amazon. Without certifications, made from inferior materials, but five times cheaper. Even though Amazon removed the offer, it kept appearing on new sellers' accounts.

Amazon sets traps for thieves

Over the past few years, Amazon has introduced several initiatives aimed at combating counterfeit sellers. In March 2019, the company launched Project Zero, which uses artificial intelligence to detect and remove suspected counterfeit goods. Last year, a pilot program of live video verification was conducted, which helps remotely verify potential sellers.

The company also collaborates with some brands in legal proceedings against dishonest contractors.
Additionally, Amazon allows sellers to create an account in Amazon Brand Registry, where after confirming trademark rights, the seller unlocks a set of tools supporting brand building and protection.

– After entering information about a registered brand, Amazon will automatically search for suspicious content that may infringe brand rights, causing their further display to be blocked until the matter is clarified. Of course, the brand owner can also submit an infringement report themselves – explains Marek Czyżewski and adds that similar solutions are being introduced on other portals, e.g., Allegro.

 


Pravna.pl

Pravna.pl is one of the largest Polish websites providing legal services (mainly for businesses) via the internet. Since the service began operations in 2013, nearly 3,000 clients have, among other things, registered a trademark through it, obtained a right of protection for industrial designs, or received advice on business matters. Pravna.pl has also helped hundreds of programmers obtain and settle the IPBOX tax relief. The strength of Pravna.pl is its laser focus on a few specific services. These are areas where the company has legal experts focusing exclusively on a given specialization. Thanks to this, the quality of services provided is at the highest level, and prices are affordable.

Summary

Unfair competition in e-commerce generates enormous losses – in 2020, e-commerce fraud was worth about $3.8 trillion, an increase of over 49.6% over the decade. Sellers fear plagiarism to such an extent that some give up advertising their own products on Amazon. However, experts recommend the opposite strategy: first register the trademark, and only then conduct marketing activities. Platforms are also implementing their own safeguards – Amazon offers the AI-based Project Zero program and tools from the Amazon Brand Registry package. Similar mechanisms are also being introduced by Allegro.