Amazon accused of profiting from counterfeits

The online marketplace Amazon is being sued for allegedly allowing and profiting from the sale of counterfeit phone chargers through dodgy trading practices on its platform.

The case has been brought by Ohio-based start-up firm Fuse Chicken, whose tablets and cell phone chargers are described as "the toughest cable on earth".

Fuse Chicken, which was borne out of a Kickstarter campaign in 2012 and has been selling its products through Amazon since 2013, claims the e-commerce site has offered goods online that infringe Fuse Chicken's trademarks and copyrighted images and videos.

The court documents also refer to individuals, 'DOES 1-10', who are unnamed and unknown third-party sellers on Amazon and who – the company alleges – have been selling knock-off Fuse Chicken products and are also liable alongside Amazon.

Fuse Chicken claims the defendants purposely "committed the tortious and illegal activities of trademark infringement and unfair competition" to sell goods to the US public who had reason to believe the goods they had purchased were genuine.

The firm also claims Amazon's actions constitute deception through false and misleading advertising.

The illicit activities "directly interfere with and damage the plaintiff's commercial efforts and endeavours and harm the plaintiff's goodwill", the court documents say.

The court documents also state that Amazon "unlawfully profited" from the "wilful and intentional" sale of the counterfeit products.

The case has come about based on the trading practices Amazon employs. Fuse Chicken says that for each of its products sold on Amazon, the firm would create a new product details page and would then be issued with an Amazon Standard Identification Number (ASIN), which are blocks of 10 letters and/or numbers that identify specific items and are often linked to a product's Universal Product Code (UPC).

According to Fuse Chicken, "once Fuse Chicken ASINs were assigned by Amazon.com, any seller purporting to sell Fuse Chicken products, authentic or not, can click "Sell Yours Here" and be listed as a Fuse Chicken seller under the product page created by Fuse Chicken".

The firm alleges that "Amazon makes no effort to determine whether the products sold by such third-party sellers are authentic".

The firm also alleges that all products with the same ASIN are pooled together at Amazon distribution centres "regardless of whether the inventory comes from the manufacturers or other sellers".

"[The] defendant's practice of co-mingling inventory, regardless of source, results in consumers being shipped product that was supplied by an entity other than the seller from which the consumer purchased the product. As a result, a consumer may order product Fulfilment by Amazon or directly from the manufacturer and the defendant may fulfil that order with counterfeit or knock-off product from third-party sellers. This inventory and distribution process results in damage to the brand and consumer dissatisfaction… and negative consumer reviews on Amazon.com," the court documents say.

One product review listed on Amazon, claimed the Fuse Chicken product had "broken in a week" and was of "really bad quality".

Fuse Chicken says it is "impossible, without assistance from Amazon, to determine which seller actually sent counterfeit or knock-off product to the Amazon distribution centres" because of the co-mingling of products.

Fuse Chicken first discovered that knock-offs were being sold as genuine products under its ASIN in November 2016 when it realised products were being shipped through Amazon Vendor Express even though Amazon had stopped purchasing certain Fuse Chicken products. The firm alerted Amazon that its own purchased stock may be fake and was advised by its Amazon Business Development Manager to file a complaint.

However, according to the firm, the complaint was never resolved and no sufficient explanation was given as to why Amazon continued to allow the sale of the fake products "despite actual knowledge of the unlawful activity". Fuse Chicken also alleges that Amazon failed to remove negative reviews of counterfeit products.

Fuse Chicken is seeking damages and an award for Amazon's profits through the sale of the fakes, as well as injunctive relief prohibiting each defendant from further infringing the firm's copyright.