Why International Intellectual Property Rights Are Important for Amazon Sellers and Aggregators

Tarter Krinsky & Drogin LLP

Intellectual property rights are some of the most valuable assets that an Amazon store owner can possess. These rights help distinguish the owner’s products from those of others and can prevent competitors from selling products with similar designs and functions. Yet, trademarks and patent rights are national in scope. Without affirmative measures taken by the store owner to internationalize those rights, the owner’s rights will be limited to its home country. This can have significant negative consequences when the store owner wants to offer its products on Amazon sites outside its home country or sell its store to an aggregator.

Amazon Sellers can Protect Brands with International IP Rights
Because trademark and patent rights are national in scope, unless an Amazon store owner internationalizes those rights, the store owner will be left without a means to prevent third parties from copying its trademarks, designs, and inventions in other countries. Without international protection, not only can an Amazon seller in another country copy the store owner’s intellectual property, the other seller can also register the store owner’s trademark in its own country. That seller can then use that registration to block the Amazon store owner from offering its goods in that country.

For example, if a UK-based seller of a popular UK brand of houseware with a distinctive design fails to secure its trademark in the United States, it can find itself unable to use its brand on Amazon’s U.S. site because a US-based seller already obtained a trademark registration in the U.S. for the brand and registered it with Amazon’s Brand Registry. Even without Brand Registry, the UK seller’s use of its own trademark in the United States could constitute trademark infringement. Similarly, without securing design rights in the US, the UK seller could find itself unable to prevent competitors from using its design in the US.

This is not considered bad faith. It is a function of intellectual property laws. But it is preventable. When an Amazon store owner develops a new brand, design, or invention, it should promptly obtain rights in every country in which the store does business and may do business. This is particularly true with respect to patents. If a patent application is not filed within a year of the product going on sale anywhere, a patent issuing from the application would be invalid.

Filing overseas trademark applications is not a difficult process. As a result of various international treaties, foreign applications can be filed through the home country’s trademark office. With respect to certain trademark applications, the entire application process can be accomplished without using an attorney outside of the home country. Even if the Amazon store owner has no plans to expand its sales beyond its own country, the store owner should consider whether it may, at some point, be acquired by an aggregator or another entity which does intend to expand the brand into other markets. These international rights make the store owner’s brands, designs, and inventions, as well as the store itself, more valuable and attractive to a potential buyer.

Importance of International IP Rights to Aggregators
International intellectual property rights are just as important to aggregators and other purchasers of e-commerce businesses. If an aggregator purchases an Amazon store intending to expand the store’s products it into new markets, the pre-acquisition due diligence must determine whether the store’s trademarks are registered or available in the markets it wants to enter. If the trademarks are available but not registered, the aggregator should promptly register them after it acquires the store.

Even if an Amazon store owner or aggregator does not intend to expand beyond the store’s home country, it is still important to obtain trademark and patent rights in the countries where the store’s products are manufactured. This is particularly important for goods manufactured in China where there is a high incidence of bad faith trademark registrations and design patents. These intellectual property rights are often obtained by competitors and the factories which manufacture the store’s products. Bad faith trademark registrations and patents can be used with Chinese Customs to tie up the store’s shipments at the port or asserted against the store’s authorized Chinese manufacturers. This often occurs as a form of retaliation when a store changes manufacturers and the original manufacturer asserts its bad faith intellectual property against the new factory. The easiest and most cost-efficient way to prevent this is to secure intellectual property rights in China before someone else does.

Design Patents
Design patents are a powerful weapon against competitors on Amazon. Amazon aggressively takes down products accused of design patent infringement. Stores and aggregators that develop or acquire the rights to new products that have unique ornamental designs should apply for design patents covering those designs. Because the application process can take more than a year, it is advisable to file the application as soon as the design is finalized –even before the product first goes on sale. A competitor’s product that copies the applied-for design does not become infringing until the design patent issues.

Aggregators should also keep in mind that if they acquire a pending design patent application which covers a product or design that an aggregator is not sure it will use, it often makes sense to continue prosecuting the application and pay the issuance fee because the resulting patent can be used against competitors regardless of whether the aggregator ever uses the design.

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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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Tarter Krinsky & Drogin LLP

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