Amazon’s second tool to combat counterfeits is a new program that started in the spring of 2017 called “Transparency.” In short, Transparency allows brand owners to purchase encrypted alphanumeric nonsequential codes that are placed on product units and can be scanned by Amazon Fulfillment Centers as well as consumers to verify a product’s authenticity.
After a brand owner enrolls a product into the program, Amazon will provide the brand owner with a list of Transparency codes.22 The purchase price is roughly 1 cent to 5 cents for each code depending on the quantity of purchased codes.23 The manufacturer places the code on the product packaging for each unit, and Amazon Fulfillment Centers scan the Transparency code to determine if the product is authentic before sending it to a consumer. A consumer can scan the Transparency code using the Amazon shopping app or the Transparency app to verify a product’s authenticity.
At the time of this writing, Amazon was still vetting the Transparency program and offering it within the United States and by invitation only. Invited brand owners must have a Global Trade Item Number (GTIN) and the ability to apply the Transparency codes on each unit of an enrolled product.
Time will tell, but the Transparency program seems promising for brand owners who can absorb the cost to purchase the codes from Amazon and apply them to products during manufacture. And, given the Transparency program is in its infancy, the cost of participating in the program could decline over time.
Amazon has been an important contributor to the growth of e-commerce. Brand owners who want to take advantage of this powerful platform should anticipate listings with counterfeit goods and have a plan to address them. While Amazon provides certain tools to assist brand owners, namely the Brand Registry and Transparency, the onus is on brand owners to use those tools in an effective manner to protect their brands and to understand their limitations.
1. Quarterly E-Commerce Report Historical Data, U.S. Census Bureau, https://www.census.gov/retail/ecommerce/historic_releases.html (last visited Dec. 11, 2018).
2. Daphne Howland, JP Morgan: Amazon Will Catch Up to Walmart in 2–3 Years, Retail Dive (May 16, 2018), https://www.retaildive.com/news/jp-morgan-amazon-will-catch-up-to-walmart-in-2-3-years/523654/.
3. Stefany Zaroban, U.S. E-Commerce Sales Grow 16.0% in 2017, Digital Com. 360 (Feb. 16, 2018), https://www.digitalcommerce360.com/article/us-ecommerce-sales/.
4. Number of Active Amazon Customer Accounts Worldwide from 1st Quarter 2013 to 1st Quarter 2016 (in Millions), Statista, https://www.statista.com/statistics/476196/number-of-active-amazon-customer-accounts-quarter/ (last visited Dec. 11, 2018).
5. Amazon Servs., https://services.amazon.com/ (last visited Dec. 11, 2018).
6. Pete Hunt, Five Reasons You Should Sell Through an Online Marketplace, Small Bus. Nation (Dec. 6, 2016), http://uschambersmallbusinessnation.com/blog/5-reasons-sell-through-online-marketplace; see also Amazon Global Selling: How It Works, Amazon Servs., https://services.amazon.com/global-selling/how-it-works.html (last visited Dec. 11, 2018).
7. Robert Klara, Counterfeit Goods Are a $460 Billion Industry, and Most Are Bought and Sold Online, Adweek, Feb. 13, 2017 (reporting percentages of counterfeits based on data gathered from custom-designed web crawlers looking on behalf of Red Points’ 200 clients).
8. Matthew Dalton & Laura Stevens, Amazon Has a Luxury Problem, Wall St. J., Oct. 11, 2017; Ari Levy, Birkenstock Quits Amazon in US after Counterfeit Surge, CNBC (July 20, 2016), https://www.cnbc.com/2016/07/20/birkenstock-quits-amazon-in-us-after-counterfeit-surge.html.
9. Frontier Econs., The Economic Impacts of Counterfeiting and Piracy (2016).
10. Int’l Trademark Ass’n, Addressing the Sale of Counterfeits on the Internet 3 (2009).
11. Id. at 7.
14. Mari Saito, Amazon Expands Logistics Reach with Move into Ocean Shipping, Reuters, Jan. 14, 2016, https://www.reuters.com/article/us-amazon-com-freight-idUSKCN0US2YW; Wade Shepard, How Chinese Counterfeiters Continue Beating Amazon, Forbes (Jan. 12, 2017), https://www.forbes.com/sites/wadeshepard/2017/01/12/why-amazon-is-losing-its-battle-against-chinese-counterfeiters/.
15. Shepard, supra note 14.
16. Id.; Frank Tong, Overseas Sales by Chinese Merchants on Amazon Double, Digital Com. 360 (Aug. 14, 2015), https://www.digitalcommerce360.com/2015/08/14/overseas-sales-chinese-merchants-amazon-double/.
17. United Nations Office on Drugs & Crime, Transnational Organized Crime in East Asia and the Pacific: A Threat Assessment (2013).
18. Julia Bourke, How Counterfeiters Corrupt Amazon Distribution, Red Points (May 8, 2017), http://blog.redpoints.com/en/how-counterfeiters-corrupt-amazons-distribution-channels; Sonya Mann, Why It’s Way Too Easy to Sell Counterfeit Goods on Amazon, Inc. (Mar. 24, 2017), https://www.inc.com/sonya-mann/amazon-counterfeits-no-starch.html.
19. Mann, supra note 18.
20. Ari Levy, This Amazon Seller Is So Frustrated She Tried to Quit—Then Amazon Pitched Her a New Anti-Counterfeiting Service, CNBC (Feb. 8, 2018), https://www.cnbc.com/2018/02/08/amazon-pitches-transparency-anti-counterfeit-service-to-wrong-seller.html (reporting SMB owner of brand WEE URBAN claimed revenue of $500,000 in 2016 but an 80 percent decrease in 2017 because of counterfeits); Wade Shepard, How Amazon’s Wooing of Chinese Sellers Is Killing Small American Businesses, Forbes (Feb. 14, 2017), https://www.forbes.com/sites/wadeshepard/2017/02/14/how-amazons-wooing-of-chinese-sellers-is-hurting-american-innovation/ (discussing SMB owner of brand BOREDWALK claim that Amazon comprised 40 percent of its sales in 2015 but by 2016, 1,500 of its products had been counterfeited).
21. For design right claims, most international Amazon websites require a registration; however, unregistered design right claims may be submitted on France, Germany, Italy, Spain, and U.K. Amazon websites.
22. Amazon Brand Registry & Transparency Program, Bar Code Graphics (May 24, 2018), https://www.barcode.graphics/amazon-brand-registry-transparency-program/.