Trump Administration Seeks Legislation to Hold E-Commerce Platforms Accountable for Counterfeit Sales

Gibney Anthony & Flaherty, LLP

On October 13, 2020, President Trump signed a “Memorandum on Stopping Counterfeit Trafficking on E-commerce Platforms Through Fines and Civil Penalties” to combat trademark counterfeiting by taking aim at the e-commerce marketplaces that act as intermediaries between buyers and sellers.

This builds on the previous Executive Order issued on January 31, 2020 which aims to impose a greater threshold of responsibility on express consignment operators, carriers, hub facilities and licensed customs brokers in preventing the sale e-commerce counterfeit goods.

The new Memorandum instructs the Secretary of Homeland Security to:

  • Seize counterfeit goods imported into the US in connection with a transaction on an e-commerce platform
  • Impose the maximum fines and civil penalties permitted by law on any e-commerce platform that directs, assists with or is involved in the importation of counterfeit goods into the US
  • Develop a legislative proposal to promote the policy objectives of the Memorandum in conjunction with the Attorney General within 120 days

What’s On the Horizon
The Memorandum is the latest effort in a series of new efforts to combat online counterfeiting. Bipartisan bills have been introduced in both the House and the Senate.

As we previously reported, the SHOP SAFE Act of 2020 incentivizes e-commerce platforms to adopt best practices to reduce the presence of counterfeit products on their sites. E-commerce sites that fail to adhere to the steps would be held liable.

The INFORM Consumers Act aims to require online marketplaces to disclose certain verified information regarding high-volume third party sellers of consumer products to inform consumers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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