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The Rise and Fall of Amazon: Forgotten Brands, Trademark Trolls, and the Withdrawing of Chinese Sellers

Thanks to the rapid advancements in technology and a global pandemic that brought devastation to brick-and-mortar businesses, contactless e-commerce platforms are on the rise; and Amazon is taking the lead, with effective tools and support systems that allow Small and Medium Businesses (SMBs) to easily generate profits on the site with just the click of a mouse.

Conversely, this ease of entrance resulted in an oversaturated market, filled with similar products and low-quality knockoffs. Amazon’s latest effort against counterfeits, the Amazon Brand Registry, has only given a mild relief to this problem in exchange for other adverse side effects: the rise of forgotten brands and trademark trolls.

 

The Rise of Forgotten Brands

As reported by Market Place Pulse, there is a 40% increase in trademarked brands on Amazon, a drastic increase in comparison to all previous years’ data. Most of these brands are unmemorable, unpronounceable, and simply a string of random letters. They serve no marketing purpose as consumers rarely notice them; or if these meaningless letters ever receive any attention, they are quickly forgotten. Yet countless random combinations of letters are still submitted to the USPTO every year to be trademarked and registered on the Amazon Brand Registry.

To understand why Amazon sellers, especially Chinese sellers, (who make up 44% of Amazon’s seller population and 25% of the USPTO trademark registrations), continue to register for trademarks that have no contribution to promoting sales or earning brand recognition, one must understand the Amazon Brand Registry program – the ultimate motivation behind all these seemingly useless trademarks.

On the surface, Amazon Brand Registry is purely an intellectual property protection program, launched in response to the widespread counterfeits. But having a registered brand 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 that is flooded with similar competitors, any reasonable businessman would like a few privileges that would get them ahead of the cut-throat competition – especially when the price of these long-term privileges is merely a nonsensical trademark to enroll in the registry. Consequently, this created an insatiable demand for trademarks.

The luring incentives offered by the Amazon Brand Registry successfully attracted sellers to Amazon, but it also encouraged trademark trolls to file nonsensical trademarks with the USPTO. Many foreign agents began to profit from the burgeoning demand for trademarks by entering hundreds of applications at once in hopes of finding registerable trademarks, then sell the approved trademarks at high prices to businesses that want to enroll in the Amazon Brand Registry. Unethical practices like this diverge USPTO’s resources from properly filed applications. Recent policy changes such as the U.S. Counsel Rule have done little to stop foreign agents from pursuing fraudulent marks.

 

Why Chinese Sellers are Leaving Amazon

Nevertheless, the USPTO is not the only one suffering the poison of Amazon. As innumerable businesses are shut down by Amazon for violating its regulations, Chinese businesses suffer most of these suspensions. Although Amazon claims that the mass suspensions are a result of widespread fake reviews, Chinese officials see this as a reason for sellers to leave Amazon.

An op-ed on People’s Daily, the largest newspaper group in China, describes Amazon as a ‘chokehold’ on China’s cross-border e-commerce and encourages sellers to cut reliance on Amazon by considering alternative platforms. The article lists Amazon’s high operational costs, mass account suspensions, and the lack of access to consumer data as reasons for Chinese sellers to ‘de-Amazonize’.

Moreover, the Chinese government offers incentives for sellers to diversify from Amazon. According to the South China Morning Post, the Shenzhen Commerce Bureau offers a 2 million yuan grant to sellers who are building independent e-commerce platforms.

Incentives and articles urging Chinese sellers to ‘de-Amazonize’ are barely the tip of the iceberg: popular Chinese e-commerce platforms (such as Shein, Tmall, and JD.com) are already on the horizon. It is evident that the diversification call is only amplifying, not diminishing. To add, as Amazon’s culture of intellectual property abuse and shoddy trademark trolls has no end in sight, the urgency to diversify from Amazon will only grow stronger. The IP law community will continue to stand with businesses and creators who sincerely hope to protect their hard work through legal actions.

Wang IP Law Group, P.C. is a Los Angeles legal firm providing professional expertise in intellectual property law (patent, trademark, copyright, and licensing agreement), business and commercial litigation, and a wide range of other legal matters including business immigration, real estate, and landlord/tenant cases. Our firm takes pride in our talented team of multilingual attorneys who represent clients across the Untied States, Europe, the Middle East, and Asia Pacific. If you have questions or would like a consultation in regards to the content of this publication, please call us at our toll-free number at (888) 827-8880 or email us at [email protected]

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