Included among the undisputed heroes of the COVID-19 lockdown are the dedicated employees of Amazon. Without their dedicated work keeping deliveries going, brick-and-mortar stores would be more crowded, as more of us would have to venture out for essentials. Having taken an Amazon factory tour this past summer (highly recommended if we ever get to be around other people in groups again), I can vouch for the complexity of Amazon’s delivery operations, based on my viewing of just a small part of that complex web firsthand. With all the technological wizardry I encountered in the warehouse, from the scanners to the conveyor belts to the robots, not one package would get delivered without the human employees conducting it all and making sure that the right packages are routed to the right destinations. It seemed to me that most Amazon factory workers had an exciting and stressful job back then. Now, with the added weight of the virus, the stressful aspect must be tuned to max volume. All we can do is be grateful for their efforts.
Amazon is much more than an e-commerce platform, of course. Whether it is Prime Video keeping us entertained (e.g. Fleabag) or Amazon Web Services performing yeoman’s work in giving us the internet we all (desperately, at this point) depend on as we know it, Amazon touches our daily lives in many ways. Even without Alexa listening in on all our Zoom conferences nowadays.
What is true about Amazon generally is also true about Amazon from an IP perspective. I have personally spent much time thinking and writing (for a 2017 example) about Amazon’s potential — and current — role as an IP adjudicator, as well as the increasing importance for IP owners of protecting their brands and IP on Amazon’s platform. While there is always more to say on those topics, it is important to take a step back and realize that there is at least one pending case that may answer one of the key threshold questions about Amazon: Is Amazon putting products into the stream of commerce, or is Amazon itself a stream of commerce?
One of our best hopes for a reasoned formulation of an answer to that question is the 3rd Circuit’s en banc consideration of Oberdorf v. Amazon, where the entire court is considering whether a woman blinded in one eye by a defective dog collar purchased from a third-party seller on Amazon can sue Amazon under products liability claims. The District Court said no, holding that Amazon was not a “seller” under Pennsylvania law, even though the identified third seller, the Furry Gang, has apparently been AWOL for years. The original 3rd Circuit panel reversed, leading to the entire court taking the case en banc, with oral argument taking place in late February. (It is worth a watch, even for those who don’t consider themselves appellate argument groupies, if only for the novelty of seeing an en banc oral argument in action.)
Without forgetting the severity of the plaintiff’s injury, as well as the very real risk to consumers nationwide from defective products purchased on Amazon, the case raises some very interesting questions — about both separation of powers and how best to define Amazon. The former question is straightforward. Should the 3rd Circuit rule on this case, or perhaps certify the question to the Pennsylvania Supreme Court? Or is everyone better off waiting for the state legislature to act? While it seemed that the 3rd Circuit judges may differ on the proper course of action, it was also evident from the oral argument that the court recognized the important role Amazon and other online marketplaces play in the modern consumer economy. Especially with respect to their role as a platform connecting third-party sellers around the world with local consumers. The policy questions are important, and the answers will likely be provided by all three branches of our state and federal governments. Tellingly, even Amazon’s counsel suggested that the true answers must come first from the legislature, where I surmise that Amazon has a (probably nationwide) lobbying effort ready to go to present the company’s position on proposed legislation.
As for how to define Amazon’s role in selling — and therefore its liability for any torts that selling results in — products to customers, the debate before the en banc 3rd Circuit was an intense one. Often more between the judges than between the bench and the lawyers arguing the appeal. On the one hand, everyone agreed that Amazon exerts at least some level of control over third-party sellers, including the right to control pricing as well as in the IP context to police infringement claims. At the same time, it was striking to hear that Amazon was unable in this case to identify the offending third-party seller, even though it went so far as to send an investigator to Nevada to locate it. That fact alone seemed to raise eyebrows with some of the judges, especially those who were taking an expansive view of the level of control Amazon exerts over sellers.
Ultimately, IP owners will have to closely watch this case and others like it, if only because of the importance Amazon and other online marketplaces have gained as shopping destinations for American consumers. By now, sophisticated purchasers on Amazon know the difference between buying products sold by Amazon.com, buying products sold by third-party sellers that are fulfilled by Amazon, and buying products shipped directly by the third-party sellers. Until now, Amazon has taken great care to protect itself from claims arising out of sales by third-parties on its platform. But how long can that continue where there are cases of real harm caused by products sold on the platform? Or when the availability of counterfeit products continues? Yes, we all benefit from the convenience and competition on Amazon — now more than ever. But we also need our courts and lawmakers to provide us clear answers on what Amazon’s legal status is and should be.
Please feel free to send comments or questions to me at email@example.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at firstname.lastname@example.org or follow him on Twitter: @gkroub.
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