Welcome back! If you missed Part 1 of our Ultimate Guide to Brand Protection we suggest you start there or you might be a bit lost. In the first half, we laid the groundwork with MAP Enforcement Programs, Authorized Sellers, and Sales Strategies. Here in Part 2, we’re covering three topics—so grab your flashlight because it’s time to dive into the murky world of gray market and counterfeit sellers. (We’ll end on a bright note with how to choose a protection provider though 😉).

What if you can’t identify your resellers on Amazon?

Anonymous Grey / Gray Market Sellers

For those who might not be familiar with this term, grey market goods are defined as authentic products sold through unauthorized distribution channels. This can take many forms such as:

• Stolen products
• Liquidated products
• Brick and mortar retailers also selling on Amazon
• Small sellers buying from retail stores and reselling online
• Large Amazon only retailers buying from your distributors

Do MAP Policies Help?

While we have talked about MAP policies pertaining to price erosion and authorized sellers, the topic also often comes up here. Having too many resellers on Amazon can make it difficult to enforce your MAP policy—having anonymous sellers with anonymous sources will make MAP enforcement impossible. The deal is, your authorized sellers usually want to follow the rules, but grey market sellers don’t have to, making it inconceivable for your partners to compete.

Thus far, Amazon has been unwilling to help brands solve problems with grey market sales on their platform. Amazon’s VP of Worldwide Customer Trust Dharmesh Metta is quoted in the Wall Street Journal saying, “We welcome legitimate unauthorized sellers on the platform because it increases selection and decreases prices.” In their effort to have the most competitive prices on the internet, Amazon has made it easy for resellers to list branded products regardless of how they were sourced. Many of our clients have come to us feeling like controlling grey market sellers is impossible.

However, there are legal pathways outside of your standard MAP policy for going after unauthorized sellers even if marketplaces like Amazon aren’t willing to help.

Is There a Way to Remove Grey Market Sellers?

Most resellers rely on a principle called the First Sale Doctrine, which essentially states that once a product is legally purchased, the new owner has the right to sell that product to whomever they wish. Unfortunately, this part of copyright and trademark law was created long before the rise of e-commerce and marketplaces like Amazon. There is light in the tunnel though! Over the last 10-15 years, the courts have established several notable exceptions to the First Sale Doctrine that give more power to brands to protect distribution.

The Material Difference

The Material Difference exception is one of the biggest legal pathways brands can pursue to protect against unauthorized sellers causing price erosion. A material difference means that there is some sort of noticeable difference between the product sold and the same product in the manufacturer’s condition. The difference must be to such an extent that it will create “consumer confusion” as to the source or brand of the product. These differences can be physical (lack of manufacturer packaging) or non-physical (warranty, quality control standards, customer service support).

Therefore, an Amazon seller who is selling authentic products that are materially different from the manufacturer’s condition may be liable for intellectual property infringement because their products could be considered “non-genuine” under the law.

Companies can establish these material differences by creating Reseller Policies and Agreements that establish criteria and expectations around quality control standards, customer support, product recall procedures, and the applicability of consumer warranties. Then communication with unwanted resellers can center around potential trademark infringement and material differences instead of not following pricing guidelines. We have found this strategy to be very effective in removing unwanted resellers from companies of all sizes in the United States.

Are you dealing with counterfeit sellers hijacking our listings?

If this is a problem your brand is facing, know that you aren’t alone—even the all-powerful Apple believes 90% of its branded products sold on Amazon are illegitimate. While that sounds like a daunting figure, the good news is that Amazon has made progress in helping brands tackle this issue on their platform with brand protection tools. These tools have been created with the express purpose of reducing and eliminating counterfeit products from entering the market.

You’ll learn more about them below, but if you are uncertain about what to do or where to start know that we are here to be a resource and have helped brands begin utilizing these programs effectively to nearly eliminate counterfeit products on the marketplace.

Brand Registry

Brand Registry was created to help brands with registered trademarks better protect their intellectual property on the platform. Getting into the Brand Registry is fairly simple once you have your trademark registered, and benefits include more access to marketing on your listings, being established as the content authority on your listings, and access to creating complaints within the brand registry violation platform against fake products.

The important factor to note here is that the focus of this tool is to eliminate counterfeit sellers on the platform. So if you complete a test buy and find a product to be counterfeit your brand has a case to utilize this tool; however, this is not effective long term for removing sellers with authentic products. If sellers can produce receipts or invoices to prove their products are legitimate the case will often be overturned in favor of the seller.

Additionally, if you are making a case of false counterfeit against sellers with authentic products, then you can be opening up liability to getting sued by sellers desperate to not get their accounts suspended by Amazon.

Transparency

Transparency is a product serialization program that is integrated with Amazon’s systems to help prevent counterfeits from entering Amazon’s warehouses (you must be in the Brand Registry to be allowed into the program). This tool can be built upon over time—If a brand wants to take part they don’t have to enroll an entire catalog into Transparency but must commit to label all of the units manufactured for the particular SKUs that they enroll.

There are several pros and cons to the program that must be evaluated carefully, but if you are dealing with counterfeits on Amazon, this program is an effective preventative measure for both Fulfillment by Amazon sellers and merchant fulfilled sellers. However, Transparency (like Brand Registry) is not a good solution for grey market sellers.

Due to Amazon’s stipulation to label all of your manufactured units regardless of distribution channel, if products are being diverted from your authorized distributors, then eventually these sellers will be selling products with Transparency codes.

Also, Amazon will ask sellers to provide invoices to prove their products are authentic and they can be allowed to continue selling if they provide the necessary evidence.

Project Zero

Amazon began rolling out Project Zero in early 2019 with the lofty goal of completely eliminating counterfeit products on their site. To help with this endeavor they have given this program two unique components:

• Automated protection through their machine learning programs which are looking to proactively identify and remove counterfeit products
• A self-service option for brands to identify and remove counterfeit listings

Amazon’s current requirements to get into the program include being brand registered, registration as the trademark owner, and a Brand Registry case success rate above 90% in the last six months. Amazon is careful to note that this program is specifically designed for removing counterfeit products and will evaluate brands in a variety of factors to make sure that the program isn’t abused. Brands can be removed from the program for using it for MAP enforcement or removing grey market sellers.

Solution Provider

If your brand is truly facing problems from counterfeit products on Amazon, the new tools Amazon has developed can be very powerful in reducing or eliminating the issue. However, if your products are largely being infringed upon by grey market sellers then you are likely to need an alternate solution. Determining what solution provider is best for your brand can be hard, and if you have a product selling online we’re sure at some point you have said or felt the following while trying to figure it out:

• “I hate when I don’t have the right tool for a job”
• “I have to either buy the right tool or try to make the wrong tool work”
• “I have spent countless hours trying to use the wrong tool for a project to save a few dollars”

We have talked with many brands that don’t really understand the reality of their brand protection needs and the root issues that are causing them. And understandably, they are frustrated by the money and time they have wasted using solutions that don’t really solve their problems. The first step is to identify your brand’s main concerns and from there you will be able to better narrow down the right solution provider.

Brand Protection Companies Types

There are several different types of brand protection companies that will address different needs. These needs/solutions include:

• Legal Strategy and Counsel
• Detection and Monitoring
• Investigation and Identification
• Enforcement and Removal
• Reporting
• MAP Monitoring and Enforcement Software
• Price Tracking

While brand protection companies will often help with a mixture of these issues, they tend to specialize in a select few and are either software or service-centric. At Brand Guarde, we pride ourselves on being not only an encompassing tool but a team of real people providing real solutions to help with your company’s success. We would love for you to reach out to our team if you are in need of help—and honesty is a founding principle of ours, so if there is a different company that would be a better solution for your needs, we’re going to tell you.

SO you really have nothing to lose by hitting that Contact Us button below. 😉