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Apple sues over fake products sold by Amazon and marketplace sellers

October 21, 2016 03:01 PM
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Apple Inc. is suing a supplier of power adapters and charging cables, alleging that it counterfeited the Apple brand and sold the products to Amazon.com Inc. and Groupon Inc. Apple, No. 2 in the Internet Retailer 2016 Top 500 Guide, is not suing Amazon (No. 1) or Groupon (No. 26).

Apple this week filed documents in federal court seeking an injunction to block Mobile Star LLC from continuing to sell the products. A hearing is set for Dec. 7 in U.S. District Court in San Francisco. Apple also seeks damages of up to $150,000 for each registered copyright infringement and up to $2 million per counterfeit mark per type of product sold by Mobile Star, and a trial by jury, according to the lawsuit.

“Counterfeit Apple products pose an immediate risk to public safety. Consumers who have been duped into buying them have experienced and reported serious problems such as overheating and fire,” Apple states in the suit. “Apple’s own analysis and tests of Mobile Star’s counterfeits bought from Amazon.com LLC (“Amazon.com”) and Groupon, Inc./Groupon Goods, Inc. (“Groupon”) confirm they can overheat, catch fire, and subject users to potentially lethal electric shock during normal use.”

Los Angeles-based attorneys for Mobile Star, which is registered as a company in New York, could not be reached for comment.

Apple says it purchased a number of Apple power adapters and charging and syncing cables sold directly by Amazon and determined the products were fakes. Amazon told Apple that it sourced the products from Mobile Star and it turned over additional Apple inventory it had bought from the supplier. Apple says the vast majority of that inventory also was counterfeit.

Fakes also show up on Amazon’s online marketplace. “Over the last nine months, Apple, as part of its ongoing brand protection efforts, has purchased well over 100 iPhone devices, Apple power products, and Lightning cables sold as genuine by sellers on Amazon.com and delivered through Amazon’s ‘Fulfillment by Amazon’ program. Apple’s internal examination and testing for these products revealed almost 90% of these products are counterfeit,” Apple says in the lawsuit.

Regarding Apple's lawsuit against Mobile Star, an Amazon spokeswoman says, “Amazon has zero tolerance for the sale of counterfeits on our site.  We work closely with manufacturers and brands, and pursue wrongdoers aggressively.”

More broadly, Amazon, like other online merchants and marketplace operators, is trying to minimize and eliminate fake goods from its site. Effective Aug. 22, new Amazon marketplace sellers who list products from select brands must pay up to a $1,500 fee. They also must provide three purchase invoices from the manufacturer or distributor and a letter from the manufacturer authorizing the retailer to sell its products.

Amazon has not released a statement or a list of brands this new rule pertains to, however, marketplace sellers on Amazon’s Community Seller Forum have said some of the brands are Nike Inc., Lego, FunKo, Hasbro, Hewlett Packard and Samsung. 

“We want customers to be able to shop with confidence on Amazon,” an Amazon spokesman said in August. “We consider several factors when determining qualifications and criteria to sell certain products. For certain products and categories, Amazon requires additional performance checks, other qualification requirements and fees.”

Alibaba Group Holding Ltd., China’s largest e-commerce company and operator of online marketplaces Tmall and Taobao, also battles counterfeit products. In August, Alibaba said it has stepped up its efforts to fight counterfeiting, closing about 200,000 Taobao stores suspected of selling counterfeit goods last year. Alibaba also said in its most recent quarterly report that consumer complaints about counterfeit products dropped 51.6%.

Rival JD.com, No. 1 in the Internet Retailer 2016 China 500, said in August that it discontinued 22,000 merchants in the first half of this year for selling counterfeits.

 

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