David Kahan, CEO of Birkenstock USA announced the news in a letter dated July 5th, 2016 sent to several retail partners of the trademark. As of January 1st 2017, it will no longer be possible to find Birkenstock sandals on the Amazon.com website. Not only will Birkenstock USA withdraw its products from the website but the company also directed its official retailers to withdraw the products of the trademark.
What are the reasons for this decision?
According to David Kahan, CEO of Birkenstock USA, Amazon is an “open marketplace” where Birkenstock experienced unacceptable business practices that would have jeopardized its trademark. Moreover, it would not be possible for the company to resolve the matter by policing either internally or in collaboration with Amazon.
According to the company, there seem to be too many counterfeits of its shoes from China. It is thus be possible to buy counterfeit sandals at a much lower price than the retail price of Birkenstock sandals.
While several other companies had the same problems and have parterned with Amazon to solve them, this is not the case for Birkenstock. Indeed, it would imply that the company would sell its entire catalog to Amazon, which would lead to some loss of control over its products. The company preferred to no longer sell its products through Amazon.com and stop battling counterfeit on a case-by-case basis.
Counterfeiting in the US
In the US, trafficking in counterfeit goods or services is punishable by the Trademark Counterfeiting Act, 18 USC § 2320. An individual can be fined two million dollars or be imprisoned for ten years while a corporation can be fined five million dollars.
However, in respect of the infringement of intellectual property rights, there is no specialized court in that disputes are brought before ordinary federal courts (the Federal District Courts and Circuit Courts of Appeal which sit below the United States Supreme Court).
The amount of counterfeits made in the US is estimated to be relatively low. In contrast, the US is dealing increasingly with cases of infringement of the intellectual property rights of their nationals committed abroad (such as China, Russia, Chile, Egypt, Thailand, etc.).
What are the possible consequences of the withdrawal of Birkenstock US?
The company Birkenstock took a risk by leaving the Amazon website. Indeed, many companies rely on Amazon to expand and maintain their business. To sell products on Amazon generally increases sales thanks to the numerous Internet users who order every day on the website.
But for several years now, Chinese counterfeit persists and grows on the website. More and more trademarks are affected, ranging from world-renowned trademarks to small-scale jewelry designers. It is also very difficult to determine on the website which products are fake or legitimate products of the trademark. In 2015, Chinese sellers have increased their sales on the website. While there are not only counterfeit products, criticism towards Amazon is consistnt, both from sellers and buyers, urging the company to fight harder against such practices.
Amazon.com denies selling counterfeit products on its website and explains that there are guarantees for buyers who can be reimbursed or get another product.
Yet Birkenstock USA will leave the Amazon ship on the 1st of January, 2017. It will be interesting to see how a company can survive without relying on the widest and best known online marketplaces. A matter to be followed.