Mar 4, 2020 - Technology

Washington's new tech target: fake products

Illustration of a repeating pattern of porcelain cats, one is different than all the others.

Illustration: Aïda Amer/Axios

The growing online trade in copycat goods is a new target in Washington's war on Big Tech, as policymakers pressure companies like Amazon to take more responsibility for what happens across their platforms.

The big picture: The spotlight on counterfeit goods is part of a broader push by lawmakers to use policy levers to hold tech companies accountable for real-world harms that result from users' online actions.

Driving the news: Lawmakers want to crack down on the sales of fake products online, with two House committees raising the issue this week.

  • The leaders of the House Judiciary Committee on Monday introduced the "SHOP SAFE" Act, which would hold online marketplaces responsible for trademark infringement if they don't take steps to stop third parties from using their platforms to sell counterfeit goods with a health or safety risk.
  • Those steps include verifying sellers' identity and contact information; screening for counterfeits; removing a seller that has repeatedly listed or sold counterfeit goods; and sharing sham sellers' information with law enforcement and the owners of any brand being impersonated.
  • The bipartisan bill is specifically focused on goods that could harm consumers, with lawmakers noting that baby formula, chargers, and car seats are among the life-threatening fakes available online.

Separately, the House Energy & Commerce consumer protection subcommittee on Wednesday will hear from Amazon, eBay, Apple and others in a hearing focused on fake and unsafe products sold online.

  • Apple senior director for intellectual property Jeff Myers said in written testimony that one analysis of 400 fake iPhone power adapters found that 99% failed basic safety tests. He argued marketplaces should do a better job of vetting sellers and permanently removing repeat offenders.
  • In written testimony, Amazon's Dharmesh Mehta outlined the e-commerce giant's actions against counterfeit goods, including "Project Zero," which allows brands to remove counterfeit listings directly without having to flag them to Amazon for review.
  • Consumer Reports' David Friedman outlined investigations into dangerous inclined sleepers for infants, children's toys and motorcycle helmets sold online in testimony ahead of the hearing.

Context: The Trump administration in a January report said it would step up enforcement against counterfeit goods and urged the private sector to follow "best practices," including enhanced vetting of sellers.

  • E-commerce platforms must "assume greater responsibility, and therefore greater liability, for their roles in the trafficking of counterfeit and pirated goods," the report from the Department of Homeland Security concluded.
  • The report notes the value of infringing goods seized by U.S. authorities increased from $94 million in 2003 to $1.4 billion in 2018.

The bottom line: Policymakers are already talking about updating federal law to hold tech companies more responsible for what happens on their platforms. The focus on counterfeits marks another front in that push.

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