“It’s going to be a long, grizzly, grizzly battle.”
With that, Don Myers launches into the story he’s told many times. In 2006, the self-described geek took his gifts of a vivid imagination, artistic flare and business savvy to launch T-Shirt Bordello in his hometown. Fueled by Myers’ intense energy and subversive creativity, within a few years, the Jacksonville-based company was selling enough shirts on its website and at conventions that Myers was able to quit his job as head of IT with Firehouse Subs. In 2012, T-Shirt Bordello entered the Amazon marketplace.
It soon seemed like a brilliant business decision. By 2014, Myers, 50, says they were selling 60 to 80 shirts on Amazon.com every day. With a staff of six, he was earning annual revenue in the mid-six figures doing something he loved.
Don Myers: American Dream-catcher.
But now, he says, the very company that helped catapult him into a higher echelon of success is driving T-Shirt Bordello out of business. “[Joining Amazon] was the worst thing I ever could have done for my business,” he said. Today his company is a shadow of its former self and Myers places the blame squarely on Amazon and its founder, Jeff Bezos.
On a recent Wednesday morning, a spring storm raged outside Myers’ office within a large warehouse space in an old industrial building on East Union Street in Downtown Jacksonville. He explained why he believes the counterfeiter-friendly environment Amazon has created has brought T-Shirt Bordello crashing down. The office is littered with signs of a once-thriving business; modern computer terminals sit silently on unoccupied desks, a vacant photography area stands in one corner, its expensive studio lights turned off. Other than the storm, the only sounds were Myers’ and a reporter’s voices as he revealed that, in just a year-and-a-half, his company has withered away, forcing him to sell personal assets to pay employees, and eventually forcing him to let the last one go. Now it’s just him. In the adjacent warehouse area, T-Shirt Bordello’s inventory gathers dust, shelf after shelf after shelf of neatly folded shirts organized by size and style, ready to be packed and shipped as orders come in, which doesn’t happen too often anymore. Some days he sells a single shirt.
Myers says the trouble began in early 2016. As a designer, he expects a certain amount of intellectual property theft, particularly on the Internet, but this was different, he says. That’s when he experienced a steep drop in sales on Amazon, which by then had become his primary revenue stream. Myers soon discovered that counterfeiters were stealing his designs and selling them on his page on the site. Thus began the grueling, frustrating and, thus far, fruitless quest to stop them.
Amazon has a system in place for trademark, patent and copyright disputes between sellers. First, send the seller a cease-and-desist order; if that doesn’t work, do a “test purchase” of the infringing material to prove that it’s not legally licensed, then send a Digital Millennium Copyright Act infringement notice, commonly known as DMCAs, to Amazon, at which point the company decides whether to remove the item. Some choose to simply send DMCAs, as it’s cheaper and faster, if potentially less effective. (Myers refuses to do test purchases of counterfeits, likening it to “petting a dog that’s barking at you to see if it will bite.”) But no matter which process a seller chooses to defend their intellectual property, many are dissatisfied. Online forums about the issue, including on Amazon’s own site, are rife with words like arbitrary, difficult, time-consuming, expensive, ineffective, frustrating.
But there’s another word that dominates the talk of the problem with counterfeiters: Chinese.
Myers believes that after Amazon quietly changed to an open market policy sometime in late 2015 or early 2016 to compete with Alibaba.com, its chief competitor in the Asian market, Chinese sellers flooded the site with counterfeit goods, driving merchants like him out of business.
Here’s how it works: A buyer goes to the T-Shirt Bordello storefront on Amazon.com, clicks on a shirt and selects a size, at which point, the site typically automatically offers them the lowest-priced matching item, which is more likely to be phony than a higher-priced item. Myers sells most shirts for about $20, $13 of which he says are fixed costs. On June 2, the medium men’s “That’s No Moon” shirt, one of T-Shirt Bordello’s top sellers, was being sold for $8.78 by one seller, $12 by another and $13.35 by another, not including shipping, on Amazon.com. (The design is copyrighted.) Each of the sellers was marked “Just Launched,” meaning they hadn’t made a single sale. One of these sellers had 15,650 items on their storefront, another 31,350 and the third an unbelievable 235,325 items on their storefront. The odds of brand-new sellers maintaining so much inventory are slim.
Unless a buyer is extremely savvy, they probably wouldn’t even be aware that they’d purchased a counterfeit until it arrived, if then, as they may reasonably believe that they’d bought it from a legitimate seller. After all, the item was being sold on that company’s storefront. As the fakes are often of inferior quality, sellers like Myers find they’re not only losing sales, they’re also being unfairly reviewed for the knockoff merchandise. T-Shirt Bordello’s Amazon storefront is rife with one- and two-star reviews, many of which concede that the item they received was counterfeit. That’s why Myers has taken the additional measure of adding a watermark to his shirts on Amazon—in violation of the company’s policies—which says, in part, “PLEASE READ THIS—only buy this design if it is ‘sold by and ships by T-Shirt Bordello,’” and changed the description of his shirts—again in violation of Amazon’s policies—to say, in part, “If your order DOES NOT read ‘Ships from and sold by T-Shirt Bordello’ it is a scam and you are getting Chinese garbage.” Amazon has, as recently as last week, taken down the warning in an item’s description and removed the watermark after other sellers, likely counterfeiters, complained.
Even listings with the watermark and warning haven’t been entirely effective to discourage buyers and forgers. Myers recently corresponded with a buyer who, upon receiving a shirt on which a forger had actually printed the watermark warning, realized that he’d been duped. According to the postmark, the shirt was shipped from China.
In a lengthy emailed statement from a spokesperson, Amazon told Folio Weekly, “Amazon is working closely with rights owners to strengthen protections for their brands on Amazon. We remove suspected counterfeit items as soon as we become aware of them, and we suspend or block bad actors suspected of engaging in illegal behavior or infringing others’ intellectual property rights.”
The spokesperson also noted that the company is “building powerful tools” to protect rights owners, “employ[s] dedicated teams of software engineers, research scientists, program managers, and investigators to operate and continually refine our anti-counterfeiting program,” utilizes systems that scan activity for signs of counterfeits, and “is also investing in innovative machine learning [artificial intelligence] to improve our automated systems in order to anticipate and stay ahead of bad actors.”
“We take this fight very seriously and we look forward to partnering with even more stakeholders to eliminate counterfeits from our marketplace.”
Nevertheless, the complaints continue.
RELENTLESS DOT COM
This is not the first time Amazon has been accused of creating an environment that allows sales of stolen intellectual property to proliferate on its site. In 2013, Seattle-based Milo & Gabby sued Amazon for allowing third-party sellers to sell knockoffs of its pillowcases on the site. (Milo & Gabby lost at trial and on appeal.) Hip-hop icons Run-DMC are currently suing Amazon and Walmart for $50 million for trademark infringement. Daimler AG, the German parent company of Mercedes-Benz, is currently suing Amazon over third parties selling rip-offs of its wheels, and further alleges that Amazon itself not only distributed, but also sold, this stolen intellectual property. Last fall, Apple said that fully 90 percent of the official chargers sold on Amazon were fakes. (Amazon is not a party to Apple’s suit against a third-party seller.) Beloved international shoe company Birkenstock hasn’t sued, but last summer its American branch announced that it was pulling out of Amazon as of Jan. 1, 2017 due to counterfeiters and unauthorized sellers. Birkenstock USA CEO David Kahan warned that, while its products would likely still be sold on Amazon, buyers should beware. “It may be counterfeit. It may be stolen. It may be manufactured under questionable labor and environmental conditions,” Kahan said, according to Mashable.
These are just those companies willing to come forward. Most aren’t. Amazon is a monolith, twice as large as its rival Walmart, with a stock that just last week became one of five U.S.-listed companies trading in the $1,000 per share realm. And it’s well-known for being relentless. Clicking Relentless.com will automatically redirect you—to Amazon.com. This isn’t a hoax; Relentless.com was an early name Bezos registered for the site. In 2013’s The Everything Store: Jeff Bezos and the Age of Amazon, Bloomberg Business journalist Brad Stone writes that friends told Bezos it sounded “too sinister.”
Mark Lopreiato is a rare merchant unafraid to out one of the nation’s largest companies.
In October, Lopreiato, the inventor and founder of California-based Forearm Forklift, a popular strap for lifting and carrying heavy items that’s sold by Home Depot and other major retailers, was featured in a CNBC segment about his struggles with counterfeiters on Amazon. On June 1, he told FW over the phone that the problems first began in 2010. In 2015, the situation escalated.
Prior to the CNBC segment, he’d spent years going back and forth with Amazon’s vendor managers, filing cease-and-desists, buying counterfeits, sending DMCAs, trying to stop the onslaught. “They would steal our images, hijack our detail page … it was just out of hand,” Lopreiato said.
All the while, he was begging Amazon to intervene. “They kept saying, ‘We’ll help you. We have the best in the world building these algorithms, I’m sure they’ll help you out,’” he said.
Nevertheless, over time, his business, which once employed 52 people, gradually shrank. Today Forearm Forklift has fewer than 20 employees.
By last fall, Lopreiato’s patience had worn thin. Feeling he had nothing to lose, he told Amazon that unless they fixed the problem, he was going to the media. Amazon, he says, blew him off.
After the CNBC segment aired, the company finally did mobilize, filing suit against a counterfeiter of Forearm Forklifts and more consistently removing counterfeiters at his behest. But it hasn’t been enough, he says, not even with him having one full-time employee doing nothing but identifying potential counterfeits and filing DMCAs, himself spending 30 to 40 hours a week on the same and two others pitching in. The day he spoke to FW, Lopreiato, a family man who grew up hard-scrabble, put his Rolex—the fulfillment of a lifelong dream when he purchased it—up for sale. Lopreiato estimates that, all told, counterfeiters on Amazon have cost him six, possibly seven, figures.
“I’m on my way to being broke. I have nothing else to lose,” Lopreiato said, his voice breaking.
Policing your brand is no new concept to sellers in the online marketplace. But on Amazon, some sellers say it’s a constant, and expensive, process exacerbated by the company’s policy requiring merchants to buy the product to prove it isn’t theirs. Once it’s proved to be counterfeit, they can return it for a full refund, thanks to the “A to Z Guarantee” that Amazon proudly touts.
But there’s a catch, Lopreiato says. Too many returns, and Amazon labels you an “abusive shopper,” and suspends your account, even if you’re returning counterfeits of your own products.
“We bought hundreds of fake Forearm Forklifts, [but] we can’t return them all, ’cause they’ll think you’re an ‘abusive shopper’,” Lopreiato said. He says they have a “closetful” of fakes at the warehouse.
“GATED” FROM INNOVATION
If every design, artwork, patent, trademark and copyright is routinely ripped off in what could be likened to a virtual Canal Street, the area in New York City known for counterfeiters, some wonder whether there will be any incentive for people to create and innovate, knowing they have little to no chance of profiting from what is often the laborious, and costly, process of bringing new products to market.
For this, many merchants blame China, specifically that country’s lack of laws or enforcement of intellectual property rights, which enables thieves to profit handily on others’ patents, trademarks, marketing and copyrights with impunity.
“I guess the Chinese sellers are trying to take us over,” said Robert Luckie, owner of College Station, Texas-based Shirt Invaders, in a telephone conversation with FW last week.
Luckie said that his struggles with counterfeiters on Amazon began early in 2016, the same time as Myers’ problems surfaced. At one point on a single item’s listing, he said they found 92 counterfeiters; after going through the process to get them all removed, two days later, there were 90 more. Using a spreadsheet to track all the thieves, he ascertained that although it appeared to be 92 different sellers, it was actually just two or three operating 92 different seller profiles. All were in China.
After spending thousands of dollars on test purchases, sending scores of cease-and-desists and DMCAs, Luckie says that one day, the counterfeiters just vanished from Shirt Invaders’ Amazon page without a word from the company.
“I think we did end up with our brand gated,” Luckie explained. He says they recovered about 90 percent of what they spent on test purchases.
Brand-gating is Amazon-ese for closing a storefront to third-party sellers. Goods in the marketplace are sorted by Amazon Seller Identification Numbers, or ASINs. It’s a simple system like Uniform Product Codes, or UPCs (ASINs often correspond to UPCs), that enables the company to group listings of the same item on the same page, which makes shopping on the site a more user-friendly experience than, say, on eBay, where items are sorted by category and description and other sellers of the same items appear below the listing, making it crystal-clear that the buyer isn’t dealing with the same company. Another key difference between Amazon and eBay, which has certainly had its own struggles with counterfeiters, but Myers says is “a saint compared to Amazon,” is that the latter requires sellers to upload items individually. If a seller gets booted from Amazon for complaints, getting all its items back on the site is as simple as creating a new seller profile and uploading everything at once in a single electronic file. Myers estimates it takes “less than three minutes to upload the inventory file and create a new store.”
“We’re branching out to several markets and Amazon is the only one we’ve had problems with,” Luckie said.
The company’s seeming inability (some might call it unwillingness) thus far to stop the proliferation of counterfeiters has led some to opine that Amazon’s popularity will be its downfall.
On a website he launched on May 26, AmazonCopyrightAbuse.com, Myers explains why he believes Amazon’s open market policy is running sellers out of business. In a post called “Amazon’s Open Market is a Gold Rush for Chinese Counterfeiters,” he writes that the company’s “support says they are not responsible for nor do they have the technology or resources to prevent counterfeit items from getting into the hands of the buyers.” The post includes an excerpt from a letter he says he received from Amazon in response to numerous complaints he filed with the company trying to get it to remove counterfeiters from his page. The letter reads, in part:
I understand that you would like to restrict the Brand: T-Shirt Bordello on behalf of the brand owner as there are no re-sellers for the brand.
Please note that with regard to brand gating, as per the new policy introduced, sellers will not be able gate their brand as Amazon is a free market place [sic] and we do not restrict sellers from selling the same product with different offers in order to provide our customers with a wide catalog of options.
However, you might see other Brands Gated on Amazon, the reason being we would have received complaints from the Seller/ Buyer, hence in order to protect and ensure buyer satisfaction the Brands will be gated.
Even if a seller is successful at getting all the counterfeiters removed, it’s often only a matter of time before more show up—Myers says that “before your coffee cools,” there are more. Within 45 minutes of FW finding the “That’s No Moon” medium-sized men’s shirt being sold by three likely counterfeiters on Amazon, a fourth, also just launched, had been added to the listing, this one selling the shirt for $10.99, plus shipping. The seller’s storefront had 48,430 items. Within seconds, that “just launched” badge had been replaced with a “100 percent positive lifetime rating,” thanks to a single review.
WHAT'S AN OFFER, ANYWAY?
For a litigant to prevail in a contract dispute, such as between a buyer and seller or two merchants, one party must have made an offer. It’s a fairly straightforward concept defined by centuries of seriously complex case law. In the case of Amazon, the issue is rather murky. Excepting items it stocks and ships from its warehouses, which is not without problems, Amazon never has physical control over the items sold on its platform. It doesn’t set the price or description or ship the items, either, so how could it possibly be in the position of offeree for items it doesn’t make, describe or ship? It was this fact that in part led the court to find in favor of Amazon in Milo & Gabby’s lawsuit. But the judge wasn’t particularly pleased with the outcome.
“[The court] is troubled by its conclusion and the impact it may have on the many small retail sellers in circumstances similar to the Plaintiffs,” wrote U.S. District Court Judge Ricardo Martinez. “There is no doubt that we now live in a time where the law lags behind technology. This case illustrates that point.”
Excepting goods it actually sells, to Myers, who is not a lawyer, the idea that Amazon isn’t offering most items for sale is as ludicrous as saying Walmart isn’t offering to sell the goods in its stores. Amazon would likely take the position that it is essentially in the role of Craigslist, on which sellers and buyers are responsible for their own conduct. But the very scope of Amazon and of the problems with sales of stolen intellectual property on its site has some troubled by this conclusion, particularly as it leaves merchants without a practical means of recourse. U.S. courts have little-to-no jurisdiction or enforcement rights over businesses and individuals located in foreign nations. And successfully suing for intellectual property rights violations in Chinese courts is not only often prohibitively expensive, it’s also essentially unheard of.
In his opinion, Judge Martinez called on Congress to act.
On May 29, FW caught up with Senator Bill Nelson, the ranking member of the Senate Committee on Commerce, Science and Transportation, at a press event at UF Health Shands. Following a brief explanation of the issues affecting Myers and other American businesses, Sen. Nelson said that he was “familiar with” the problem of Chinese counterfeiters and would look into it further. A follow-up call from his Washington, D.C. office days later seems to indicate the senator is following through.
There’s another wrinkle to Amazon’s claim that it’s merely a passive platform, which the Daimler AG suit illustrates. Daimler AG alleges that Amazon itself was selling fake Mercedes-Benz wheels. On May 25, searching for “tshirt bordello” items sold by Amazon.com, FW found and took screenshots of two shirts Amazon.com was selling on Myers’ storefront. Myers says he did not design those shirts, nor did he authorize Amazon to use his brand name to sell them. The shirts have since disappeared from the storefront.
Irrespective of some complaints, thus far Amazon has enjoyed a very positive reputation.
“When people go to Amazon, they expect that they’re going to be treated correctly,” said Myers.
Indeed, even as some sellers feel violated, Amazon rakes it in. With a market value of $478 billion and annual revenue generation of more than $75 billion, it could seem that the company has no incentive to stop the flood of counterfeits. Last September, Consumerist reported that sales from Chinese sellers had more than doubled on Amazon the previous year, possibly due to it adopting an open-market policy and registering with the Federal Maritime Commission to provide freight directly from China to Amazon’s fulfillment centers, such as the four centers to open in Jacksonville in the next few years, for which the city has ponied up millions of dollars in corporate incentives.
But lawsuits, complaints, media coverage and shuttering American businesses can generate a rising tide of public opinion against a company which, in turn, can hurt its bottom line.
This year, Forbes reported that Rolex ousted Amazon from its top spot as America’s most reputable company, a position it had held for three years. (It placed second.) Certainly a few stories about counterfeiters aren’t entirely to blame; indeed, some of the more shocking reports about Amazon concern the working environment, especially inside fulfillment centers. But Amazon could have a looming public relations problem. Like all things that are earned, consumer faith can be lost.
“I kinda see this as the downfall of Amazon,” said Luckie, referring to its business practices.
Some say that if Amazon were as relentless fighting the counterfeiters as it has been pursuing expansion, people like Don Myers would have no beef with the site. There are some signs that Amazon is taking this seriously. Last November, for the first time, the company filed suit against sellers for intellectual property theft, including one allegedly counterfeiting Forearm Forklifts. After Lopreiato went to the press, he says he found a far more helpful Amazon at his disposal. And while the company ignored requests for comment in some early stories about this issue, it responded to an email inquiry from FW just 35 minutes later.
Subsequently, Myers also heard from the company, which he says had ignored his many pleas—and well over a hundred DMCAs—to talk about his complaints. But, he says, his conversation with two representatives from Amazon was laughably fruitless. He said one representative accused him of not effectively policing counterfeiters.
TOO LITTLE, TOO LATE
In the last 16 months, Myers has reasoned, cajoled, calculated, begged, raged and wept trying to find some resolution to this issue. With T-Shirt Bordello sales at an all-time low, now he says that no matter what Amazon does, whether it gates his brand or gets rid of all the counterfeiters stealing his designs, he’s done playing nice. He’s retained the counsel of Rogers Towers, one of Florida’s oldest and most respected law firms, with the intention of filing a class action suit against Amazon.
“We are exploring Amazon’s unauthorized use of trademark or copyright,” confirmed Myers’ patent attorney Joseph P. Kincart.
On AmazonCopyrightAbuse.com, Myers spells out the issues he’s had with the company and his contempt for it in no uncertain terms. The postscript on the homepage recently read, “If you are an attorney for Amazon reading this, tell Jeff [Bezos] I said he’s a douchebag.”
Myers has also worked with a developer to design software that automatically sends DMCAs to Amazon. A recent trial run sent multiple DMCAs on a single item in a matter of seconds. Myers says Amazon informed him that the item was cleared of counterfeiters at 6:32 a.m. that day; he sent FW a screenshot showing that, by 8:30 a.m., there were already two counterfeits on the item. He hopes the software will help him and other sellers police their brands without the time-consuming process of identifying counterfeits, creating and sending DMCAs piecemeal.
Some wonder why, if Amazon is so bad, sellers don’t simply leave. Myers explained that leaving the marketplace doesn’t make counterfeiters go away nor does it close your storefront. It just makes it easier for forgers to sell their wares without being hindered, even temporarily, by complaints. (Though it pulled out on Jan. 1, on June 4, a search on Amazon for “Birkenstocks” turned up nearly 1,800 items—any number of which could be fake.) Myers said he tried closing his storefront but it did not have any impact on the counterfeiters. Lopreiato said the same, adding that it also cut him off from communicating with them to send cease-and-desists.
Though some consumers don’t care if a purchase is counterfeited, others do. Not only are counterfeits often of inferior quality, there are safety concerns associated with buying knock-off food, health and beauty products, children’s toys, etc. For some vigilant consumers, that “fulfilled by Amazon” badge lures them into believing that an item couldn’t possibly be counterfeit. Not so, say Myers and others. Sellers have long complained that Amazon stocks and ships fakes from its own warehouses, where they are commingled with legitimate items.
Most merchants would give up, or quietly fight and hope something changes before they lose everything. Myers isn’t most merchants. It helps that he coincidentally started a business selling reclaimed wood right around the time this all came to a head—he wryly notes that reclaimed wood luckily can’t be counterfeited. But he’s not giving up on T-Shirt Bordello or on recouping the hundreds of thousands of dollars of his estimated losses.
“If I have to, I will get arrested for chaining myself to the front gates of Amazon,” he said. “… I am young, I am bitter and I am smart.”