Ecommerce Sellers’ Intellectual Property Risk

 

When online marketplaces such as Amazon and eBay are confronted with an accusation of patent, trademark or copyright infringement emanating from a product on their site the marketplace will take two actions:

·        Remove the accused product from their site until the dispute is settled.

·        Look to the ecommerce seller for indemnification (all online marketplaces require this). 

The marketplace will not defend the product! One thing is certain, the marketplace is going to do whatever it can to avoid the cost and entanglement of an intellectual property dispute. The accuser knows this and uses the infringement allegation notification to the marketplace as leverage against the ecommerce seller.

The above scenario occurs hundreds of times each year.

According to a large intellectual property law firm and my own personal experience with my clients the legal cost to defend an infringement claim will run into the hundreds of thousands of dollars.

So, what can an ecommerce seller do? Investigate the purchase of intellectual property insurance. (This risk is not covered by your current business insurance).

Highlights of insurance:

·        Reimburses the ecommerce seller for legal and settlement expenses

·        Ecommerce seller chooses their legal counsel and controls the dispute strategy (insurer has the right to approve legal counsel)

·        Available in the US and worldwide

In many cases the accuser is looking for a licensing fee from the accused seller. If a seller does not have the financial wherewithal to sustain their negotiating position they are at a distinctive disadvantage. Insurance allows the seller to “hang in there” through the negotiation.

The premium cost will run 1-2% of the limit purchased. (2% of a $300,000 limit equals a premium of $6,000 per year). Cost depends upon the industry, revenue size of the ecommerce seller and the limit of insurance purchased.

It costs nothing to receive a quote so why not explore it?

For more information, visit my website at: http://www.OnlineSellersIPRisk.com