Amazon Brand Gating
Amazon.com is the largest U.S. retailer online. It captures almost half of the online retail market, with eBay a distance second with a mere 7.2% share of the market. As a result of the success of its business model, goods that infringe on intellectual property rights as well as illegitimate counterfeit and grey market goods appear at a surprising rate on the platform. Amazon is committed to ensuring that intellectual property rights are adhered to by sellers on its Marketplace. In order to combat some of the more grievous violations, Amazon has created a number of brand protection programs, one of which is the brand gating program.
What is Amazon Brand Gating?
Brand gating is the term to describe one of Amazon’s brand protection tools to prevent the sale of counterfeit goods. Amazon controls the gate, determining who can and cannot sell branded products as new. Sellers of legally purchased used products may continue selling these items as long as they are marked as such.
The stated purpose of this program is to protect brands that are currently losing sales to counterfeiters. By requiring proof that third party sellers have permission to sell these items as well as an ongoing relationship with the manufacturer or brand owner, Amazon is reducing the opportunities for fake products to enter its Marketplace.
Brand gating’s entrance barriers creates benefits for manufacturers and brand owners because it reduces their competition from other sellers. However, this type of gating can make it more difficult for small and medium businesses to compete on the Amazon Marketplace. One requirement for third party sellers to participate in this program is proof of permission to sell branded products. As a result, brand owners have significantly more ability to limit who may sell these products, and can block unauthorized distributors. This is the case even if the third-party seller legally purchases new goods directly from the manufacturer.
Brand gating to control sales of counterfeit goods is also a form of consumer protection. Counterfeit products are made without the safety precautions of the original item and could malfunction, potentially harming the consumer and increasing the likelihood of poor product reviews for the manufacturer and authorized sellers.
Although this program has provided additional brand protection to companies that produce their own products, the Amazon Marketplace can be a difficult landscape for brand owners or sellers to navigate. This is especially true when the more than 5 million sellers on the Marketplace are taken into account, half of which only sell through the Marketplace platform.
Because Amazon Marketplace sellers often have to compete with legitimate sellers and counterfeiters from China, who are able to undercut prices, it often makes sense to work with a trained professional when navigating Amazon’s services. In this way, sellers are able to ensure that any disputes are handled as quickly and effectively as possible.
How to Set Up Brand Gating on Amazon
Brand owners must go through a two-step process in order to qualify for and set up brand gating on the Amazon Marketplace. First, they must sign up for Amazon’s Brand Registry program. Once a brand registration is successfully approved, brand owners can then apply for brand gating protection. Brands that are not on the registry will not be considered for the brand gating program.
Additionally, before applying for Amazon brand registry or brand gating, owners should register their trademark with the U.S. Trademark Office. U.S. trademark registration is a good idea regardless. Even a pending application with the Trademark Office will demonstrate a commitment to brand protection.
Brand owners should also decide which products they want to prioritize for protection. To this end, owners should review their inventory and determine which products are most vulnerable to counterfeiters. Although Amazon does protect the entire catalogue of a brand’s products, sometimes it is quicker to have a single item protected first. By prioritizing the most vulnerable and/or valuable products, brand owners will be able to limit the most devastating forms intellectual property infringement while Amazon finishes processing any remaining gating requests.
Once owners determine which products should be prioritized, they should provide Amazon with a list of the Amazon Standard Identification Numbers (ASINs) for these products.
Next, brand owners should provide Amazon with information regarding their efforts to reduce counterfeiting. This is a stated goal of the Amazon Marketplace, due to the negative effects counterfeiters have on consumer confidence. Amazon wants to help companies that are currently battling against counterfeit goods, but also companies that care about eradicating this practice. A company should demonstrate both the offensive and defensive moves it has taken to avoid being the target of counterfeiters.
Finally, owners need to provide Amazon with their seller ID in order for Amazon to apply protection to the correct account. Currently, the application for brand gating is free to brand owners, but this may change in the future.
If a brand is gated, only authorized sellers may continue to sell these products as new. Sellers are still able to list the products as “used-like new,” because under the first sale doctrine, intellectual property owners may not prohibit resale of used goods. However, for a seller this may not result in the same sales volume that listing products as new would generate.
When requesting permission to sell a gated product, a seller must fill out an application form. The Amazon Marketplace requires sellers to submit:
- Proof from the distributor, manufacturer, or brand owner that the seller is authorized to sell their products. This sort of proof could include a letter or contract.
- Three different purchase orders or invoices for products that are protected by brand gating mechanisms.
These documents demonstrate that a third party seller is authorized by the distributor, manufacturer or owner to sell the products, as well as an ongoing relationship between both sides. Additionally, third party sellers will need to pay a non-refundable deposit that can range from $500 to $5,000, depending on the brand in question. If their stores contain items from multiple gated brands, sellers will need to complete this process and pay the application fee for each product they wish to continue selling.
Amazon Brand Gating Policy
After its brand gating policies were first implemented in 2016, hundreds of brands have successfully been restricted from unauthorized sellers.
Its brand gating policy and other brand-related programs are part of Amazon’s intellectual property protection and anti-counterfeiting initiatives. Amazon’s IP policies are in place to ensure that the retailer and any individual sellers on the site are complying with all national intellectual property laws, including trademark, copyright and patent requirements. Its anti-counterfeiting policies are in place to ensure that consumers receive authentic products.
Amazon applies different gating policies to different categories and brands. Some categories, such as Grocery & Gourmet Food, Fine Jewelry, Major Appliances, and Video, DVD, & Blu-Ray are restricted across the board. All third-party sellers must submit an application to sell new items in these categories. Due to the nature of products in these categories, they are particularly susceptible to infiltration by counterfeiters, so Amazon restricts access to all sellers.
Other categories, such as Health & Beauty, have restricted some, but not all, specific subcategories. Categories such as Toys & Games may be restricted during the holiday season, when counterfeiters are targeting items popular with Christmas shoppers.
In addition to ensuring that consumers are receiving their products from trusted brands, Amazon’s gating policies present an opportunity for the company to make its web retail services more appealing to large brands.
By presenting brand gating policies to large brand owners, Amazon has been able to appeal to companies and industries that previously were reluctant to get on board. Nike famously avoided selling its products through Amazon until the retailer agreed to police third-party sellers. Amazon was also able to expand its offerings for luxury beauty product by courting companies that previously avoided its site due to competition from third party resellers.
Amazon’s latest brand protection program, Project Zero, is an additional extension of its anti-counterfeiting policies. Brands enrolled in this project will have more self-service tools for reporting and removing counterfeiters from the Amazon Marketplace. The program is currently invite-only, but is anticipated to add additional tools to brand owners currently battling against counterfeit products.
Amazon Brand Registry vs. Brand Gating
Amazon’s brand registry tool is the first step for manufacturers to enjoy the company’s brand benefits, including participation in brand gating.
In order to qualify for this program, a brand must:
- Have a registered trademark in one of several jurisdictions, including the United States, Canada, and the European Union. The tool will not assist in protecting common law trademark rights. When applying for the program, the rights holder must include the relevant trademark registration number.
- Have one or more trademarks containing text, words, letters, or numbers. Currently, the brand registration program cannot be used for trademarks that consist solely of an image or logo.
Because U.S. trademark registration can take nine months to a year for approval, this is a step that should be started as soon as possible.
The process for brand registry approval takes approximately two weeks. Once a brand has been successfully registered with Amazon, the manufacturer has significantly more control over brand listings, brand representation, and additional automated tools at its disposal for catching counterfeiters.
Brand gating is one of several additional tools available for owners who successfully register in the brand registry program. Additional brand gating benefits include:
- Enhanced brand content, which lets sellers create more attractive on-page advertising materials to draw in more customers.
- Early reviewer, which provides incentives for customers to leave reviews on participating products, which in turn can lead to increased sales
- Transparency, which ensures further protection against counterfeit goods by providing authenticity verification for products shipped by Amazon fulfillment services.
- Project Zero, one of Amazon’s newest anti-counterfeiting programs, which gives brands the ability to remove counterfeit materials themselves, without waiting for further assistance.
Each of these tools allow intellectual property owners greater control over their advertising, increase access to their customer base, and, importantly, help fight counterfeit goods being sold in the Amazon Marketplace. Once a brand is enrolled in the brand registry program, a rights owner can assign brand management tools to an authorized agent or amazon attorney.
As the first step in Amazon’s brand protection programs, brand registration provides a minimum level of service for brand owners.
Amazon Cease and Desist Letter
Intellectual property holders may attempt to resolve an IP infringement matter privately, by sending a cease and desist letter directly to the infringing party. Cease and desist letters should contain:
- An introduction of the IP owner and their contact information
- An explanation of the protected material, including registration information, if applicable
- Links to and/or the ASINs of the infringing material in the other party’s online store
- A request for the infringer to immediately stop all infringing activity, such as by removing the copyrighted photographs, or ceasing to sell the unlicensed trademark or patented product
- A request for proof of compliance
- Further steps you will take, should the other party fail to comply within the requested time frame.
In general, Amazon Marketplace sellers prefer to work with intellectual property rights holders directly. Account owners engaging in bad behavior that is brought to the attention of Amazon face account suspension, which can be more devastating to small and medium-sized businesses than an intellectual property infringement lawsuit. Amazon ban or account suspension can happen overnight, and could result in the seller’s funds being frozen or seized indefinitely.
While sending a cease and desist letter may appear threatening, this attempt at mediating a dispute can often generate goodwill among resellers and could avoid any attacks from bitter account hackers. For many reasons we advise that cease and desist letters come from an attorney. For more information, please see our trademark cease and desist letter and copyright cease and desist letter pages.
If you have an Amazon issue and need assistance, please feel free to contact us.