“How Amazon Can Protect Your Brand” with Tom McNulty of Lando & Anastasi

Nathan (0s):
Welcome back to Radio Entrepreneurs, I’m producer Nathan Gobes filling in for Jeffrey Davis this morning. I’m excited to be back with one of our regular reporters, Tom McNulty of Lando and Anastasi. Welcome back, Tom.

Tom (13s):
Thank you. It’s always a, always a pleasure being here, right?

Nathan (17s):
You always bring some really topical conversations. I understand this week you want to talk about what Amazon is doing to help fight counterfeit products. Tell me more.

Tom (28s):
Yeah, Amazon basically, when Amazon started allowing third-party sellers kind of to sell directly on Amazon, they ran into a considerable kind of negative press and pushback back on the amount of counterfeit products and infringements that were taking place. So back about the end of 2017, 2018, they established first, I guess, sort of a way to try to deal with this. And it’s called the Amazon brand registry and the, the brand registry allows sellers of products on Amazon to register their brands with Amazon. And once registered, Amazon take some proactive steps to prevent others, you know, unauthorized users of the trademark from selling, excuse me, the, the efforts they take, it’s sort of a black box it’s, it’s got some machine learning and algorithms involved.

Tom (1m 26s):
It has some actual human beings involved, and that’s about as much information as they’ve sort of publicly shared in terms of how they do it. But, but it’s been going on, like I say, for about three years now, it’s relatively simple and straightforward. You register your brand. It gives you a platform to register complaints. If you observe trademark infringement. But like I said, they do do some proactive things on their own.

Nathan (1m 56s):
Now, one question that comes to mind is does a, does a brand have to be selling on Amazon in order to sign up? I don’t know if you know the answer to that. I’m not sure if there are many brands that aren’t selling on Amazon these days, but it was just curious.

Tom (2m 10s):
Yeah, I believe you have to be, you have to have an account with Amazon so effectively, you know, you have to be selling whether you have to be selling the actual product that contains a particular trademark or not. I’m sort of unclear, but again, why wouldn’t you exactly. But they, they re released over the summer an analysis of, of how it’s, how the pro program has been going and what kind of success it’s had. And according to the program, according to the, excuse me, the release, they employ about 10,000 people in terms of, you know, the human side of this, of this program, they say they’ve spent about $700 million overall on getting this going.

Tom (2m 58s):
And they say that they’ve prevented about 6 million attempts to create false selling accounts. This one sort of struck me as, as, as almost worrisome, even though it seems like it indicates success. They say that only 6% of attempts to account to register an account, I have passed their verification process. So that ought to give you some idea of the number of bad actors trying to get out on Amazon. And I know, you know, again, there’s, there’s sort of a number of procedures they use to verify, but you know, one of them is apparently as they require you to send, you know, video and, and images of your physical location to prove that you are who you say you are.

Tom (3m 40s):
And that apparently is one of the ones that people walk at. They also say that they’ve seized more than 2 million counterfeit products as part of their going to the Amazon fulfillment system. Excuse me. So, you know, at least, at least according to their reports, they’re having a fair amount of success.

Nathan (4m 0s):
Yeah. 10, 10,000 people. That’s just on this program alone,

Tom (4m 5s):
Just on this program alone. Yes.

Nathan (4m 7s):
Wow. A company like Amazon,

Tom (4m 10s):
I know, I know this had started as United States only. They’re slowly starting to expand into some other countries and they’re actually expanding the program a bit. Now they’ve added something called the seller transparency program. And that’s a situation where they’ll actually create a unique individual code that you can print out and put on your products. And it’s, you know, separate code per individual products and things that are going through the Amazon fulfillment center. They will actually run the code and confirm that it’s authentic. So that’s kind of another step that you can take. It’s not necessarily killer expensive, but it’s not free.

Tom (4m 51s):
It runs 5 cents per code. If you order more than a million at a time, it goes down to three and more than 10 million at a time, it goes down to one set per code, but you also have to print it out and hire, you know, go through the process of actually applying them to the products and all that. And it, and it doesn’t remove bad listings. It just prevents the shipment of bad goods.

Nathan (5m 13s):
That makes sense. I can see how for, you know, especially for major brands, specialty brands, luxury brands, you know, the, the items that are regularly counterfeited, you know, a lot of, you know, luxury clothing and things like that, that, you know, bags, stuff like that, that loves to be counterfeited and, and sold online

Tom (5m 36s):
Electronics is

Nathan (5m 36s):
One of the big electronics. Yes, exactly. You know, a center to here or there, especially, you know, some of those brands are the ones that are shipping, you know, 10 million units or what have you

Tom (5m 48s):
Yeah. To, to partake in that program. You do have to have signed up for the brand registry. So that’s, I guess one of the other small catches, but just kind of a small catch. The other thing that instituted a year and a half, two years ago now that I find interesting is it’s called the Amazon’s neutral patent evaluation program. And this is a way to try to stop infringing products that infringe a patent has pushed a trademark. This is not something that they had really ever had before. It addressed really in any meaningful way before it’s confidential process, where if you have a patent and you think somebody is infringing it through an Amazon sale, you can file a report with Amazon.

Tom (6m 30s):
You identify one claim from one unexpired patents. So it’s a very limited, you know, kind of a look at this and, and you provide a, you know, an explanation of why you think the claim is infringed, Amazon employees, outside intellectual property attorneys to kind of conduct these evaluations, you know, neutral third parties. People who have experience in the particular technical field, but the patent is involved with. And the way it works is they’ll, they’ll make an initial determination. Whether there’s something sort of real there or not, if they think it’s real, they’ll send you an invitation to enter into the agreement for this process.

Tom (7m 12s):
They’ll send it both to you and to the accused party. You have to have both parties agreed to the process. So if the seller doesn’t agree to it, then the process stops on the plus side. If the seller doesn’t agree to it, the listing is immediately taken down. If the seller does agree to it, each party pays $4,000. There’s a couple of rounds of briefing. The, the, the patent holder files an initial brief, the seller files, a response in the patent holder gets a reply kind of as a last statement on the matter. And, and then there’s no hearings. There’s no discovery, there’s no expert witnesses.

Tom (7m 53s):
None of that. That’s, that’s all there is. And then the evaluator makes a decision and the prevailing party will get their $4,000 back. So the total cost is effectively, only $4,000 in its loser pays. And again, if the, if the evaluator find some favor of the patent holder, the product is, or the listing is taken down, if not, the listing stays up.

Nathan (8m 16s):
And I assume, do you know if there’s any sort of process of appeals? Like you said, there’s no expert witnesses or anything like that. So what happened is if you were the patent holder and they don’t find in your favor,

Tom (8m 29s):
Well, on both parties, both parties have the ability to bring a case in federal court. Okay. And if the federal court comes out differently, you can go back to Amazon and they will treat it differently. But yeah, there’s, there’s no appeal within Amazon. There’s not really a description or, or, you know, a written opinion as to how they came to their conclusion. There’s no damages, it can be awarded, you know, it’s, it’s limited, but you know, it can be very, it’s only $4,000, which I promise you is dramatically less than a litigation would be. And the other advantages there, the expectation is that they’ll all be done within three to four months. And at least according to the report, they average time as of the summer of 2021 was about seven weeks, which is, which is far quicker than, than a court case as well.

Nathan (9m 18s):
But I would guess in, you know, I don’t know if you have any numbers, but I would guess in the majority of cases where there’s an infringing party, that they just don’t respond and ended up getting taken down rather than, you know, spends a four grand.

Tom (9m 33s):
I suspect that that is the prevailing results. I haven’t seen any members released on it yet. It’s, it’s relatively new and they’re sort of ramping it up. It had been for utility patents only, but they’ve got a pilot program going now to do the same thing with design patents. So that’s, you know, that’s a useful thing. The other sort of advantage that comes with it is if you’ve got a finding in your favor, or if you’ve filed a complaint against the same product twice, you know, perhaps different sellers or different listings, and they haven’t responded, you basically get a presumption of take down and you can get as long as it’s the same product, you can get it taken down from other listings without actually having to go through the process.

Tom (10m 17s):
Again.

Nathan (10m 17s):
That’s good. That’s good. All these safeguards are obviously wonderful, but I’m sure it goes without saying that a it shouldn’t replace, you know, being in contact with a professional patent attorney, copyright attorney, et cetera.

Tom (10m 34s):
Yes. Yes. I will say the one little bit of data that I have seen and it’s, you know, frankly, it’s more anecdotal than, than hard numbers, but like I say, Amazon makes an initial determination, whether they’re going to accept your, your patent challenge and the, the data seems to suggest that you’re far more likely to have it accepted if it’s filed by a patent attorney than by an individual patent holder. And I don’t know if that’s because somebody kind of vetted it and decided whether you really have a claim or if it’s just, they know the language to use because you’re, you know, you’re effectively writing to a patent attorney, but that, that seems to be the case.

Nathan (11m 13s):
Yeah. I mean, if, if a client were to come into you or one of your coworkers have a Lando and Anna Staci, would you maybe say, you know, give it a shot with Amazon first, but you know, we’re here, we’re here to help you with not. Or how would you maybe approach a syndrome situation like that?

Tom (11m 30s):
I mean, obviously it depends a little bit on the client and the nature of the business and all that, but I would, I, that would be something that I would certainly recommend that they have us do. It’s, you’re limited to 20 total pages of briefing and your initial and your reply brief. So it’s not, you know, you’re not signing up for months and years of attorney time, so it shouldn’t even on the attorney’s fee and it shouldn’t be terrible to have them involved in it, you know, it should increase your likelihood of success.

Nathan (11m 57s):
Great. Any other thoughts for, for business owners as they may interact with this Amazon system?

Tom (12m 6s):
Yeah, I think the primary one would really be to, you know, particularly in the trademark side, Amazon is doing some proactive policing, if you, if you’ve signed up for the brand registry, but that shouldn’t obviate your sort of requirement or duty to, to try to police as much as you can and report as much as you can, because, you know, unfortunately this is kind of a whack-a-mole situation where you’re sort of still targeting individual defendants that pop up left and right. So it’s, it’s a step in the right direction, but it’s by no means a complete and perfect

Nathan (12m 38s):
The solution of course. And I’m sure, you know, as you’ve spoken to us on many occasions, the best defense is, is proper preparation in, in the first place, making sure your documents are in order your patents in order all filed correctly, et cetera.

Tom (12m 52s):
Yes, that’s right.

Nathan (12m 54s):
Great. Well, we’ve been speaking with Tom McNulty of Lando and Anasazi. I want to thank you again for joining Tom. If people want to reach you at Lando in Anasazi, how could they do so

Tom (13m 5s):
They can get me by email at team McNulty, M C N U L T y@lalaw.com or they can reach me by phone at (617) 395-7040.

Nathan (13m 16s):
Great. And Tom is on our show monthly. So if any of you listeners enjoy this content, please be sure to like share subscribe to our channel, hit that bell button so you can get notifications. When, when further YouTube videos come out, all of it really helps our channel as well. And we appreciate it. This has been Radio Entrepreneurs. We’ll be back with more after this.