Amazon Seller’s Guide – TRO and Suspension
You wake up in the morning, get a warm cup of coffee ready, position yourself in front of your laptop, and get ready to review your sales data for the previous day, week, month, or year, only to find that your entire store has been suspended by Amazon.
You start to wonder how something like this could happen. You have received no warnings or complaints, and, up until this morning, everything seemed to have been working fine. Well, lucky for you, we have the answers.
What is a Temporary Restraining Order?
A temporary restraining order is an exceptional remedy, wherein the complainant must demonstrate to a judge that they will suffer irreparable injury unless the order is issued. A temporary restraining order is, as the name would suggest, temporary relief, so the restraint in Federal Court should only last a period of 14 days unless extended or the court grants a preliminary injunction.
Within the context of Amazon, Etsy, Walmart, eBay, and Shopify sellers the irreparable harm that is usually alleged in the complaint is that there is a group of counterfeiters, based overseas (alleged to be in China), who open and close stores when reported through the Digital Millennium Copyright Act (DMCA) or trademark infringement process. It is further alleged that should the stores not be restrained from continuing to trade, the brand will suffer from ongoing losses arising from a loss of revenue.
The foundation for TROs against online sellers has always been intellectual property (trademark, copyright, patent) infringement, and, its legacy can be traced back to the early decisions made in the Northern District of Ilinois, which established the legal basis that allows for US courts to enforce temporary restraints against US companies and foreign companies doing business in the United States, through online stores.
Why Was I Not Notified?
The law allows for motions to be brought ex parte in exceptional circumstances. Typically a defendant in a court case needs to be notified of proceedings initiated against them, due to the guarantees afforded in the Fifth and Fourth Amendments, so, by temporarily excluding a party to the proceedings from participating in proceedings that directly affect them, it could be a violation of their right to due process.
The practice in the Northern District is atypical, and, companies are required to provide security bonds, as a mechanism to offset any damages an innocent defendant may incur arising from the litigation and lack of proper notice.
I Do Not Reside In The US, Why Am I Affected?
In Illinois, foreigners can be subject to the personal jurisdiction of the Federal Court if the requirements of the state’s long-arm statutes. This means that the court can adjudicate a matter if the party has sufficient “minimum contacts” with Illinois. Foreigners may also be subject to personal jurisdiction in terms of Federal Rule of Civil Procedure 4(k)(2) if (i) the defendants are not subject to jurisdiction in any state’s court of general jurisdiction; and (ii) exercising jurisdiction is consistent with the US Constitution and laws.
Due to the fact that residents of Illinois can access these websites, make purchases through them, and are directly marketed to, it will generally meet the requirements for jurisdiction to be established over them.
Further, the platforms that the overwhelming majority of sellers use are US-based or heavily target the US market, this includes Walmart.com, Amazon, Shopify, AliExpress, Temu, and eBay. All of which are either subject to or comply with Federal Court orders.
My Store is Suspended… Now What?
You need to start the process to negotiate and defend the matter immediately. A lot of defendants are unaware of how efficient the US Federal Court system is, and, these cases can be concluded, with default judgment being granted against defendants within a few months. In some cases, sellers only begin the process of asking for assistance when the default judgment application has been filed, which is way too late.
ACT IMMEDIATELY.
There is also a chance that your listing could have been taken down incorrectly or has not met the threshold for trademark or copyright infringement, so, you may be able to be dismissed from the matter without paying a settlement amount.
Always seek legal advice from an attorney licensed to practice in Illinois or you can consult with a specialist focused on negotiating and settling these disputes, like us. Sadly, due to a combination of how leveraged these proceedings are in favor of the plaintiffs, the lack of oversight in the process of enforcement, and the prohibitive costs of securing legal representation for defendants, most stores remain suspended for months or even years with no resolution.
Plaintiffs’ attorneys have also become excessive in what they feel their clients are entitled to, often looking at a store’s total sales as a basis for a settlement, instead of basing the settlement on the sales of the actual item alleged to be counterfeit or infringing, as required terms of the law. This has led to defendant’s misled into believing their liability is thousands of dollars more than what they may have been liable to pay.
Sadly with most defendants desperate to access their funds, these exorbitant settlements are being paid, just so that defendants can get back to trading.
Seek advice and act immediately to avoid irreparable harm.
If your store has been suspended or you want to learn more about how you can protect your copyright-protected content, recover infringing domain names, or need general advice on online intellectual property protection reach out to us here.
If you are a reseller who wants to learn more about how to defend claims of trademark infringement through the first sale doctrine click here or if you want to learn how Shein and Temu sellers are stealing copyright and trademarks from online sellers click here.
Justec Brand Protection is a company that specializes in online intellectual property (copyright and trademark) theft, and domain name disputes. Justec Brand Protection is not a law firm and this is not legal advice. Always consult a licensed attorney for your business’ needs.
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Has your Amazon, Etsy, Walmart, eBay, Shopify, or online store been suspended?
Check out our guide to learn more about why this is happening and some of the traps you should be aware of.
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