24/7 Wall St.

Selling fake versions of brand-name products for sale at e-commerce websites is a $1.7 trillion global business. Are the websites doing enough to stop this criminal activity?

According to a lawsuit filed last month in Los Angeles federal district court, they are not. Or at least Amazon.com Inc. (NASDAQ: AMZN) is not.

German automaker Daimler alleges in its suit that “Amazon refuses to take reasonable steps to police intellectual property infringement” by selling fake versions of Mercedes-Benz wheel caps.

In the filing Daimler notes:

Although Amazon has received significant negative publicity for its facilitation of rampant infringement of intellectual property rights by third parties in the Amazon Marketplace, the sales at issue in this case are not merely third party sales that are facilitated by Amazon in the Amazon Marketplace; rather the sales at issue are infringing products that are “shipped from and sold by Amazon.com.” Despite Daimler’s and other brand owners’ extensive lobbying of Amazon to respect their intellectual property rights and the reputations of their brands …

Daimler acknowledges that Amazon does have an anti-counterfeiting policy but argues that the company’s actions with regard to fakes comes entirely after the fact:

Amazon currently does not have in place a system for preventing infringement, and only has minimal processes in place for detecting infringement, which put the onus on the rights-holder, rather than Amazon, to detect infringement.

Daimler says it has notified Amazon on “numerous occasions” that the e-commerce giant is infringing Daimler’s intellectual property rights and “causing significant harm to Daimler.” The filing continues:

Amazon has repeatedly claimed that it is not responsible for the infringing activities of its third party sellers in the Amazon Marketplace and that any infringement can be addressed through Amazon’s infringement reporting form and procedures. But this ignores that (1) Amazon is itself selling infringing products with respect to Infringing Products that it sells as “Ships from and sold by Amazon.com” and (2) Amazon could establish processes that would better detect and deter infringement, rather than simply respond to infringement on a post-hoc, case-by-case basis, yet Amazon chooses not to do so. As of the date of this Complaint, Amazon has not instituted any sufficient solutions to Daimler’s infringement concerns, and has refused any commitment to install such solutions.

Daimler’s complaint lists six counts against Amazon and seeks statutory and compensatory damages. as well as legal fees and treble damages upon a determination of “willfulness” in Amazon’s alleged unlawful acts.

Consumer advocate and watchdog The Counterfeit Report has reported more than 32,000 counterfeit items to Amazon that the company has removed from its website, including fake Apple-branded products. Sandal maker Birkenstock and watchmaker Swatch no longer sell authentic branded goods at Amazon due to the company’s refusal to take a more active role in stopping the sale of counterfeit goods.