Online retail giant Amazon on Wednesday put some shoulder into Nite Ize’s fight against counterfeit sellers of one of the Boulder company’s best-selling products.
In a lawsuit filed Wednesday in federal court in Seattle, Nite Ize and Amazon are going after fakers in three countries who go by names such as Discount Always, Very Lee Good and Snakey. It’s the latest legal attempt by the Colorado mobile-gadget company to cut down on counterfeit and knockoff products that are rampant on sites like Amazon.
The Nite Ize product in question is the Steelie, a steel ball and magnetic mount to prop up a mobile phone in a car. The original dashboard kit sells for about $20 on Amazon. It became so popular that Nite Ize expanded the line — and quickly saw counterfeits and knockoffs. (Counterfeits are imitations wrapped in Nite Ize packaging, while knockoffs can be perfect copies under a different brand name.)
Not only did the fakers advertise and sell products on Amazon using the Nite Ize brand, they “willfully deceived Amazon and its customers, infringed and misused Nite Ize’s intellectual property, harmed the integrity of Amazon’s store, tarnished Amazon’s and Nite Ize’s brands, and damaged Amazon’s and Nite Ize’s customers,” according to the lawsuit.
“It’s really critical to keep counterfeit goods out of the market because consumers think they’re buying the real thing and then they get something that doesn’t work as well,” said Clint Todd, Nite Ize’s chief legal officer. “It’s not the same materials, it doesn’t last as long, it doesn’t have the same workmanship. It really affects our brand.”
Nite Ize is suing for damages, but Todd didn’t dare make a guess at the potential value. Damages could include the loss of a sale by customers who bought a fake product, legal fees to fight fakes and damage to the company’s reputation by consumers who bought a poorly-made product and now hold it against the company.
In its fight against fakes, Nite Ize received an International Trade Commission order last year that gives U.S. Customs the ability to seize infringing items at the border. The order also was the proof Amazon required to allow Nite Ize to banish infringers within Amazon’s third-party marketplace, which has “millions” of small sellers from around the globe, according to Amazon.
In October, U.S. Customs notified Nite Ize that officials had discovered 300 counterfeit Steelie car mount kits at the Portland, Oregon, port of entry. They were coming from Shenzhen Haiming Limited and Hu Nan in Hong Kong. The items were headed to a warehouse in Tualatin, Oregon, owned by Shipito, a Utah company that offers package and mail forwarding to more than 220 countries, according to the lawsuit.
That led Nite Ize to Shipito account holder “Jack Nebressa,” or Chun Wong, who appears to live in Ontario, Canada. Nite Ize already knew about Wong, whose MentuShop on Amazon advertised and sold Nite Ize products in August 2018. They were fakes. Nite Ize continued its sleuthing and went after several other Amazon stores selling fake Nite Ize products. Despite numerous warnings from Amazon, the sellers did not stop selling the counterfeits, according to the lawsuit.
The lawsuit named a handful of other Ontario residents as defendants, as well as people living in Minnesota and Maryland and two companies that appear to be based in China.
Amazon joined the lawsuit after Nite Ize reached out, Todd said.
“They did a bunch of backend work on their side and decided it was worth joining us to try and see if we could really stamp out this counterfeiter and make sure consumers are getting the real product,” Todd said.
READ THE COMPLAINT (PDF)
Amazon has joined company lawsuits before, including claims filed by luggage and accessory maker Vera Bradley and OtterBox, the Fort Collins mobile-phone casemaker. According to Amazon, the Vera Bradley case was settled in April for a half-million dollars, which all went to Vera Bradley.
Knock-offs and counterfeit products have been widely reported on Amazon. On Sunday, the New York Times reported thievery in books, with some poorly reprinted medical books offering hard-to-read recommended dosages. Last year, The Atlantic had a story titled “Amazon May Have a Counterfeit Problem,” and mentioned wheels that infringed on Mercedes-Benz patents, fake Birkenstock shoes and a counterfeit hoverboard that litigants said started a fire and burned down their house.
In a reply to The Colorado Sun, Amazon said authenticity is important to the company and goes after violators.
“Our customers expect that when they make a purchase through Amazon’s store — either directly from Amazon or from one of its millions of third-party sellers — they will receive authentic products. Amazon strictly prohibits the sale of counterfeit products and we invest heavily in both funds and company energy to ensure our policy is followed,” the company said in a statement.
Amazon also uses machine learning to scan products and sellers to determine fakes and bad actors. In 2017, it introduced Amazon Brand Registry that offers tools for brands to quickly find violators that copied text, images or other proprietary information. So far, 130,000 brands have enrolled. Amazon says those brands report “99% fewer suspected infringements than before” Brand Registry. More recently, it added Project Zero to let brands monitor and remove counterfeits instantly.
“Amazon continues to invest and fight counterfeiters on all fronts—from developing technology to proactively prevent counterfeits, to working with brands, leaders in the public sector and law enforcement to hold bad actors accountable. Counterfeit has no place in our store and we will leverage every tool available to protect brands like Nite Ize, our customers, and our store,” said Amazon in a statement.
But it’s a difficult, centuries-old problem that in this internet age has become a Whac-A-Mole game, shutting down infringers only to see them pop up elsewhere under a different name, said Bernard Chao, a law professor at the University of Denver Sturm College of Law who specializes in patent law and intellectual property.
“It’s easy to persuade decisionmakers you’re right, but that doesn’t solve the problem,” Chao said. “If you spent a lot of money only to have them reappear somewhere else under a new distributor of website, you haven’t won that much.”
Lawsuits and other legal means may not be the answer for the rampant counterfeiting online. But Chao said believes technology will help. He pointed to YouTube, which had long had a piracy problem with users profiting off copyrighted images, videos and music.
“Now (YouTube has) automated technology scanning for stuff deposited by media companies. (Copyright holders) can submit and say, ‘This just came up, check for this,’ and they have computers checking all the time,” Chao said. “Amazon is probably going to find more technical solutions to get rid of these large problems.”
Todd, the Nite Ize legal boss, said he knows that an International Trade Commission order or lawsuits won’t stop counterfeits completely, but he believes the new tools Amazon offers are helping the fight.
“If you look at how not just Amazon but all the third-party marketplaces are set up, the whole idea is to allow a frictionless posting and selling experience. Just that experience by itself lends itself to abuse by a few bad actors,” Todd said. “We want counterfeiters to know we’re not going to sit back and let it happen to our company and let our customers be duped.”