In the ever-evolving landscape of e-commerce, protecting intellectual property (IP) has become a crucial undertaking for businesses aiming to safeguard their patented innovations, trademarks, copyrights, and trade dress from being fraudulently used in or on copycat products. As companies explore ways to enforce their IP rights on major online platforms such as Amazon, eBay, Alibaba, AliExpress, and Shopify, the approach taken can significantly impact the outcome and long-term success. 

The Two Paths: Licensing vs. Takedown

One common method of enforcing IP rights involves identifying infringing products and pursuing a takedown, compelling the removal of these products from online marketplaces. A takedown can result from submitting a notice to a website host, such as Shopify, and requesting that the host remove the infringing product listing page(s). Takedowns are effective ways to remove infringing products from the marketplace and help the IP owner regain market share.

Another option when enforcing IP rights is licensing. There are several ways to establish an IP license with an infringing party, including reaching out directly to the infringing party with a legal notice. License agreements can also result from IP complaints submitted via a platform, such as Amazon, which can put the IP owner and infringing seller in contact to start negotiations. By allowing companies to continue selling infringing products under a licensing agreement, IP owners can generate revenue through royalties.

The Upside of Licensing

The allure of licensing lies in its potential for mutual benefit. For IP owners, licensing offers a revenue stream without the need for prolonged legal battles or the risk of negative publicity, either of which can result from pursuing a takedown. Platforms like Amazon and Shopify facilitate communication between IP owners and infringing parties, fostering an environment where disputes can be resolved amicably through licensing agreements.

Licensing can also serve as a means of brand control, ensuring that the quality and reputation of the IP owner's product remain intact. For example, if the quality of a licensed product declines enough to harm the overall perception of the IP owner's product, the IP owner can refuse to renew the license agreement after the license term expires. Once a license is no longer in effect, the IP owner is free to issue a takedown notice and force the infringing party to stop selling its diminished-quality product, which tarnishes the reputation of the IP owner's product. Such a threat may be enough incentive for an infringing seller to maintain a high-quality product and be allowed to continue selling (and paying royalties) rather than stop selling entirely.

Although the initial decision to enter into a license agreement might seem counterintuitive, as it involves permitting the sale of infringing products, the long-term financial gains and brand preservation can outweigh the risks associated with a takedown strategy.

Challenges and Rewards

While takedown requests and licensing agreements may seem like straightforward solutions to enforce IP, challenges abound. Financial and evidentiary burdens may be significant and costly and should be a consideration for IP owners when contemplating enforcement strategies. 

However, intellectual property is a valuable asset, and IP owners should take the necessary steps to protect their investment and business. In the long run, enforcing IP can have substantial impacts on the bottom line and market share. 

How Gallium Law Can Help

Whether you pursue a license agreement or a takedown when enforcing your IP, we encourage you to seek the advice of an IP professional. If you believe your IP is being infringed or even at risk of infringement and would like to discuss your options for IP protection and enforcement, please fill out this online form or call us at 651-256-9480 to schedule a consultation.

To learn more about how different online platforms respond to IP enforcement efforts, check back for the second article in this series.

*The information in this article is not legal advice and should not be relied on. The content of this article is for informational purposes only and is meant as a starting point in your search for answers to your legal questions.