“It started as a normal way to defend intellectual-property rights,” says Ning Zhang, an legal professional within the US who has represented Sun and different sellers in comparable conditions. But through the years, Zhang says, she has witnessed the IP violation claims getting more and more baseless. “It doesn’t matter if [the claims] have any merits—you can just sue [the sellers], freeze their accounts, and force them to negotiate with you to take their money back.”
Staking trademark violation claims
Chinese merchandise have lengthy been related to counterfeiting and intellectual-property theft. This is just not with out trigger. In 2022, 60% of the counterfeit items seized at US borders, by worth, got here from China.
But IP rights and counterfeiting have grow to be a lot blurrier ideas within the age of third-party e-commerce markets. Traditionally, counterfeit items revenue off established model names by driving on their identify recognition. Not all logos are recognizable names, although; some simply appear to be descriptive phrases.
In November 2020, PopSockets, a US firm that designs cellphone circumstances and different equipment, utilized to trademark the time period “airbag” below the class of “hand grips, stands, mounts, and cases adapted for handheld electronic devices.” The firm has merchandise that use air-filled elements, however examples of the phrase’s use to explain comparable options additionally existed earlier than the trademark. The software was authorised a 12 months later, on November 9, 2021.
Sun Qunming says she had used the phrase “airbag” earlier than to explain different cellphone circumstances she offered with out inflicting any hassle. And she admits she didn’t examine whether or not it was trademarked this time. “If it’s an uncommon word, we will look it up in the trademark database to see whether it’s registered. But in terms of ‘airbag,’ the reason why I didn’t look it up was because I thought it was just a descriptive term. You see it everywhere,” she says.
The plaintiff, nonetheless, claimed within the lawsuit that defendants like Sun “deceive unknowing consumers by using the POPSOCKETS Trademarks without authorization … to attract various search engines crawling the Internet looking for websites relevant to consumer searches for PopSockets Products.” PopSockets declined to remark for this story.
These kinds of lawsuits first appeared on the radar of Eric Goldman, a legislation professor at Santa Clara University School of Law and co-director of the High Tech Law Institute, in 2021. A German firm that owns and licenses the phrase “emoji,” he found, had sued an estimated whole of greater than 10,000 e-commerce sellers from 2020 to 2021. Some of the events sued had merely used the phrase to explain a product that truly included the picture of an emoji. But the court docket selections are working in its favor. In one of many dozens of circumstances, the choose discovered the copyright declare too expansive however however awarded the proprietor $25,000 in statutory damages from every of the 231 sellers being sued.
Goldman, in a paper revealed in March, calls this kind of lawsuit a “Schedule A Defendants Scheme” (or “SAD Scheme”). When these circumstances are filed, the names of defendants are put right into a doc, Schedule A, that’s typically instantly made confidential on the request of the plaintiff. As a consequence, the circumstances can contain lots of of sellers on the identical time, but the sellers don’t know who else is being sued, and so they often don’t know they’re being sued themselves till the court docket orders Amazon to freeze their accounts.