Amazon Faces Lawsuit Over Sale of Counterfeit Face Masks

On September 3, 2020, a trademark infringement lawsuit alleging Amazon’s involvement in the sale of counterfeit face masks was filed in the U.S. District Court for the Northern District of Illinois. The suit was filed by counsel AU LLC on behalf of Shenzhen Qianhai Phoenix Networks, a China-based manufacturer of various personal items sold under the brand name Honrane. The Honrane trademark is registered in the US.

Allegations Against Amazon

The complaint alleges that when customers searched for Honrane-branded face masks on Amazon’s site, Amazon’s product recommendation algorithm—called the tag-along feature—often showed other surgical-type face masks as suggestions to shoppers. Some of these recommendations claimed to be Honrane-branded face masks but were, in fact, counterfeits illegally carrying the Honrane mark.

The plaintiff alleges that in two separate cases, customers purchased masks through the tag-along listings. Once the purchases arrived, it became clear that “the products in-fact sold and shipped by Defendants are not Plaintiff’s products,” according to the complaint. The complaint included photographs of the masks received from both test purchases, attached as exhibits.

The complaint also states that the “Plaintiff has not licensed or authorized [Amazon] to use the Mark to offer and sell HONRANE-branded products which are not manufactured or sold by Plaintiff, and Plaintiff [has] not licensed [Amazon] to use the Mark to sell products made by third-parties.” By selling the improperly-branded masks, the plaintiff alleges, Amazon has engaged in unlawful conduct, unfair competition, and is in violation of Illinois’s Deceptive Trade Practices Act. The complaint requests an injunction against Amazon, as well as damages and attorney’s fees and costs.

Concerns Over Counterfeit Masks

As the complaint notes, demand for face masks has surged during the COVID-19 pandemic. Many states and cities now mandate the wearing of face masks in certain public venues. Even in places where no law or executive order requires face coverings, many businesses have made it their policy not to serve customers who do not wear a face mask on the premises.

As such, counterfeit masks place both mask manufacturers and customers at a disadvantage. Manufacturers whose marks are improperly used may lose business as customers purchase counterfeit masks, mistaking them for the genuine article. Meanwhile, customers who discover that a counterfeit item is defective or otherwise harmful may have no recourse, as they cannot turn to the manufacturer for assistance with a product that turns out to be fake.

Understanding the Tag-Along Problem

At the heart of the dispute between Shenzhen Qianhai Phoenix Networks Co. and Amazon is the tag-along feature. This feature allows sellers to indicate whether their products are identical to other items already for sale on Amazon’s platform. Then when a user searches for a particular item, identical items marked as tag-alongs may be shown in the search results.

The tag-along function can help customers compare prices among third-party sellers offering identical goods on the platform. It can also, however, lead customers toward counterfeit goods and away from their genuine counterparts. When Amazon doesn’t sell the genuine item—as in the case of the Honrane masks—the tag-along function might still surface counterfeit branded items and display them as if they are the real thing.

Seeking Expert Support

To date, Amazon has not filed an answer in the case. An answer or motion to dismiss, as well as discovery, could lead to a number of facts that would change our understanding of the claims at issue. However, it is not unreasonable to predict that at some point, an expert witness’s assistance might be needed in this case or in similar cases involving counterfeit goods sold on Amazon and discoverable via the tag-along feature.

In such cases, experts are likely to be called to discuss key issues surrounding the name recognition of a particular trademark—especially when, as here, the mark is held by a Chinese company and has been available in the U.S. market only since 2017. They may also be asked to shed light on the tag-along function or other means by which Amazon makes products—including potentially counterfeit products—available for sale on its platform.