Amazon´s troubles with forgeries have been discussed a lot. Also, this blog has already given some space to this topic. In the meantime, the situation has become even worse. Amazon was targeted by several suits. Manufacturers complain that fakes of their products are sold on Amazon. Clients complain because they bought fake brand sunglasses and other products.
Litigations target the process that is at the very core of Amazon activities and which started from its book business. The user writes a name of a book and the e-shop shows all relevant offers from different book-sellers. The latest edition, older editions, different publishers, new books, second hands, paperbacks, hard covered, etc. You can just select. Amazing. A dream of any book addict. Amazon does not investigate whether all publishers have bought all rights. It is assumed that it is up to authors and their representatives to deal with such issues. After all, Amazon is not able to see all contracts. Some second-hand books have been released by publishers who don’t exist anymore. Moreover, Amazon does not have physical access to all books offered. How could they check their genuineness?
The process of selling consumer goods is de facto same at Amazon. You ask for a Samsonite traveling case and you are offered a list of new and second hand Samsonite cases from different sellers. It is possible that some of them are fakes. And now we face the core of the argument. Who should pay for a genuineness check? The manufacturer? The marketplace provider? Customer? Taxpayers?
Accusers believe that the marketplace must create a fake-free environment. However, it is not clear what exactly Amazon is expected to do. Sell only goods directly from manufacturers? If this were the case, it would make no sense to run an independent marketplace. Contact manufacturers because of each item to check genuineness? Integrate its information systems with all track-and-trace systems of all producers?
Each of these alternatives imposes additional costs and limits the assortment. If Amazons lost these cases, it would have a damaging impact on entire e-commerce industry. Similar principles could be applied on independent marketplaces and second-hands worldwide.
The logic of current wave of suites follows up lawsuits between Louis Vuitton and eBay in 2008-10. Luxury cases provider required that the marketplace implements genuineness check processes. This view was accepted by European courts. eBay had to pay several times up to the total sum of almost 100 million USD and later implemented a special regime for luxury branded goods. It resulted in a decrease in revenues, but it did not matter to Louis Vuitton. This premium luxury brand prefers to be sold only in its shops and in the underworld, nothing between. However, putting most of the general items under the same regime would have a dramatic impact on the market.
In some measures, it will happen regardless results of litigation. Amazon has already started a product labeling project. Each item will be tracked, including a possible check of origin. The business model has not been decided yet, but very likely Amazon will charge sellers for product labels. The vendors will pass new costs to the customers. Application of this regime at unique items is quite bearable. Its application at almost everything will result in higher prices and smaller markets.
It is not necessary. Anti-counterfeit technologies are available for reasonable price. Their resistance against all kinds of attacks is extremely high. Manufacturers can save a few dollars through not implementing such protection. However, in long-term effect, this “savings” will result in a loss even if they win all litigations because of negative impact on distribution channels.
The final most important question is: Why should be the costs of anti-counterfeit protection of commercial brands imposed on taxpayers?
Regarding brand protection technologies, there are several alternatives. However, holograms are the strongest technology, provided the following.
- Imitation of a hologram is impossible or close to impossible. It can be reached through e-beam lithography origination. There are only a few companies that are able to produce such holograms. Some of them have their own software, which includes mathematical algorithms that cannot be derived back from a ready hologram. Special visual effects are thus enabled.
- Hologram imitating is impossible. It means that it includes visual effects that cannot be created with other technology.
- Identification of genuine hologram is easy, without special skills. It can be ensured through very expressive effect and clear communication to ensure that people know the effects.
With meeting these conditions, there is no need to implement more measures such as tracking system.