Consumers are doing more and more shopping online. But when a consumer buys a product that is defective or counterfeit, are online marketplaces liable for misconduct by third-party sellers?
E-commerce platforms have generally avoided being treated like their brick-and-mortar counterparts by arguing that they do not actually "sell" goods, but rather provide services (e.g., payment processing, storage, shipping) to third-party sellers, who in turn sell products to consumers. However, recent court decisions and looming legislation may change this dynamic, opening up online marketplaces to product liability and intellectual property claims for products sold by third-parties on their platforms.
As previously discussed on this blog, the
In Bolger v.
On
How this issue plays out may have ripple effects beyond the realm of product liability cases. Online marketplaces have avoided direct liability for intellectual property infringement using the same argument that third parties, not the marketplaces, "sell" the products to consumers. See, e.g.,
Notably, this issue has caught the eye of federal legislators, who earlier this year introduced two bills on this subject. First, the SHOP SAFE Act of 2020 (H.R. 6058), would "amend the Trademark Act of 1946 to provide for contributory liability for certain electronic commerce platforms for use of a counterfeit mark by a third party on such platforms, and for other purposes," unless the platforms take certain reasonable steps (identified in the proposed legislation) to prevent such infringement. Second, the INFORM Consumers Act (S. 3431), would "require online marketplaces to disclose certain verified information regarding high-volume third party sellers of consumer products to inform consumers." https://www.congress.gov/bill/116th-congress/senate-bill/3431/text. Both of these proposed bills have bipartisan support. If enacted, they would give consumers and intellectual property holders greater ability to pursue claims against online marketplaces and the third-party sellers using the platforms.
With numerous courts and legislative bodies actively considering these issues, online marketplace liability is sure to remain a hot topic in the law. We will continue to monitor this area and will keep our readers apprised of any important developments.
The (Potentially) Shifting Landscape Of Online Marketplace Liability
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