Thanks to rapid advances in technology and a global pandemic that has devastated physical businesses, contactless e-commerce platforms are on the rise; and Amazon takes the lead, with effective tools and support systems that make it easy for small and medium-sized businesses (SMBs) to generate profits on the site with just the click of a mouse.
Conversely, this ease of entry has resulted in an oversaturated market filled with similar products and poor quality counterfeits. Amazon’s latest effort against counterfeits, the Amazon Brand Registry, has brought only mild relief to this problem in exchange for other unwanted side effects: the rise of forgotten brands and brand trolls.
The rise of forgotten brands
As Market Place Pulse reported, there is a 40% increase in registered trademarks on Amazon, a drastic increase from all previous years data. Most of these marks are immemorial, unpronounceable, and simply a string of random letters. They serve no marketing purpose because consumers rarely notice them; or if these meaningless letters ever command attention, they are quickly forgotten. Yet countless random combinations of letters are still submitted to the USPTO each year for filing and registration on the Amazon Trademark Registry.
To understand why Amazon sellers, especially Chinese sellers (who make up 44% of Amazon’s seller population and 25% of USPTO trademark registrations), continue to register trademarks that don’t to promote sales or gain brand recognition, one must understand the Amazon Brand Registry program – the ultimate motivation behind all those seemingly useless brands.
On the surface, Amazon Brand Registry is purely an intellectual property protection program, launched in response to widespread counterfeiting. But having a registered trademark also gives sellers access to an exclusive suite of marketing tools, such as the A+ Content Manager. Tools like these are the real incentives for sellers to enroll in the program. Naturally, in a market awash with similar competitors, any sane businessman would like a few privileges that would put him ahead of the cutthroat competition – especially when the price of those long-term privileges is just an absurd mark to put in the register. Hence, it has created an insatiable demand for brands.
The luring incentives offered by the Amazon Trademark Registry have been successful in attracting sellers to Amazon, but they have also encouraged trademark trolls to file nonsense trademarks with the USPTO. Many foreign agents have begun to take advantage of the growing demand for trademarks by entering hundreds of applications at once in hopes of finding registrable trademarks, then selling the approved trademarks at high prices to companies wishing to register with the Amazon Brand Registry. Unethical practices like this divert USPTO resources from properly filed applications. Recent policy changes such as the US Counsel Rule have done little to prevent foreign agents from looking for fraudulent marks.
Why Chinese Sellers Are Leaving Amazon
However, the USPTO is not alone in suffering from Amazon’s poison. While countless companies are being shut down by Amazon for violating its regulations, Chinese companies suffer most of these suspensions. Although Amazon says the mass suspensions are the result of widespread fake reviews, Chinese officials see them as a reason sellers are leaving Amazon.
An editorial in People’s Daily, China’s largest newsgroup, describes Amazon as a “chokehold” of cross-border e-commerce in China and encourages sellers to reduce their dependence on Amazon by considering alternative platforms. The article lists Amazon’s high operational costs, mass account suspensions, and lack of access to consumer data as reasons why Chinese sellers are “de-Amazoning.”
Additionally, the Chinese government offers incentives for sellers to branch out from Amazon. According to the South China Morning Post, the Shenzhen Bureau of Commerce is offering a 2 million yuan subsidy to sellers who build independent e-commerce platforms.
Incentives and articles urging Chinese sellers to “deamazonize” are just the tip of the iceberg: popular Chinese e-commerce platforms (such as Shein, Tmall, and JD.com) are already looming on the horizon. Clearly, the call for diversification is only growing, not diminishing. To add, as Amazon’s culture of intellectual property abuse and shoddy brand trolls has no end in sight, the urgency to branch out from Amazon will only grow stronger. The intellectual property law community will continue to support companies and creators who sincerely hope to protect their hard work through legal action.