Enforcing trademarks online: what brands need to know

Trade in counterfeit goods has  risen steadily since the COVID-19 pandemic, especially on online marketplaces. The US Customs and Border Patrol (CBP)  reported confiscating nearly 25 million counterfeit products in 2022, a haul that would have been worth $3 billion if the items had been genuine.

The trade in knockoff products—which tricks consumers into buying unauthorised, substandard, and at times dangerous items—damages brand owners’ reputations and bottom lines.

That is why it is important for companies to register, monitor, and enforce their trademarks with the  US Patent and Trademark Office (USPTO) and other global regulators to combat bad actors who infringe their brands and logos.

Since many transactions involving counterfeit goods happen through online marketplaces, such as eBay, Amazon, Lazada, and Temu, companies should know how to enforce their trademarks on these platforms. Below, we discuss strategies that can help companies retain control over their brand and products.

Registering a trademark with the USPTO gives a company the exclusive right to own and use the mark for a set of goods or services. It also puts others on notice of the company’s rights and authority, discourages infringers and allows companies to recover fees arising from any litigation associated with the mark.

Many online marketplaces will only help brand owners with registered trademarks act against potential infringers or counterfeiters, particularly during the online takedown process.

Online takedown requests

One of the most common avenues for enforcing trademarks on online marketplaces is submitting a takedown request with the marketplace for unauthorised infringing or counterfeit products.

Most marketplaces have dedicated programmes and templates in place for submitting these requests. Companies must include a description of the trademark, the grounds for violation and a declaration of truthfulness signed by a company representative with authority to sign on the company’s behalf.

Typically, marketplaces have zero-tolerance policies for counterfeiting and comply with brand owners’ requests to remove storefronts selling obviously fake goods, but marketplaces can be reluctant to get involved in contractual disputes between companies and third-party sellers.

For example, if a brand owner discovers an unauthorised seller with genuine products, many marketplaces will ask the two parties to resolve the issue themselves.

When unique situations arise that do not fit neatly into the takedown request form, working with an online marketplace’s in-house counsel directly may be the best way to handle the matter. This is especially true if a company finds a fake storefront listing thousands of counterfeit products; the online marketplace’s in-house counsel can help remove the entire storefront and have the seller blocked from the platform, if appropriate.

But a recent case in the US District Court for the Southern District of Florida involving the unauthorised sale of beauty products sheds light on the risks to brand owners if an aggrieved seller retaliates against the takedown request.

In Verbena Products v BeSweet Creations (2021), an unauthorised seller sold allegedly legitimate BeSweet Creations beauty products. The brand owner objected and claimed the products were of lesser quality, and the online marketplace took them down.

In response, Verbena Products sued BeSweet Creations, seeking a declaratory judgment from the court that it did not infringe BeSweet’s trademark since the products were allegedly genuine. As part of the suit, BeSweet Creation’s CEO was a named party and faced individual liability as the one who submitted the original takedown request. The district court did not excuse the CEO as an individual defendant at the motion to dismiss stage.

The parties ultimately settled, but if the court had ruled in favour of the seller, Verbena Products, it could have suggested that executives at other companies could face liability exposure over takedown requests in similar cases brought by aggrieved sellers.

Even though this case was not decided on its merits, we expect cases with similar claims against brand owners to emerge, opening the door to potential individual liability for those who sign takedown requests.

To mitigate the risk of individuals facing such liability, brand owners should consider their enforcement strategy and avoid sweeping requests that could give rise to retaliatory lawsuits. Instead, companies can send out demand letters that assert their rights and attempt to work out a settlement with unauthorised sellers.

To do this, a brand owner can try to obtain a seller’s contact information through test buys or the online marketplace directly. Sending a warning or notice letter often acts as a deterrent because the seller knows the brand owner is watching.

Temporary restraining orders

If a brand owner discovers an unauthorised seller peddling infringing or counterfeit products, it can also file a temporary restraining order (TRO) in court ordering the online marketplace hosting the product to help take down the unauthorised seller.

The federal courts, especially the Northern District of Illinois, have streamlined this process, making it even easier for companies to employ this method for trademark enforcement. Some judges have made template orders seeking TROs, preliminary injunctions, and default judgment available on their individual websites, of which companies across the country can take advantage. If infringing sales happen in Illinois, a company can assert jurisdiction in the district court.

Once a company has filed the order, the court can issue a sealed TRO prohibiting additional transactions of the contested products. The order also requires platforms, website registrars, and financial platforms like PayPal and credit card companies to share information on the sellers and freeze their accounts.

Because companies can file TROs without the defendants’ knowledge, they can act before the defendant knows about the complaint. For example, companies can request a court order to freeze and retrieve funds from sellers’ accounts.

However, these cases sometimes sweep genuine third-party sellers within the scope of a TRO, and those sellers have their accounts frozen, too. To minimise the impact of getting ensnared in a TRO, legitimate sellers should keep the balance of their marketplace accounts low, identify themselves (and their US contact information) on online storefronts and websites as genuine sellers, and/or have a US website.

Decision trees

Another way for companies to enforce their trademarks is to develop ‘decision trees’ to streamline and formalise enforcement decision making.

For example, if a marketing team member sees a product in red, but the company does not make the product in that colour, a team member can consult the decision tree to gain instructions on the next steps they should take.

These models can help companies scale their trademark enforcement and allow legal and marketing team members to make easy judgments about the best type of escalation for each situation.

US customs

One of the best ways for companies to clamp down on counterfeit goods is to partner with CBP to intercept the products before they enter the US.

Companies can flag known infringers to the agency, which helps CBP distinguish between authorised and unauthorised importers. Another bonus for companies? CBP does most of the legwork in this process.

Companies can also record their trademarks with customs agencies in other countries, such as China, to try and stop counterfeit goods from leaving that country and gather information on the manufacturers of the counterfeit goods.

Counterfeiting and other forms of trademark infringement will only grow in an e-commerce environment, but companies can fight back using the enforcement actions available to them.

Andrea Fuelleman is a partner at Neal Gerber Eisenberg. She can be contacted at: afuelleman@nge.com

Ian Block is a partner at Neal Gerber Eisenberg. He can be contacted at: iblock@nge.com