#461 – Counterfeits, Hijackers, & IP Nightmares: Protecting Your Brand on Amazon with Daren Garcia
Imagine a world where your brand’s value is constantly under threat from unauthorized sellers and counterfeiters. In an era where e-commerce is a competitive battleground, protecting your brand has never been more crucial. Join us as Daren Garcia from Vorys, an international law firm, shares his expertise on the delicate interplay between brand protection and intellectual property strategies in the digital marketplace. Learn what can brands can do to maintain their market presence and integrity.
Navigating the legal maze of e-commerce is no small feat. We explore how giants like Amazon and eBay position themselves as mere facilitators, avoiding accountability for third-party seller actions such as counterfeiting. The episode dives into the nuanced legal concepts like the “first sale doctrine” and how these impact both the brand and the marketplace. Through Daren’s insights, discover the rigorous process of securing trademarks and combating infringement, particularly in challenging terrains like China, while understanding the pivotal role of cease and desist letters in safeguarding your brand.
Brand protection is an ongoing battle, demanding strategic resource management and proactive measures. From securing injunctions to leveraging AI for trademark protection, we unravel the complexities of modern brand defense strategies. Hear stories of entrepreneurs turning adversity into opportunity by innovating within legal confines, and glean valuable lessons on the importance of securing a robust legal framework before enforcing restrictions globally. Whether you’re facing the challenges of counterfeits or unauthorized sales, this episode offers actionable insights and expert guidance on how to effectively safeguard your intellectual property in the digital age.
In episode 461 of the AM/PM Podcast, Kevin and Daren discuss:
- 00:00 – Brand Protection Strategies in E-Commerce
- 07:16 – Online Marketplaces and Legal Immunity
- 10:18 – IP Infringement on Online Marketplaces
- 18:23 – Amazon Brand Protection Strategies
- 23:57 – Cease and Desist Misuse
- 27:22 – Brands Asserting Control Over Distribution
- 27:33 – Combatting Brand Infringement in E-Commerce
- 35:57 – The Importance of IP Protection
- 38:53 – Injunction Process for Brand Protection
- 41:44 – Amazon Listing Sabotage Threats
- 45:22 – Impactful Brand Protection Strategies Through AI
- 48:10 – Brand Protection Strategies on Online Marketplaces
- 53:39 – Impact of AI in Business
Transcript
Kevin King:
Welcome to episode 461 of the AMPM podcast. You know everybody always wants to be chasing the sexy things the launching a new product, the PPC, the getting the TikTok creator to make something go viral but the fundamentals are what often are the most important and most overlooked and the last to deal with and they can cost you dearly. And you’ll see that in my discussion today with Daren Garcia from Vorys. We’re going to be talking about everybody’s favorite topic IP protection and counterfeits and knockoffs and what you can do and how you can protect yourself as a brand. So Vorys has been doing this for a long time big, huge law firm out of Ohio. I think you’ll get some good ideas and some good insights and how the process works in this discussion with Mr. Daren Garcia. Enjoy. Counselor Garcia, how are you doing?
Daren:
Daren Garcia here on the am pm podcast from Vorys. How are you man? Yeah, good, I’m good. Thanks for having me, Kevin.
Kevin King:
That’s good, good stuff, all good here, so looking forward to it today now, whenever I say I’ve got a lawyer on the podcast, some people are like, oh my god, um, what are we gonna be talking about today? I’ve got a lawyer on the podcast. Some people are like, oh my God, what are we going to be talking about today? I’ve got a few questions for this Mr. Lawyer guy, so hopefully we can provide some value today and I don’t have to give that disclaimer that I just play a lawyer on TV. This is not legal. No, I’m just kidding. We can get it from someone that’s a little bit more in the trenches. Let’s do it, let’s do it. So tell me a little bit about I mean, you’ve been practicing law for a while and you’ve been at Vories, I think, for a while what is Vories? And tell me a little bit about your story.
Daren:
Yeah, so Vories is a relatively large international law firm. It’s historic headquarters in the state of Ohio with offices throughout the states and then and then over in over in Europe. I’ve been here my whole career, so I probably 23ish years or so and done various things at the firm. But you know we’re here to talk today about e-control. We’ll get into all that. But that would be a specialized group within the 4E’s firm.
Kevin King:
Because there’s like 300, 400 lawyers. I mean you guys do everything from basic corporate laws. I mean it’s across the gamut, right.
Daren:
Oh yeah, no, it’s a full service firm that does. Probably the only thing that we don’t do would be criminal and domestic issues and things like that. We’ve probably touched most other things at some way or another.
Kevin King:
Do you litigate? Is the firm litigate as well? Oh yeah.
Daren:
Okay, yeah, the firm’s historic roots were in litigation. I came up as a litigator. A lot of people that do what we do in our group came up as litigators, so they sort of bring that mindset into the e-commerce space. So it’s been a good sort of foundation for all this stuff that we’re doing now.
Kevin King:
Now you guys have been doing e-commerce. Did you all start getting into it when this whole Amazon third-party kind of boom started happening around 2014, 2015? Or were you doing it before?
Daren:
then, interestingly, I have a partner, Whitney Gibson, in Cincinnati. I sit in Columbus, I manage our London office, so I’m back and forth between the States and Europe quite a bit. But Whitney, at a very young age, had a practice centered around internet defamation. So think like the early days of Yelp and things like that, when those began to be a big deal and companies would get defamed or slandered or whatever on those platforms and they started to have an impact and so businesses would reach out and he ended up getting a lot of the early work in that space, which really was some of the early days of integrating law and data tech, because you needed to be able to look out across the web, see what was being said and then have a scalable way to address that. So fast forward a bit and Amazon started to really catch fire and branded manufacturers started to have to wrestle with the channel a bit more. Instead of maybe 3%, 4%, 5% of revenue, all of a sudden it’s 8%, 9%, 10% and executives start to take notice. So they start trying to manage it a bit and so brands started reaching out saying, hey, you know, I get that. You know people may say things about us online. But what I’m most concerned about. Are these people selling our stuff on marketplaces like Amazon, disrupting? So that’s really how we, how we got into that.
Daren:
He uh, he and a couple other guys down in Cincinnati went into the Batcave and came up with some of the early strategies and really frameworks so really we still use today on this stuff. And then I teamed up with them just sort of contemporaries of mine in the firm. I teamed up with them, oh, after they were doing it for maybe a few months or a year or so. So it was really early days still, and then we’ve just kind of gone from there. I came up doing a lot of work in the retail space. So as retail brands started coming up and caring about things like map and how much they’re selling and all of that, he said, hey, you know a lot about retail, would you come with me to go talk to this brand, in case they wanted to talk about retail stuff? And so I said, sure, and that’s how we kind of teamed up on this.
Kevin King:
So how big is the team that focuses on e-commerce?
Daren:
Yeah, I mean it’s big now. I mean it’s probably around 100 people. It’s all multidisciplinary. You have lawyers, investigators, brand protection people, data analysts, data scientists, software developers I mean within the collective group of Boris E Control and then the firm’s ancillary business that we own called Precision E Control that runs the data and tech platforms. There’s probably at least 100 of us doing it full-time.
Kevin King:
Now, are you guys doing across the globe or is it just like I saw on your website? There’s certain states that you guys are, where you have offices. I mean because I know you can’t. There’s certain rules where you can do. You can practice and do stuff, yeah, in certain states, or you can only litigate or you can only enforce. You can threaten anywhere, but you can only enforce, um, uh, in certain states. So is it across the globe or just more localized?
Daren:
no, we do work globally, um, which has been amazing, but uh yeah, the firm’s physical offices around the US are in various cities and certainly if you want to turn up to court or actually practice law in a particular jurisdiction, you have to be licensed there. But we have a national practice in the US in this space and then, as you point out, an international one, most of the work internationally being Canada, Europe, Australia, China, Korea. I’m sure I’m missing a couple of others, but those would be some of the bigger markets internationally. I look at all the international stuff for us.
Kevin King:
Now you mentioned the guy Whitney, I think you said his name was that started up uh, kind of with Esty and yelp and some of those guys, uh, in the early days there’s. Is there something that there’s some sort of law in the us where the marketplaces are kind of immune? Uh, you know, just like on Facebook, you know they’re not really liable for if someone slanders you or does something, they are responsible to take it down if they have a court order and things like that. But they’re kind of like a. They’re like we’re just the middleman, we’re not involved here and there’s some sort of law or rule around that.
Daren:
Yeah, I mean yes, the platforms have largely, you know. So you put amazon in their Walmart marketplace. You know eBay on down the line. You know they’ve taken the position that they are, just as you say, open platforms that provide a place for people to buy and sell products. They may also, in the case of an Amazon or Walmart, be selling the product there themselves, in kind of a first-party scenario. But, yeah, they’ve taken the position that we just facilitate the transactions. If there’s issues going on that the brand is upset about, the brand has its recourse. But it’s not really with us. We’re just the platform. It’s with respect to the person out there doing whatever it is. The brand doesn’t want to be done.
Kevin King:
How does that differ from the law? I mean just that if I go into a grocery store and they just recently mopped the floor and I slip on and fall and break my arm, I can sue the grocery store. How come I can’t do that like in a marketplace, like go after Amazon for looking the other way or creating an environment where they don’t enforce certain things?
Daren:
Yeah, I mean so, you know. I mean obviously there’s a lot of nuance all that and, to everybody listening, this isn’t legal advice Check with your lawyers but it really comes down to you know, in your example, like the grocery store would have control over the physical premises, they’re inviting people onto the platform and you know they’re the ones that have the control over the floor and all of that, you know like a marketplace. You know an online marketplace’s position would be like look, we just provide the platform. The resellers are the one controlling whether the product that they have is authorized or unauthorized, whether it’s counterfeit or real. You know those sorts of things.
Kevin King:
And so you know that that’s collecting sales tax or whether that’s enforcing liability and insurance rules and all kinds of stuff, usually like they don’t really act like they should until they’re forced to, usually by legal or action, or something’s going to happen in Congress or there’s a big, huge story that comes out by one of the reputable Wall Street Journal or someone like that, where credibility, and then they take a little bit of action. But then I just remember, like with the sales tax thing, they just like, oh, that’s not us. And then finally it came around like, okay, that is us. And so it’s kind of the same when it comes to IP and other things too, isn’t it?
Daren:
Well, yeah, I mean so in our experience. I’ll say this. I mean, obviously everybody wants the Amazons of the world, you know, or wherever you are in the world you know, like Baba Group, whatever to be more proactive around infringements and carpet and safety. And there’s something being sold here that you know has ingredients that aren’t legal in the US or in Europe or vice versa, and I guess what we would say is that they do a pretty good job at providing tools for things that are really true, like hardcore IP infringement, so counterfeiting, even down to stolen product and thing, the counterfeit crimes unit and whatnot, and that’s all fine.
Daren:
There’s different layers to that type of stuff. I mean you could sit there and press the buttons and do takedowns. You can escalate things to the legal department there and get them to take notice if it’s a significant issue. I mean you start to see brands get into gating and things like that if they have massive counterfeit issues and Amazon believes that it’s an Amazon in the consumer’s interest that there be hype protections. But where they don’t get involved in our world would be around things like unauthorized sale from the brand’s perspective of legitimate product, respecting math policies, distribution go to markets, things like that that’s where I think the brand’s desires collide with Amazon’s or whatever the marketplace is. But let’s just say Amazon’s short for marketplace today, their posture, that look, we’re just that open platform. That’s where things really get disrupted most often.
Kevin King:
I see a lot of sellers in the forums and stuff. I’ve been doing this for a long time. They’ll say, oh, I got a hijacker on my listing. They’ll do one of these promotions, these search find buys, where they send out a free product in exchange for hoping to get some reviews. They couch it under different things but the ultimate goal is to get rank and reviews. And then the person that got this free product really doesn’t care for this product, doesn’t want the product, probably never even opened and used it, just wrote a review and now they’re selling it on their listing and they think that’s counterfeiting or hijacking. And it’s really not, because it’s something called the first sell doctrine in the US. Can you explain what that is and how it’s different in the US versus, like, in your London office? There’s different rules. Can you explain what that is? Yeah, I mean.
Daren:
I think it’s probably safe for those listening to understand generally really in every market around the world that it’s fine to buy and resell product. Okay, we call it the first sale doctrine. In the US and other countries of the world it’s maybe called exhaustion doctrine or the exhaustion principle or things like that, and what that means is that once a manufacturer or a brand makes something and sells it the first time, so you make a widget, you sell it to a distributor. That distributor then goes and resells it down the chain. Once you sell it that first time to the distributor, it can be bought and resold. So somebody could say I have a Kevin brand widget and that’s what I’m reselling and that’s okay. They’re allowed to use your information, your brand and things to resell. That’s really what that means and that’s really why, if you really think about it, things like marketplaces can exist in the first place is because of that rule.
Kevin King:
Otherwise people couldn’t just take it and resell it, and so that’s really what brands are grappling with every day is how do we, in the face of that rope, manage to control our sales on a platform like now I can have an agreement with a distributor right that that says if I do this in advance of actually shipping them or agreeing to sell them product, that basically restricts them from like you’re not allowed to sell this on amazon. Now that doesn’t mean that they can’t sell it to somebody who then turns around and does it and still makes its way there through the back door in essence. But I can do things like that to protect myself if I want to right.
Daren:
Yeah, a hundred percent and that strategy whether it’s called authorized reselling agreements or in Europe something like that, would be called like a selective distribution that’s been around for decades and so you’d see, it’s why you don’t see luxury goods in Target or Walmart or things like that, or why certain brands like high-end electronics and things like that, even though they may sell through a distributor, they have that very locked down. I mean, those companies have made the decision a long time ago that those controlled sales and their long-term brand equity and all of that is more important than any sort of short-term sale. Now that reality is colliding today with more mass distributed brands that have never had those controls in place on the front, and so what they’re trying to do is to understand how can we, in a logistically feasible way I can’t go get signed agreements with everybody how do we, in a feasible way, maintain control over that space? So you see them issuing policies and things like that a lot.
Kevin King:
So, when it comes to some of the liability and some of what’s going on with both, I mean, there was a story back in, I think, May about a lot of counterfeit supplements being on Amazon and you don’t know exactly what you’re getting. And some people are saying this has got these ingredients and it really doesn’t or doesn’t have this percentage. That’s a big issue. And then another issue is just People are saying this has got these ingredients and it really doesn’t or doesn’t have this percentage. That’s a big issue. And then another issue is just I don’t know if you guys deal with this as well, but it’s not really IP but the product liability. There was another issue in June it was in the New York Post in early June where there’s a company selling a device and people are getting hurt left and right. They’re using it to prop up their, their cars, Like when these jacks, you know, under your car to prop up your car, and and it turns out that I think the New York post did something. It was like 1400 better business Bureau complaints against this company and they’re selling like crazy on Amazon. So how does what’s the way, proper way that those things can be addressed from? a legal point of view whether, no matter which side you’re on, um, yeah, because that that’s just dangerous and that hurts everybody, because those sets precedence and hurts everybody down the chain.
Daren:
Yeah, yeah, I mean it’s a um, you know it. It’s not a an uncomplicated issue. I mean, I guess I would say that if you’re a brand, whether you’re selling car jacks or supplements or whatever you’re running into the reality of this just being, as we’ve been talking about, an open flat, and so it really is your move as a brand to step in and control that. I mean, the marketplaces typically aren’t going to do it for you or not to do it in a way that you would potentially be happy with, and so what you’ll see them do is sort of multifaceted. First and foremost, you have to have the data, so you’ve got to look out and be able to see everybody that’s selling your stuff, either your ASIN or using your name in their listing or whatever. You’ve got to be able to get your arms around it. Then you have to say, okay, what’s an issue? Is it just an unauthorized sale? Or, to your point, is it something where maybe it’s potentially a counterfeit product, or things like that? Now there are certain indicia, indicators of a counterfeit product. Is the pricing super low? Is the seller based in China? I’ve never heard of them. Is it hard to figure out where they have a physical presence in the US. There’s all of these little data points that would indicate that there is an issue. Now, let’s assume that there is.
Daren:
So you have your first tier things, which would be to go like on a brand registry or something like that and get it taken down. But the smart brands would also be doing a couple of things. They would be compiling a lot of information like, okay, look, I’ve done all I can, I’m doing what I’m supposed to be doing on brand registry. Or you have e-commerce specific ASINs, maybe you add them in transparency or whatever it is. Or if you have e-commerce specific ASINs, maybe you add them in transparency or whatever it is, but I’m still having these issues. I’m getting overrun. And when those we call them like a little dossier, it can be assembled and provided to Amazon in a compelling way. Sometimes not all the time, but sometimes they’ll step in and put a few hurdles in place for people to list the product outside brands authorized sellers. So that would be sort of now getting into the realm of gating and the different sort of levels of gating that’s out there. But the thing around the counterfeits and whatnot is you also have to be very careful as a brand that you’re not just calling things counterfeit that you don’t know for sure that they are, because that can backfire. Well, you see a lot of lawyers out there sort of looking for brands making those mistakes so they can sue them.
Kevin King:
So let’s explain what gating is to those listening. Some people may not know what that is. There’s brand protection through brand registry, which is limited in scope, but then the next level up, at Amazon. You used to be able to just request this back seven, eight years ago and then it got to where you had to know the right lawyer at Amazon and send the right letter on legal letterhead and they would gate you. Now it’s a whole different animal. It’s much more difficult to get gated. But can you explain what gating actually is for those listening?
Daren:
Yeah, in lay terms, and just everybody remember, I’m just a lawyer, I’m not an e-com, I’m not a VP of e-com at some brand. But here’s sort of the lay definition of brand gating. As I think about it, it would be Amazon itself implementing a block, a blockade, to say look, we are not going to allow products to be listed unless they are from a single seller, whether that’s Amazon 1P itself or the brand itself or whatever. So other third parties can’t list a particular product. Now you’ll see it more widespread in a premium beauty and things like that, but outside of that space it’s relatively rare. So you just I mean everybody you know is all over the place on like a LinkedIn and things like that. Talking about Nike coming back to Amazon, Well, Nike was able to, you know, effectively be gay and they had the brand power to do that. There’s, you know, the Nikes of the world are a few in between.
Kevin King:
Yeah, Nike was able to get like 268 sellers or something like that off as well when they came back in or maybe it’s more than that by now, but they were able to get a bunch of them off. So basically, so gating means you’ve got to have permission from the brand to actually list it on Amazon In writing, they’ve got to send a special document and then you’re allowed to, as a seller, to list it. It usually goes under their storefront, it doesn’t go under your storefront, but you’re allowed to be a third party seller. And some big brands like Body Glove I’ve done that in the past with Body Glove they allowed that. But others like Nike and Apple and stuff are very particular on who are they going to let do that.
Daren:
They are, and I mean, you know, the gating is kind of like the big unicorn in the in the sky out there. Everybody sort of would oh, I want to get gated like Nike or, you know, apple or whatever. I mean it’s kind of like, look, it’s just not going to happen for the average brand, just, or the average brand. It’s just contrary to Amazon’s real ethos about it.
Kevin King:
Yeah, everybody wants that monopoly, so I don’t have to compete against anybody on the buy box and I can control it. But so usually one of the first steps that happens is a cease and desist letter, and sometimes this comes from a lawyer, sometimes it’s a chat GPT generated one by a seller trying to scare somebody. Yeah, can you? Can you explain the perp, what is cease and desist letter is and what the purpose is? And is that just a us thing or does that apply like in europe and stuff too?
Daren:
well, I mean, I think the way to think about a cease and desist is simply just a letter from the brand or from you know, the brand’s lawyers saying hey, hey, we know you’re selling our product and for these reasons we need you to stop to cease and desist what you’re doing. Our view of all of that would be that for brands to be sending those letters, they have to have the legal basis to be able to send them. There’s a whole world out there of people that advertise oh, I’ll get rid of X percent of your marketplace sellers, or we have the ability to enforce against Amazon sellers or whatnot. And if your brand is sitting there, that’s all great. But you have to keep in mind that, unless you have a very particular foundation, it’s fine to buy and sell your stuff, and so the first thing that a brand needs to do before you even get into the cease and desist world is to build that legal foundation wherever you are in the world it could be the US, Europe, Canada, Australia, wherever to enable you to even have a basis to go out and send those. But then those letters are usually sent to resellers and then they have a choice Do we comply or do we not? And then the brand’s next move will depend on you know as well ties back to that foundation.
Kevin King:
So some people use cease and desist almost like a big cannon. They put all kinds of demands in there, like I need copies of your reports and I need copies of this and you’re you must turn over all your inventory by this x y day, or else I’m doing x y z right. And a lot of those are just. Some of those are serious, but some of those are just threats to scare the little guy sitting in his underwear in his house that’s selling, uh, your product on his computer. Um, so when, as seller, if I get a cease and desist letter, I mean I know it’s up to me what I do, like you just said, but to what level should I pay attention to that? Should I run out and get an attorney? Should I personally answer it myself, or should I just ignore it and see if they send a second one and then get serious? So, as a seller, from the seller’s point of view, what would you recommend a client, one of your clients, if they got one of those?
Daren:
to do. Well, yeah, I mean we represent the brands, not really the sellers. But I think, just as a general matter, I remember when I was in law school one of the professors said look, there’s a rule in the law that says open your mail. Stupid, which is you know. What they were really saying is you can’t just ignore things like that. You know things typically get worse if they’re ignored. And so if you’re a seller out there and you do get one of those letters, you know, I think it’s probably prudent for you to take it to your lawyer or to reach out to the brand yourself, if you don’t have one, and just say hey, what’s going on? I got this letter, why are you sending it to me? And then you’re likely to hear from the brand well, you’re not authorized, et cetera. And then who’s right and who’s wrong in that scenario often ties back again. I know I sort of keep repeating this, but does the brand have a legal foundation that would allow them to still enforce against a seller, even with that first sale doctrine being sort of the starting point?
Kevin King:
Back at the turn of the decade around 2018, 2019, in the Amazon space. I’ve been. I’ve been selling third party since 2015 on Amazon, since 2001. Vorys had a reputation of in some circles as being a bully and there was a lot of stuff of going out there and like getting people getting all these cease and desist letters and all kinds of stuff on the forum Like they’re just bullying, they’re just this and that. And then other people are like, no, that’s just good lawyer work, that’s just good legal work. There it’s just like I don’t know a collection agency. There’s some collection agencies that call you and say, hey, you want to settle your credit card debt. And then there’s other ones that are digging around and using the law to the fullest extent and maybe calling your neighbor and saying, do know, Kevin, or you know, going to the getting you know liens or whatever it may be. It’s just good work. What would you what? What do you remember? What was going on back then that was causing? I think you guys were doing a lot of proactive work on behalf of your clients and it was. I think it was good legal work. But a lot of people, you know there’s lawyers that popped up and said even an industry that popped up and said, hey, we’ll help you fight VORIs, don’t let them bully you. We actually know how to do this kind of stuff. So what was going on back then? What would you say to that?
Daren:
Well, yeah, I mean I think that during that time and really the activity has only increased year over year since, since then. But I think around that time a lot of branded manufacturers, you know, wasn’t really just first movers anymore, it was a lot of just mainstream brands that everybody’s heard of decided that they needed to proactively assert more control over the channel. So you saw a lot more widespread enforcement. You saw legal decisions come down that said that brands indeed do have the ability to control this and that there are reasons why. I mean, I guess what I would say is and again, I respect the different views of things and people’s different positions but from the brand standpoint, they’ve spent an incredible amount of time and money bringing products to market and they have certain revenue expectations for those products, certain go-to-market strategies. They want to sell through people that are invested in the distribution and the growth of the brand, and so they want to have some ability to have an appropriate return on all of the investments that they’ve made, all within the bounds of what’s legal. And so that’s really where we came up in the space is we said look, we’re just going to do this the right way within the bounds of the law. We don’t do black hat, we don’t do gray hat and things like that. But I think, around the time period that you’re referencing, it went from dozens of brands doing this to hundreds of brands doing this.
Kevin King:
Yeah that wouldn’t, that would make sense yeah, but isn’t it a lot of times pop a mole. Uh, like that game. Pop a mole because I I I know a brand that I have another podcast called the marketing misfits and we had a a lady on that’s done very well with a light. She was a eyelash technician and she had developed her own light to light up the face because the lighting had shadows and stuff and she built this arc light and then when COVID hit she had to shut down her salon and she’s like, what do I do? And she decided to manufacture this light and put it out there and it’s like a $500 light and now it’s taken off and tattoo guys are using out there and it’s like a 500 light. And now it’s taken off and tattoo guys are using it and it’s just taken off. But she’s had tons of knockoffs. I think she said 137 or something Chinese cheap knockoffs yeah she makes hers in the us and she says she has a full-time lawyer just dealing with just knocking them down. They’ll get them taken off, and then another one pops up. And another one pops up. So is it in some cases where I mean it’s, it’s I like in marketplaces to the old mafia days of the Sopranos. You know, there’s a lot of money in the garbage mists and so the bag comes in. So it seems like sometimes people just don’t care, and so is it a constant battle. And some of these big firms are just all all right, we’re. 3% of sales are devoted to IP protection or something.
Daren:
Yeah, I mean, I think it is a constant battle. I mean the brands that are out on the front foot on this stuff, they don’t think about it as a project. They think about it more of like an ongoing program. That’s always in the background. Now you mentioned knockoffs. That’s always in the background. Now you mentioned knockoffs. Now we’ve covered a lot of different types of disruption. You have counterfeits, you have knockoffs, you have unauthorized sales, you have map violations. If you’re in the US or Canada where you can do those types of things, knockoffs, for example, are difficult. And I think that maybe brands do sort of feel that whack-a-mole type uh feeling, because you know that really comes down to does the brand have patents, design patents and things like that on the specific product itself? Because the knockoffs are under a different UPC, different ASIN and things like that. On the specific product itself, because the knockoffs are under a different UPC, different ASIN and things like that, they’re just diluting sales of the product. So it’s not you know so much. On that specific ASIN, somebody’s saying I’m doing this particular uh light that’s made in the us, you know, like a counterfeiter. It’s just we’re copycatting that product and we’re hoping that she has.
Daren:
She has patents and IP on it yes that’s one of the ways she’s actually able to enforce yeah, but it’s still, it’s a process and it costs money and time I mean it’s, it’s just a uh, you know, obviously I mean this is how we earn a living, but if you think about it, you know you have. Everybody sort of understands supply chain control and all that, but as the e-commerce world has gotten where it is and the omni-channel kind of ecosystem is the way it is, meaning that everybody’s interconnected. You know what happens on Walmart impacts Amazon. Vice versa, I mean Target impacts Amazon. What happens brick and mortar impacts what’s happening on a marketplace like Amazon. Amazon happens brick and mortar impacts what’s happening on a marketplace like Amazon. The brands need to think about it in terms of revenue disruption, because your revenue is going to be disrupted multiple ways any given day and you’ve got to be able to A surface that to say is this meaningful? You know financially A and B. If so, what is it that’s actually happening? You know your contact there that had the lamp. That’s a knockoff issue. Then there’s the counterfeiting on the fake supplements we were talking about. Then there’s unauthorized sales. I mean all of those are different paths that you need to take.
Kevin King:
Yeah, what she’s doing actually is she’s created her own knockoff. So hers is all made in the U? S out of a metal and a lot of these cheaper ones are like 70 bucks or something and they’re made out of plastic and they’re not very good. So she created her own mock-off to compete at that price point. And then when they buy that, she tells them hey, this is just a, she has a little story in there. And she has a little story in there and she says if you want the real one, I’ll knock $100 off, I’ll give you $79, whatever you pay for this, plus $20 off. And here’s how you get the real one. And it’s a pretty effective strategy. But on the IP side, I know I had someone on the podcast a month or two ago that helps with a little bit of IP stuff and he said they had a case where a woman developed this charging thing, plugs into the wall and somehow has some sort of patented technology of the way it lets you plug in different outlets or additional outlets. It’s like an extender and a surge protector kind of thing and he said that she put it up on Amazon and crushed it. But as soon as she put it up on Amazon and crushed it. But as soon as she put it up it wasn’t a difficult product to make. There’s tons of knockoffs, you know, violating her IP. And he said eventually, after about two or three months, those guys actually got her shut down and she was the owner and the brand and he’s like this is just a freaking mess.
Kevin King:
I mean Amazon’s become so big. I mean I just saw I just had in my newsletter Billion Dollar Seller. There’s a story where they’ve just deleted like 50 million products off of the website. 50, five, zero million. These are ones that have been sitting on there for two or three years and haven’t made a sale. But just the scope there’s something like five to seven million, I think, is what Helium 10 says active products that are actually making a regular sale here and there. That’s a lot of stuff to babysit and keep on. So it’s just so big it just becomes. You hear cases of really good stories and things happen really quick, and then you have the islands that are fighting the stuff for like three years. Oh yeah.
Daren:
Do you see that as well? I do, a hundred percent, I mean, and I think that it just doesn’t surprise or, you know, shock me in any way at all because, you know, because they provide the tools that they provide. They’re good to a point, but beyond that, there’s just a lot of self-help that a manufacturer, whoever’s selling the product that cares about the sales, is going to need to do, and you’re just bumping into this widest selection, lowest price, open platform. Those are the pillars, and things that sit outside of that just aren’t the core focus. From my experience of the company, what about?
Kevin King:
I think there’s all this big tariff talk, with what Trump has been doing earlier this year and saying we need to get balanced and everything. You know. There’s a lot of good and some like I don’t know about that, uh, parts of it, but one of the things that’s not discussed really that I think should be discussed is is the ip protection. I know trump brought it up. Yeah, you guys just steal our stuff and um, which is is true, a lot, but you, any Chinese seller, can come and sell in the United States super easily. If I want to sell on TikTok shop, I have to have a registered person in the United States with their driver’s license or their ID and prove that they’re a US citizen. That way, there’s a responsible person in the US. The same for Amazon Japan. Japan has a rule that you have to have a responsible person In Japan. If your product is faulty or whatever that you’re importing, they can go after what’s local. We don’t have that here. So when someone, a company or person violates IP and you guys are going out and finding them, you’re like, oh my gosh, this is based in Shenzhen. You said you’ve got a bunch of investigators. Your investigators can’t find any trace of any US-based stuff. What do you do, or what can you do to help mitigate their problem, because there’s nobody that’s going to be liable, other than just shut their account and get their account shut down.
Daren:
Well, there’s that. I mean there’s a whole movement around that, what you just talked about. I mean you’ll see brands going up filing suits who are usually under an injunctive type approach, so forcing the courts to make quick decisions, rather than some prolonged litigation process. Now, the goal in those would be to get the account shut down and then, I think, more importantly, to be able to seize the funds in the accounts to cover the damage. I mean, getting an account shut down is fine, but that’s whackable. It just pops up under a different name of your different account the next day. But actually getting to those funds and getting those seized by the court orders is probably the best bet. I mean, I think-. That hurts them the most when they can’t pull out their $100,000 or whatever they’re like. I’ll go sell something else. Yeah, I mean, that’s really what you’re going for. I mean, I think if these things are happening to you around the Chinese kind of counterfeiters and things like that you have three but I have this right in my head, counting them up in my head. Three options number one, like we just said, you know, pop the seller in court. That’s not, it’s not super. You know you have to pay to be able to do that as a brain. So I don’t want to like, oh, that’s just, you know, like snapping your fingers, it’s not, but that can be the quickest way to leverage the US legal system to punish those sellers in a way that.
Kevin King:
How quick can that be done? An injunction typically, I know it’s probably dependent on the court and stuff, but what’s just like a rule of thumb that you would tell a client Like, oh, we could probably have an injunction in a month, in two weeks, in three months.
Daren:
There would be a couple of phases. So the first is often what’s called a everybody hears the word TRL or temporary restraining order so that you kind of go into court on an emergency basis and you say, hey, look, this is happening to me, I need relief. Today or tomorrow, that’s a matter of days one, two, three days before you get somebody to rule on an interim basis on that. So they would come in. They would say, hey. The judge would say, hey, yeah, it looks like you have a valid point here. I’m going to go ahead and give you a temporary order, temporary restraining order. Take that to Amazon and say, okay, this listing, we got to pause it here while the court sorts this out. Then the court would say, okay, now we’re going to go to what’s called a preliminary injunction. That might be two weeks, three weeks after the TRO hearing, and that’s where there’s a more fulsome discussion of the issue. The other side will often show up. If they’re going to show up and you kind of have it out like a little mini battle, a little mini trial, and coming out of that you’d get a more permanent order than you could take to an Amazon and have the attack funds or whatever it is that you’re about to do so. All that to say, I guess in a long wind-up way, to say that you could probably be through that process in two to four weeks.
Kevin King:
Now you said there’s three things. So that’s one of the ways is to go that quick court order type of stuff. What are the other couple?
Daren:
The other would be to involve the marketplace. Now, that’s going to take again none of these. I don’t want to act like. Any of these are like silver bullets or like light switches, but it would be able to show in a compelling way the repeat pattern of infringement that is actually damaging to Amazon’s reputation or to consumer safety. I think would be the two things that are most, in our experience, most compelling to Amazon to urge them to implement some type of obligating or other protections that we’ve talked about. The third and this is not going to be super attractive to a lot other than probably bigger brands with bigger budgets and things would be to take the show to China and figure out where the stuff’s being made there and crack down on it there. Now, people go to prison for that there, it’s just most. Don’t go through the hoops of going and going after it in China. Yeah, that’s a whole other legal system, and I mean that’s the world it’s a whole another world and you, there’s lots of rules.
Kevin King:
You got to do it in the district where the factory is and there’s all this, this stuff and China has different rules on trademarks. Where you can, it’s you can act. I had someone this happened to a seller that I know they were in, uh, like four years ago, in the middle of closing to Thrasio, selling their business for three or four million bucks and the day the money was supposed to be wired and the deal closed, their listing went down, completely went down, and they’re like what the heck? And it turns out that someone had filed a complaint, a competitor had colluded with the factory in China. They all made their products in the same factory, colluded with the factory and actually got a trademark or something in China to actually block the export of this and then sent that into Amazon and Amazon just said okay, sure, and took it down. They were able to solve the problem and the deal ended up going through, but it was a hell for the seller for a while until they got that sorted out. But there’s all kinds of little loopholes and ways that, with enough money involved, people will do a lot of crazy things, do a lot of crazy things.
Daren:
The very entrepreneurial people over there in China, I mean for all the sellers and brands that are in your audience here. China has, and some other countries do too, but China has a first-to-file trademark system, meaning the first one that can make their way to the agency and say I want to register Mark X is the one that’s going to get it In the US. It would be sort of first to use and things like that. And so, even if you haven’t registered it officially, you can show that you’re truly the one that ought to have it. China it’s a race, and so you know they’ll see products that are gaining velocity and things like that, and they’ll just go and say, okay, are they registered here? If not, boom, boom, register it. And now you’re in a. You know, now you’re in a fight, like you just mentioned.
Kevin King:
Yeah, and they can block. I mean, there’s certain ways that they can actually block the export of that under certain circumstances as well, so that can just cause all kinds of problems.
Daren:
I mean it’s super cheap to get a trademark. I mean super cheap is relative, I guess, but it’s not hard or particularly expensive to get your trademarks in China. So if you have any type of certainly global business or you have a product that you mentioned, a few here that are taking off on the Amazon from a velocity standpoint, I would just go ahead and do it. I mean it’s not, you know, it’s a relatively easy box to check if you do it on the front.
Kevin King:
Now, do you guys help for brands and force, not just when we talked about counterfeiting and duplicates and all these different things, but what about them just using the marks? So I’m an iPhone case guy let’s say a seller, Um, um, and I’m selling iPhone cases. And if I, I think the way it’s set up on Amazon, if I say, um, uh, iPhone case XRT 32 XY, you know, whatever, um, that’s in my title, I can actually get shut down because it appears that that’s an iPhone case by the way, I’ve ordered the title versus if I say it’s an XR, whatever, 32 P pink case for an iPhone, I’m okay, Uh, compatible or compatible with uh or something like that. Are you, do you guys help enforce that kind of stuff for your brands as well?
Daren:
Yeah, absolutely, I mean they again, those are, those are I guess what I would call more. Do you guys help enforce that kind of stuff for your brands as well? Yeah, absolutely, I mean they again, those are, those are I guess what I would call more. Um, that’s kind of more check the box type stuff. You know that can all be done in like a brand registry and things like that. But uh, but yeah, I mean you, you start running into what is you know and that’s beyond the scope of what we’re getting into here, but what’s kind of fair use of a mark and what isn’t. So you see the compatible widths, a lot which is allowed in certain instances, versus saying this is an iPhone case, blah, blah, blah, which is confusing to people, to people. The test, really all of these things from a legal standpoint have their basis in some philosophy and the wanted issue here would be the whole purpose of a trademark is to educate consumers. So consumers know what they’re getting. And if you say iPhone in their title but you don’t have an iPhone branded case, it’s something else you know. That’s confusing to people. So all of that is designed to protect consumer confusion and you know like the platforms will will allow for the enforcement of that stuff just because it’s relatively cut and dry up and sometimes, though, these big law firms I mean they just have, they got money and they got time and they got people on staff.
Kevin King:
Sometimes they’re sitting around like, okay, instead of taking the afternoon off, go find something to do. It seems like sometimes because I’ve had cases or, uh, in another business of mine we dealt with, uh, we had a website and it was uh like, uh, swimsuit models and stuff, yeah, and one of these girls name her stage name. It wasn’t her real name, but her stage name was Alexis Winston A-L-E-X-U-S. Winston, and that’s a woman’s name. And Toyota came after us for saying that we’re violating their trademark because of Alexis and Lexus and this is damaging to their mark and we’re not having anything to do with cars. There’s not even a picture of a car in any of the shots or whatever, but it was such a I mean it was so lawyered up letter. There’s, like you know, we could fight this but we’re going to spend and probably win it, but we’re going to spend 10, 15, 20, 30 grand dealing with this and it’s just easier to just tell or change your name on the website. So sometimes there’s those kinds of things. And then I had another case back where we’re using the word centerfold in Google. You know someone? We were optimized back in the days where you could put you know keywords, like in your meta tags and stuff like that, and Google would actually recognize that and index you on it.
Kevin King:
This is early days. We had the word centerfold in there. So people typing in, you know, like Playboy centerfold or something, would find our website because we had models that were Playboy centerfold and they came after us for Violet because the word centerfold is actually a trademark term of Playboy. Nope, Okay, so they came after. So do you see that happening on Amazon, where people are? Maybe they’re doing comparisons? Let me compare my product to this big brand name product so that when someone types in, they get the juice. Amazon associates those together. They’re kind of leeching off the back and riding the brand equity and goodwill of those brands, and then in some cases they do very well. Is that something that is worth you guys fighting on behalf of some of your clients as well?
Daren:
Yeah, 100%. I mean we deal with that. I would say quite a bit. I mean we would you know, and, and I mean how we do stuff is is one thing, but I think for the audience, that the takeaway ought to be you need to be able to understand where you’re losing real money. Not is there somebody out there that’s using your name? Okay, that’s, that’s annoying and potentially bad. But you’ve got to be able to quantify what the damage is or what the impact would be, because you’ve made several points throughout the discussion You’ve got five, seven million products there. It’s a massive world. That’s just on Amazon. Then you’ve got every other marketplace out there, so, seller, brand, whatever, you can’t be flailing around reacting to everything. So the first thing I would say is you’ve got to get clear on what the impact is. So if somebody has used it and it’s an easy fix, I’m going to go on a brand registry and take it down. Fine, if it’s going to be some more involved situation, then I would sit there and say okay, really, how much revenue is falling through that? How disruptive is it? Do we think we could pull it back into the authorized one and whatnot? Because time and budgets are time and budgets, and you have to be able to stack those in a way that’s going to be the best for the business overall.
Kevin King:
Yeah, I do that just as an example for those listening. A lot of you know that I have the Freedom Ticket course and I have a lot of content that I put out BDSS content and I sell that content. People will pay $1,000 to get the replays of some of the trainings and stuff that we do and then inevitably somebody somewhere usually in Eastern Europe, will take that content, they’ll buy it they’ll buy it with a stolen credit card, but I don’t know that for like three weeks until it comes back, and then they download it all or screen capture it all, and then they put it up on what’s called a torrent T O R R E N T site and and then they resell it to people. For, you know, instead of a thousand bucks, it’s 15, 30 bucks, it’s straight up stealing. They’re stealing my content and put it up and and that’s whack-a-mole. And then some of the the these servers are like in Russia or other places where it’s difficult to actually get them taken down, and so I used to worry about that and like, oh my gosh, I’m losing so much money. How many people are buying this? And now I’m just like you know what? Someone that’s going to go to those sites is not my customer anyway. They’re never, going to spend a thousand bucks. I can turn this around to a pause and tell the people that are on my providing the content to teach it. I was like, look, yeah, we’re going to have about 300 people, 400 people, pay the thousand, and then we’re going to have another 10,000 watch it. So you’re getting a really good reach and so you’re getting your word out, so it’s not worth fighting. So I think that’s something that a lot of people, but it took me a while to realize that. I think your point is good about sellers need to focus on what’s moving the needle and what’s not, and don’t worry about the little things.
Daren:
Yeah, we always say impact over activity and I think, just for your audience, there’s brand protection on the one hand and there’s brand control. And if you look at the evolution of this space, you would say, okay, late 90s, early 2000s, internet gaining steam, e-commerce gaining steam, and you start seeing people care about oh, did my images get ripped off and get put off over here? Did somebody take my content and pirating it or whatever? And so that industry came up. It was really kind of the first type in this space, but that industry depends on finding violations, serving them up to the brand and saying, hey, should we do something about this? So it’s constantly trying to surface new things without so much of a lens on is this commercially impactful? It’s simply do I have something I can do something about? So then you start seeing things like the map world and pricing world and things like that and people saying, oh, I’ll go monitor the web and see who’s breaking your price and I’ll tell you this is in the US, you can’t do that in Europe or in other regions of the world. But that became a thing for a while. Now there’s so much money flowing through these channels that brands are looking to say not how do I protect my IP, but how do I control this whole experience? Or if you’re an exclusive seller on a brand, for example, you’d be thinking that way too. So it’s been a bit of an evolution, and you just start to see more and more. Yeah, I get that there’s a technical violation there, but I’ve got to be able to focus my attention and time on the things that are actually going to make money at the end of the day.
Kevin King:
How is AI affecting what you guys do? Yeah?
Daren:
I mean, it’s a big deal Internally. We have a ton of initiatives around that For us. What’s really exciting to us is that I believe we probably have the broadest set of data and data points and things like that in this space, and so the ability to layer the AI on top of all of that and just move faster than any human can move at surfacing recommendations for particular sellers. What’s all of our experience around a particular type of disruption? How do you do things in this region or that region, what’s effective and what isn’t, across tens and tens of thousands of different actions. That’s been very exciting to start to see that start to to come to light. Um for us. So so that’s that, and then you know we do it. We use it a lot, um to begin the process of doing things that would be more routine and rote, that people would have to do. But I just you know you sit there and you start to think about it. It’s like almost like contemplating the universe, like where’s all this going to go? How’s it all going to happen? You just try to stay out on the front foot, on the front edge of it, and lean in, because I don’t think anybody really knows.
Kevin King:
No, it’s an amazing, amazing time. Now you’ve got a service, though, that you deal with a lot of big brands, the Fortune 500s, and a lot of those guys are clients of your firm, but you also have something that can help the smaller guy, right? Don’t you have some monitoring service of some sort? Oh yeah, can you tell me a little bit about how that works?
Daren:
Yeah, I mean I think if you’re a brand or a seller that represents brands and an author, I mean we deal in the authorized world, not so much gray market sellers and things like that. But I think what’s most important is that you get on the right path. Now there are different, there are different sort of stages along that path You’ve got everything from. I just want to get my arms around what’s going on and see, do I know any of these people? Can I figure out where these problems are coming from? Do some self-help and things like that. You have some kind of volume enforcement, just communicating with people saying, hey look, I don’t really want you doing this. And then you have the true, legally backed programs, I think, and that can all be sort of one journey. And so Vorys, the firm owns Precision E-Control, which is an ancillary business of Vorys that we own completely, and they have a very robust tech platform and go out across marketplaces, across retail sites. You know, understand everybody that’s selling. You know the brand’s product, the volumes, the revenues, the disruption from the advertised, price compliance and all of those types of things. So brands may purchase that. It’s not particularly expensive, and then they’ll get the information and they’ll try to work on it a bit themselves. So that would be sort of like the what maybe a smaller kind of scrappy brand would want to do or sell or do.
Kevin King:
So if we had to leave the audience here with a couple of words of wisdom or advice when it comes to dealing with brand protection, IP, that kind of things, what would you say they should take away from this and keep in mind?
Daren:
So I think that whether you have a brand or you’re out there selling brands in an authorized way, your success commercially will rest fundamentally on how much control you have. You see, we were both at the same conference a couple weeks ago. You see a lot of focus on this e-commerce revenue equation. Your revenue is traffic times, conversion times, price. Each of those variables rests on how much control do you have. If you don’t have buy box, you can’t run your ad. You can’t run your ad. You can’t run your ad, you can’t drive traffic. You can’t drive traffic, you’re not going to convert. Pricing is disrupted, you get into an erosion situation. I think that it’s still in the very early innings of branded manufacturers and the sellers of those products realizing that you can have all the phenomenal ad strategies and content strategies and whatnot, but if you lack that control, that revenue equation will suffer. And so that’s kind of the takeaway that I think I’d like to leave your audience with, and the fact that a marketplace like an Amazon isn’t going to help you with that. They may give you some tools that are useful around the edges, but the guts of your success on that issue will depend on what you do yourself.
Kevin King:
Awesome. Well, Daren, if people wanted to reach out to either you or to the firm or whatever, what’s the best way for them to do that?
Daren:
Yeah, a couple of ways. I’m fairly active on LinkedIn. You can find me there, Daren Garcia, d-a-r-e-n-g-a-r-c-i-a, connect with me there. There’s a ton of content and things. There’s also the group’s microsite within the Vorys site, so that would be www.vorysecontrol.com, and then my email is [email protected]. So those would be probably the best ways.
Kevin King:
Awesome. Well, I appreciate you coming on and sharing today. It’s been great.
Daren:
No, absolutely. Thanks so much for having me. It was great seeing you out there and, yeah, I’m sure we’ll bump into each other somewhere on the road here.
Kevin King:
I’m sure we will. A regular listener of the AM PM podcast, you notice, over the last few months there’s been quite a bit of a discussion about IP protection and what to do to protect your brand with different guests, including today’s guest, Daren. It’s because I think it’s a pretty important topic that a lot of people are overlooking and just not handling it the best way they can, and it’s becoming more and more of an issue as the marketplaces continue to grow and to mature and continue spitting off serious cash. So hopefully today you got some good insights and get some good things to think about when it comes to protecting your brand. Next week we’ll be back with another amazing guest here on the AMPM Podcast. Remember new episodes every single Thursday. Hit that share button. If you like this episode, be sure to like it. Subscribe to the channel and check out my newsletter at billiondollarsellers.com. Free newsletter every Monday and Thursday. It’s like a free $25,000 a year mastermind straight into your inbox. Take care, everybody, and we’ll see you again next week.
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