New House Bill Introduced to Combat Online Sales of Counterfeit Goods

On March 2, 2020, Representative Nadler, on behalf of himself, Reps. Collins, Roby and Johnson, introduced a new bill directed to holding U.S.-based e-commerce websites (“US Platforms”) accountable for policing the use of their sites for potential misuse by third-party counterfeiters, and ensuring that these counterfeiters have fewer opportunities to distribute their counterfeit products in the U.S. market.

The SHOP SAFE Act of 2020 (H.R. 6058) – which stands for Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce – seeks to create “incentives” for US Platforms to verify the legitimacy of participating third-party sellers and the authenticity of their products before allowing them to use these US Platforms as distribution channels for their goods. See Press Release, “Collins, Nadler, Roby, Johnson Introduce SHOP SAFE Act to Protect Consumers from Dangerous Online Counterfeits,” Mar. 2, 2020 (“The bill incentivizes platforms to engage in a set of best practices to curb the presence of counterfeits on their sites.”) (emphasis added).

The full text of the bill was posted by the House Judiciary Committee, although this copy does not reflect the assigned bill number. See also Section-by-Section Summary (also posted by the House Judiciary Committee); Public Bills and Resolutions, 166 Cong. Rec. 41, H1437-H1438 (daily ed. March 2, 2020) (brief statement of Rep. Nadler introducing the bill).

In particular, the Bill proposes to amend 15 U.S.C. § 1114 by imposing contributory liability for trademark infringement on a US Platform that allows a third-party seller to traffic in counterfeit goods that “implicate health and safety” through the platform, unless the following conditions are met:

  1. The “third-party seller is available for service of process” in the U.S.;
  2. Before any (allegedly) infringing act occurred, the US Platform took the following steps to prevent its site from being used that way:
    1. Verified “through governmental identification and other reliable documentation”, the identity, principal place of business and contact information of the third-party seller;
    2. Required a verification and attestation of the “authenticity of goods on or in connection with which a registered mark is used”;
    3. Required the third-party seller to sign a contract that included the following mandatory terms:
      1. The “third-party seller agrees not to use a counterfeit mark in connection with sale, offering for sale, distribution, or advertising of goods on the platform”; and
      2. The third-party seller consents to jurisdiction of US Courts with respect to claims relating to the third-party seller’s participation on the US Platform;
    4. Displayed “conspicuously on the platform” the verified contact information for the third party seller (i.e., “verified principal place of business, contact information and identity”) as well as the country of origin and manufacture of the goods and the location from which the goods would be shipped;
    5. Required the third-party seller to only use images of the products that the seller “owns or has permission to use” and that “accurately depict the actual goods offered for sale on the platform”;
    6. Implemented proactive technical measures for pre-screening of goods against the marks registered through the USPTO (at no cost to the registrant of the registered trademarks) before the goods are displayed to the public – to ensure that the third-party seller is not using a counterfeit mark;
    7. Implemented a program to expeditiously disable or remove a third-party seller’s product listing that reasonably could be determined to have used a counterfeit mark – again at no cost to the registrant of the registered trademarks;
    8. Terminated use of the platform by any third-party seller that has engaged in more than three instances of using counterfeit marks in connection with goods offered through the US Platform;
    9. Implemented a program to ensure that terminated sellers do not rejoin or remain on the platform under a different seller identity or alias – again, at no cost to the registrant; and
    10. Provided the information verified under Section (a), above, for any third-party seller who used a counterfeit mark on goods offered through the platform, to relevant law enforcement and (upon request) the registrant.

One could read these conditions as requiring a US Platform not only to have effective screening mechanisms in place to prevent counterfeiters from using its site in the first place, but also to have taken the full laundry list of steps to avoid its own liability.  In other words, it appears that the US Platform must also have identified this potential counterfeiter before the alleged counterfeiting activity occurred, kicked it off the US Platform before the accusation was made, turned the contact information of the counterfeiter over to law enforcement, and prevented the counterfeiter from participating in the platform again, even under a different name. It is not unreasonable to believe that at least one of these steps will be missed, or that the programs implemented by the US Platforms will not be sufficiently robust enough to effectively identify and prevent counterfeiters from using their platforms for illegal activities. Unless they simply stop doing business with third-party sellers – which could completely change the business model of sellers like Amazon, eBay or Walmart.

This Bill essentially requires US Platforms to refuse to allow third-party sellers who fail to meet these criteria to sell their products on their platforms – presumably on the theory that if US Platforms refuse to allow these sellers to use their sites to further their counterfeiting schemes, then the potential avenues for distribution of such counterfeit goods would evaporate. At least in theory.

While the Bill does not eliminate the perennial “whack-a-mole problem” by preventing known counterfeiters who are blocked from a site from simply creating a new identity and resuming their counterfeiting activities under a different name – it does shift the burden for combatting this problem onto the US Platform who would be hosting these sellers and (theoretically) receiving a portion of the sales, or at least a listing fee, in exchange. The recordkeeping and pre-screening requirements this might impose on entities like Amazon or eBay could be significant – particularly since a large portion of their current business model incorporates offering products for sale by third-party sellers.

Damages Available under Current Statute for “Counterfeiting”

Recall that courts are required to award “three times the profits or damages, whichever is higher, along with a reasonable attorney’s fee”, upon a finding of counterfeiting, although a plaintiff can elect to recover statutory damages between $1,000 and $200,000 per counterfeit mark, or up to $2 million in the case of willful counterfeiting. 15 U.S.C. § 1117(b), (c). Sharing in the statutory damages as a contributory infringer could be extremely expensive for the ecommerce platforms, and this possibility could certainly “incentivize” them to engage in more robust policing of potential counterfeiting using their services – but it would undoubtedly also dramatically increase the cost of doing business under their current business models.

Potential Commercial Impact of this Bill

The screening program contemplated by the Bill may also cause US Platforms to simply close down the third-party seller aspect of their business – particularly if they determine that implementing an effective program to evaluate their current pool of third-party sellers is simply too expensive to undertake. As a result, perhaps this Bill would effectively put an end to third-party sellers offering their products for sale through large ecommerce sites because of these ramp-up costs alone.

It is also possible that this new construct would negatively impact smaller businesses based in the U.S. who do not engage in “counterfeiting” as we typically think of it – but instead merely adopt a trademark of their own that is confusingly similar to an already registered mark – and thus would cause the small business to be excluded from these US Platforms. Perhaps rather than engaging in the kind of fraud we think of when someone says “counterfeit,” these smaller business simply did not conduct a pre-use trademark clearance search before adopting a mark and using it in connection with manufacturing sufficient quantities of a product to have enough to sell once orders started coming in. Assuming the US Platforms develop a screening model that runs that trademark clearance search against the USPTO’s database before allowing a third-party seller to offer their goods through their platforms, one could foresee that these infringers would be blocked from the platform. Does this now impose an obligation on third-party sellers to conduct trademark clearance searches before launching their products or trying to get on these US Platforms?

Finally, what if the third-party seller has indeed created a low-quality knockoff of a well-known branded product – and uses its own trademark on the product. Arguably, this seller would not be excluded from the US Platform under the program required by the Bill because they are not using a counterfeit mark. If the user of that particular US Platform simply searches for the generic product name (such as “smoke detector” or “cellphone charger cable”) and sees products that are cheaper than the brand-name product – they are not protected against purchasing low quality goods that look the same and appear to offer the same basic functions. As a result, perhaps this Bill would not actually protect consumers from purchasing low-quality knockoffs through these US Platforms.

Department of Homeland Security’s Report

Notably, the Department of Homeland Security recently released a report detailing the breadth and scope of the availability of counterfeits proliferation. DHS Report, “Combating Trafficking in Counterfeit and Pirated Goods: Report to the President of the United States,” Jan. 24, 2020. Two of DHS’s primary recommendations were to “Ensure Entities with Financial Interests in Imports Bear Responsibility” (at 5) and require entities with financial interests to engage in “Significantly Enhanced Vetting of Third-Party Sellers” (at 6). This Bill appears to directly respond to these recommendations.

Bill Status

Immediately upon introduction, the Bill was referred to the House Committee on the Judiciary – but it appears that a related hearing was held before the House Committee on Energy & Commerce – “Buyer Beware: Fake and Unsafe Products on Online Marketplaces,” on Wednesday, March 4, 2020 at 10:00am. While this hearing was not directly tied to the Bill, it covered the same subject. See Pre-hearing memorandum submitted by the Chair of the Subcommittee on Consumer Protection and Commerce, Rep. Pallone, on February 28, 2020. Witnesses who testified at this hearing included representatives from Amazon, eBay, Apple, Consumer Reports and Public Citizen. Id.

2014 ABA IPL Section White Paper Directed to Online Piracy and Counterfeiting

In 2014, the ABA’s Section of IP Law proposed that U.S.-based intermediaries (such as payment processors, advertising networks, ISPs or search engines, among others) be incentivized to help stop the proliferation of counterfeit products directed to U.S. consumers. See A Section White Paper: A Call for Action for Online Piracy and Counterfeiting Legislation, 2014. A principal target of the analysis at the time were “Predatory Foreign Websites” (id. at 8) – on the theory that these sites would be stand-alone online locations for U.S. consumers to purchase counterfeit products. In particular, the Task Force working on this White Paper explained that the term “Predatory Foreign Website” was used to refer to a

limited category of foreign-originated websites engaged in large-scale piracy of U.S. copyrighted content (in this case, any work created in the U.S., covered by the Copyright Act, capable of dissemination through electronic means) or counterfeiting of U.S. trademarks (in this case, intentional use of a spurious trademark that is identical to or substantially indistinguishable from an authentic trademark, in connection with products that are not [offered for sale] by the trademark owner or its agent). In particular, while the conduct itself may be identical to that prohibited under existing law, these specific actions are not readily subject to adjudication in the U.S. because the website is either beyond the jurisdiction of U.S. enforcement authorities entirely or, even if technically subject to such jurisdiction, is beyond the reach of such authorities to enforce a judgment against them. This limited scope of illegal conduct is the focus of this White Paper.

Id. (emphasis added).   For more on this topic, see earlier posts on this blog.

For more information about the New Bill:

USPTO Published New Exam Guide on Mandatory Electronic Filing

On February 7, 2020, the USPTO announced its publication of a new Examination Guide explaining the requirements of mandatory electronic filing and clarifying the specimen requirements that are impacted by the new rules. USPTO Examination Guide 1-20, “Mandatory Electronic Filing and Specimen Requirements,” Feb. 2020 (the “Guide”).

Shortly after releasing this Guide, the Trademark Public Advisory Committee held its quarterly public meeting. (See also the slides presented during the meeting – particularly beginning at Slide 19.) One of the topics for discussion was the impact of the Mandatory Electronic Filing Rule and its looming effective date of February 15, 2020. (See USPTO, “Changes to the Trademark Rules of Practice to Mandate Electronic Filing,” 84 Fed. Reg. 69330-69331 (Dec. 18, 2019)).

Applicant/Owner Email Address

This guide makes a number of significant changes to the way U.S. trademark lawyers typically practice. In particular, in order to obtain a filing date for a new application, all applications must now include an individual email address for each applicant, which cannot be:

  • Outside counsel’s email address;
  • A foreign law firm’s email address;
  • An email address that is never monitored (a “black hole email address”); or
  • An email address to which the applicant, registrant or party does not have access.

Guide at 6. The Guide also provides some specific examples of types of email addresses that would be acceptable, including an email address for the owner specifically to receive communications from the USPTO, provided that this email address is both accessible by the owner and routinely monitored. Id.

Owner Email Address Required to Complete Electronic Forms

Similarly, if a trademark owner needs to submit a post-registration filing, such owner must disclose an individual email address or the filing cannot be completed using the USPTO’s forms. Id. The USPTO confirmed in its response to public comments during the TPAC meeting that even though an individual owner’s email address is required in order to complete any filing after the February 15, 2020 implementation date, the USPTO will continue to only correspond with the attorney of record, if an applicant, registrant or party is represented by counsel. See also Guide at 7. At least, until the registration issues – at which point it will only correspond with the registrant unless a new power of attorney is filed for post-registration matters. (More on this point, below.)

Owner Email Address Will Be Available to the Public, But Not on TSDR Status Page

The Guide explains that while the trademark owner’s email address will not be shown in the TSDR status page, it will continue to be available to any member of the public who views the individual documents filed in connection with a particular mark. Id. at (In other words, if the owner’s email address is submitted in connection with filing a Statement of Use, such email address would not be viewable on the overall status page available at TSDR for that application, but any member of the public can find it by opening the actual Statement of Use, as filed.) Id.

Petitioning to Redact Owner Email Address – Extraordinary Situations

Trademark owners, or their attorneys, can petition to have this email address redacted from documents available in TSDR by filing a petition “in an extraordinary situation.” Id. (citing Trademark Manual of Examining Procedure (TMEP) § 1708). When asked during the TPAC meeting what would constitute an “extraordinary situation,” Acting Commissioner Meryl Hershkowitz responded that she did not have a precise answer, because this process was new, but imagined it might include an instance where an individual applicant did not want her email address available to the public because she wanted to avoid contact from someone who was harassing her.

USPTO To Only Contact Correspondent of Record – Until Registration Issues

Finally, both the Guide and comments made during the TPAC meeting also make it clear that the USPTO plans to contact only the trademark owner about matters relating to their files once registration has issued. Id. at 7 (providing that USPTO will contact trademark owner directly when it files a revocation of a prior power of attorney, the designated attorney is suspended or excluded from practice in trademark matters before the USPTO, or “recognition as the designated representative ends pursuant to Rule 2.17(g).”). Id. Rule § 2.17(g) provides that recognition of representation of an applicant by an attorney ends automatically “when the mark registers, when ownership changes, or when the application is abandoned.” 37 C.F.R. § 2.17(g) (available electronically by browsing under Title 37 at

Similarly, Chief Judge Rogers confirmed in his remarks during the TPAC meeting today that the USPTO will only communicate with trademark owners (and not their attorneys) regarding cancellation petitions filed against their registrations – unless a post-registration power of attorney has been filed. See also Guide at 7 (“Except during the prosecution of a cancellation petition, the USPTO will not correspond directly with a represented party . . . .”) (emphasis added). As a result, it would not be shocking to see attorneys routinely provide their clients with new post-registration powers of attorney for execution, to allow the attorney to continue to receive communications from the Office in connection with completed matters. After all, if a company hires an attorney to handle its trademark portfolio, why would it want to suddenly deal with direct communications from the Office regarding the administrative details required to maintain that portfolio? (I.e., isn’t that what the company hired the attorney for?)

Potential Risks to Making Owner Email Addresses Publicly Accessible

In addition to the privacy/security risks to individual trademark owners resulting from publishing individual owner email addresses on a publicly accessible database (such as the harassment concern raised above), this accessibility also raises the concern that bad actors will have yet another way of impersonating the USPTO and transmitting fraudulent “invoices” to unsuspecting trademark owners, attempting to extort exhorbitant fees seemingly to “maintain” a registration. These invoices routinely bear the wrong mailing address for the USPTO and the wrong applicable deadlines for maintenance obligations. However, depending on which company employee(s) are charged with monitoring this email box, it is not unforseeable that such employee could simply forward that invoice to the accounting department for payment.

In July 2017, the USPTO held a lengthy public roundtable discussion attempting to educate the public about avoiding being duped by these nefarious solicitations. Webinar, “Fraudulent and Misleading Solicitations to Trademark Owners” (July 26, 2017) (video of presentation is still available); see also prior post “Don’t Assume Post-Registration Invoices for Trademark Fees are Legitimate,” Privacy and IP Law Blog (July 27, 2017). During the TPAC meeting today, the USPTO confirmed that it continues to work with the Department of Justice to prosecute these bad actors.

However, notwithstanding such education and enforcement programs, it goes without saying that even the most sophisticated client – upon receiving what appears to be a valid invoice relating to registered trademarks – could be duped into assuming this were a legitimate communication and acting on it as a matter of routine. Providing a direct email address of the trademark owner to the public just increases the risk that the invoice would be received and processed before the trademark attorneys (whether in house or outside counsel) are ever advised.

Specimen Requirements

The Guide also provides some additional clarification about what kinds of specimens will be accepted once the mandatory electronic filing system goes into effect on February 15, 2020. To some degree, the Guide simply sets forth the revisions made to Rule 2.56 (37 C.F.R. § 2.56) as described in more detail on July 31, 2019. See USPTO, “Changes to Trademark Rules of Practice to Mandate Electronic Filing,” 84 Fed. Reg. 37081-37099 at 37090 (July 31, 2019). However, it also provides some important clarifications that are important to keep in mind while preparing to submit specimens online:

  • Labels and tags supporting an application for registration of a mark used on specific goods must not only show the applicable mark as affixed to the goods but also must show “informational matter that typically appears on a label in use in commerce for those types of goods such as net weight, volume, UPC bar codes, lists of contents or ingredients or other information that is not part of the mark but provides information about the goods.” Guide at 9, 10; see also Slides from USPTO Webinar (Dec. 10, 2019) at 56-60.
  • Any website specimen submitted must include print date and URL where the website appeared. Guide at 9, 10; see also Slides (Dec. 10, 2019) at 65-66.
  • In addition to printer’s proofs being rejected, digital images that show “an artist’s rendering, . . . a computer illustration, . . . or similar mock up of how the mark may be displayed” are similarly unacceptable. In essence, these are merely “depictions” of the mark and fail to show actual use in commerce. Guide at 10.

Additional Resources Regarding Specimens: 

USPTO Announces Appointment of New Commissioner of Trademarks

The USPTO has just announced that the U.S. Secretary of Commerce Wilbur Ross appointed a new Commissioner of Trademarks, David Gooder, who is scheduled to start on March 2, 2020. The prior Commissioner, Mary Boney Denison, retired at the end of 2019, before a successor had been named. (See TPAC Annual Report, 2019 at 3.) As a result, Deputy Commissioner, Meryl Hershkowitz, has been serving in the position of Acting Commissioner since January 1, 2020.

According to the USPTO’s February 5, 2020 press release, Mr. Gooder previously served as Chief Trademark Counsel for Brown-Forman Corporation and previously as Managing Director and Chief Trademark Counsel at Jack Daniel’s Properties. Before that, he practiced “trademark, copyright and entertainment law at Graham & James in Los Angeles and Luce Forward in San Diego.” (See Press Release.)

On Friday, February 7, the USPTO will hold its quarterly Trademark Public Advisory Committee meeting – which currently shows Deputy Commissioner Meryl Hershowitz as providing the operations update for the Trademark Office. We assume that there will be some mention of Mr. Gooder’s appointment and an identification of some of the initiatives that he would be addressing when he assumes his role.

We also note that the Trademark Office recently postponed the implementation of the Mandatory Electronic Filing Rule until February 15, 2020 and previously announced that it would be providing guidance to the Trademark bar about how this rule will affect specific practices, such as providing direct email addresses and phone numbers for trademark owners. (See December 10, 2019 Webinar on the impact of the mandatory electronic filing rule change).

For reference, the USPTO posts notices of changes to its trademark practice rules on its Recent Postings page, but the pertinent ones relating to the Mandatory Electronic Filing Rule and the Mandatory U.S. Counsel Rule are linked below.



  • Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants 31498-31511 [2019-14087] [Electronic version][PDF] (2Jul2019)
  • Notice of Proposed Rulemaking, Requirement of U.S. Licensed Attorney for Foreign Trademark Applicants and Registrants, 4393–4403 [2019–02154] [TEXT] [PDF] (15Feb2019)

USPTO Delays Effective Date for Mandatory eFiling of All Trademark Filings

Today the US Patent and Trademark Office (USPTO) announced that it was delaying the effective date of the new rule requiring the electronic filing of all trademark documents and the provision of accurate email addresses for purposes of correspondence with the USPTO relating to all applications and registrations. The new effective date will be December 21, 2019.

The USPTO explained that the delay was intended to provide the USPTO with more time to prepare internally for implementation and to allow the public more time to “fully comprehend the nature of, and prepare to comply with, the new requirements before they are effective.” Supplementary Information, Sept. 24, 2019.

For more information about the requirements of the Rule, please note the following:

USPTO Expands Random Audit Program

On July 29, 2019, the USPTO hosted a panel discussion outlining the details of its newly-expanded random audit program, as part of its ongoing efforts to declutter the U.S. federal trademark Register.

Originally launched as a pilot program in 2012, the Random Audit Program was made permanent in November 2017, requiring additional proof of use for goods and services covered by over 4,600 registrations. The USPTO has now announced that it plans to expand the program to audit approximately 5,000 registrations each year and has reemphasized that the U.S. trademark registration system protects only those trademarks and service marks actually in use in U.S. commerce – and can not be used as a reservation of rights system.

What Kinds of Registrations are Subject to Audit? Continue reading