Williams-Sonoma's Lump of Coal for Amazon...
With Amazon’s success, the likelihood that the company will get sued by upset IP owners only increases. In the latest challenge to Amazon’s business practices when it comes to respecting the IP rights of others, Williams-Sonoma filed a Complaint on December 14, 2018 in the Northern District of California, alleging causes of action for design patent infringement and Lanham Act violations, along with a host of state law unfair competition-based claims. In particular, Williams-Sonoma took aim at two key Amazon activities: 1) maintaining and promoting an unauthorized Williams-Sonoma “store” to encourage purchases of Williams-Sonoma products from third-party Amazon sellers (or competing products from Amazon itself) and 2) design patent and trademark infringement by Amazon’s “Rivet” brand of Williams-Sonoma’s popular “Orb” and “Slope” chairs.
While the initial conference in the case is set for March 2019, it is not to early to consider the merits of Williams-Sonoma’s claims. Especially since they go to the heart of Amazon’s commercial desire to act as the marketplace par excellence for the sale of products made by others, as well as Amazon’s increasing efforts to develop and sell their own private-label products. The competitive threat to wholesaler/retailers like Williams-Sonoma by Amazon’s approach is real; we can therefore expect more companies like Williams-Sonoma to take action with respect to enforcing their IP rights against Amazon’s encroachment.
Here, it is interesting to consider that the behavior Williams-Sonoma is complaining about is carried out quite publicly by Amazon. The latter does take out Google Ads hoping to redirect potential Williams-Sonoma customers to Amazon. And it does allow third-party sellers to resell Williams-Sonoma products at a markup, while also making it easy for Amazon shoppers to search for those products from Amazon’s Williams-Sonoma “store”. At the same time, Williams-Sonoma’s claim that Amazon’s “services under the counterfeit (ed. Williams-Sonoma) mark” (Cplt. at 10) have damaged it may be difficult to prove. On its face, the risk that “consumers may come to associate WSI’s WILLIAMS-SONOMA Mark with overpriced, low-quality or potentially unsafe goods or services“ (Id.) because of Amazon’s actions may be overblown, even if some unsophisticated customers may hold Williams-Sonoma to account for their displeasure with the prices for the resold goods on Amazon. That said, this case —if it actually proceeds to decision on the merits — could provide important insight into how far Amazon can go to market around a rival’s marks, or how clear it should be when goods bearing a rival’s mark are being sold through third-party sellers exclusively.
As for the design patent and trademark infringement claims around the popular Williams-Sonoma chairs knocked off by Amazon, that aspect of the case should proceed in a conventional manner. Tellingly, a search for the accused “Orb” chair on Amazon has already come up empty, suggesting that Williams-Sonoma’s allegations have at least led to some corrective action by Amazon. While it remains to be seen whether Williams-Sonoma ultimately succeeds in this case in full, even incremental success could be a harbinger for more IP owners looking to police Amazon more closely in 2019.