Court orders Amazon to make inventory open to inspection

In a landmark case, a US court has ruled that Amazon must submit to an inspection of its inventory by a brand owner that claims to have been hit hard by counterfeits listed on the retailer’s websites.

Last week, judge Ivan Davis of the US District Court for the Eastern District of Virginia ordered that Amazon make its inventory of over 33,000 ‘accused products’ – stored in roughly 200 facilities around the US – available for inspection by Maglula within five days.

Israel-based Maglula, which makes magazine loaders for firearms, filed a lawsuit against Amazon a year ago claiming that Amazon had allowed counterfeits to be sold on its websites, Crucially, the suit alleges that Amazon is a direct seller of the counterfeits, rather than third-party vendors listing goods on its marketplace.

Amazon is accused of selling a counterfeit version of one of Maglula’s products that arrived at the buyer wrapped in an Amazon-branded plastic bag. The loader had been returned to a third-party liquidation-centre but listed for resale.

The court order says that Maglula must be granted access to land “for inspection of the quarantined accused products in Amazon’s warehouses”, or alternatively that Amazon must ship the products in its possession to an off-site location for inspection by the company.

This is thought to be the first time that such an inspection order has been made against Amazon in connection with counterfeit goods. The online retail giant has argued that the accused products avoid infringement because they were never sold.

“Rather than permitting discovery, Amazon resorts to litigation tactics to frustrate and limit Maglula’s access to information regarding the nature and full extent of Amazon’s infringing conduct,” says Maglula’s complaint.

“Amazon feigns ignorance and portrays itself helpless when it comes to providing sufficiently detailed noninfringement positions on the accused products,” it goes on, noting that the retailer has variously argued over the last few months that access could not be allowed because of COVID-19 or the “holiday rush”.

It also accuses Amazon of operating a “heads I win, tails you lose” strategy – insisting that Maglula can’t establish infringement unless and until it inspects every suspect product, but denying access to do so.

“Despite all its technical savvy, sophisticated tracking infrastructure, and virtually endless resources, Amazon refuses to even make these accused products available for Maglula’s inspection,” it says.

The Counterfeit Report – an industry and corporate backed website promoting worldwide consumer awareness of counterfeit products – said earlier this year that commingling of the genuine and counterfeit loaders in the same Amazon inventory bin may result in consumers receiving counterfeit products. The fakes have also been seen on eBay, it says.

Maglula's lawsuit alleges they repeatedly warned, then purchased counterfeits of their trademarked and patented products from Amazon as a direct seller through Amazon's platforms, according to the website.