Suspension, IP Claims, Trademarks & Business Structure
How should you set up your Amazon business structure? When’s the best time to file for a trademark and what’s involved in that process? What do I do when I get an intellectual property (IP) claim from another seller? Or how do I send one out to a seller whose infringing on my IP? And what do we need to do to avoid being suspended as private label sellers? We have all these questions answered and more from a practicing lawyer professional in this information-packed episode!
In today’s episode, we hear from the Amazon sellers’ lawyer about all kinds of important legal related Amazon topics. First, I want to let you know that our free Amazon Private Label training series. It is going to be opening up very soon on June 17, 2018. So get signed up and watch the free private label training series now. And get ready for our full Private label course which will be opening up later this month. We only open this up for a limited time each year. And we switch it up every single time. So make sure you go to amazingfreedom.com/training and get in touch with us. You won’t want to miss it.
My name is Nathan Slamans joined today by Andy Slamans and a very special guest. The Amazon Sellers lawyer himself, CJ Rosenbaum. CJ, very excited have you on with us today, thanks for joining us.
CJ: Hey Nate, thanks for bringing me on. Andy, always great to talk with you.
Nathan: We actually had the opportunity to hang out with CJ over in Australia. So we’ve been talking about Australia the past couple of podcast episodes. We actually had the chance to go out, have a night on the town with CJ, Alex Moss and a couple of other awesome Amazon superstars. And it was just a great time hanging out. And afterward, Andy said to me: Hey Nate, we have to have CJ on to the podcast”. He was talking to him a lot over dinner and he said he just knows all the stuff about Amazon. We needed to have a lawyer that knew what he was talking about. When we get into some of these topics.
So we have a number of really informational points that you’re not going to want to miss. We have what every single seller deals with whether you’re new or you’re experienced. These are the types of issues that if you don’t know them correctly, could really be the difference between a successful Amazon business and a failure. We’ll also talk about a story that Andy actually had that was related to this.
So CJ, before we get into that, I just want you to maybe introduce yourself a little bit. Tell us about you. How you got involved with Amazon. How you became the Amazon Seller lawyer?
CJ: Sure, I tell you I’m blessed with great friends like you guys and great clients. How I got into this space is shortly after going through my divorce. It was a whole change of life. A client that I had helped negotiate the purchase of his Amazon based business. He closed and he got suspended and he reached out to me. And he said, “Hey, there’s really nobody out there that I trust to help with Amazon suspension.” You should look into this. So I did. I looked around and went to some events. I read a bunch of books and I reading and writing and fleshing it out. And then we launched and haven’t looked back since.
And fast forward, years later. Right now we are up to about 35 people right here in beautiful downtown Long Beach, New York. I’ve got 30 people working, doing nothing but Amazon. Everyone’s college educated. Nothing is outsourced. About half the business is writing plans of action that are not really legal in nature. But we got a fantastic team of college-educated writers. And the other has to do with Intellectual Property Rights. Which is just everything to do with loss. I’m blessed that a good friend and a good colleague brought me into this space. And also all people I got to meet and all the countries visited where Amazon sellers go to learn.
Nathan: Awesome, I mean that’s basically how all of us got into this. Andy got started and told me about it a few years ago. And the rest is history.
So for anyone who’s listening and maybe newer to Amazon or newer to private label. Maybe you’re a little bit hesitant on how to make this all work in the beginning.
Andy was just talking about before, one of the pain points for newer sellers, people who go through our course is they’re a little bit worried about the liability of it all as they set up their business structure.
So maybe you can just start off talking about liability. Which some of that I know gets into insurance. Can you talk about what would be your recommendation for a newer seller or a newer private label seller? Should they set up an LLC? How should they structure their business? What’s your recommendation to the newer seller?
CJ: Okay first, we are all about paying it forward and empowering people. So you really shouldn’t be nervous. I know it’s a fear going into a business where your potential liabilities are. And that’s good business sense to think about. But there are two really easy things that you can do. And really simple things, you can do yourself to protect yourself, to protect your assets.
#1 – Set up an entity. It can be an LLC. It could be a simple corporation. Or an LLP if you have partners. But you just want to set up some entity to protect you from liability.
Now I don’t mean that to scare anybody. There’s very little litigation about products sold on Amazon. When there is something like the Hoverboard battery that burned down a house. That’s like one product out of billions and billions of sales. I think we’re involved, I think the total count is two products. One, I think the whole claim was, the whole thing is like $12,000. And the other was a little more significant. But the number of claims from products that are sold is really really minimal. But you should go ahead and set up the corporation or an LLC. You should probably talk to your accountant which one is best for you. But if you’re just starting out, corporations are really easy.
We use a company called Blumberg. And they set them up, I think in every state in the country. You really just have to call them on the phone. And you give them 3 names…they immediately run a computer check. If they say “Ok, that corporation is available, it’s all yours”, you’ve got it. We’ll have the corporation established tomorrow”. You give them a couple more bucks, you do it yourself to get your tax id number. And then you have your corporation. At that point, you might want to get a lawyer involved to sort of customize the share hold agreement. But you’re gonna get a notebook with a set of forms in it. And you have it just, with that one phone call. And in New York, it’s $210. You now have a corporation that protects against a lot of liability, you get that corporate shield.
#2 – Buy Insurance. I always recommend Ashlin Hadden. She is probably the number one E-commerce insurance broker out there.
She is my broker, I trust her, she’s smart, she’s nice. She’s friendly, she answers the phone. I think for starting out sellers, you’re probably looking at a few hundred dollars per year in coverage. So by setting up the entity, either corporation or LLC and buying coverage, you’re all set. There will be very few things that will get through you.
And before I got into this space, I was a personal injury trial lawyer. I did car accidents, trip and falls and medical malpractice. And if you have insurance, whoever ends up with that case, as a former ambulance chaser, you stop where the insurance is. You try and settle quickly, get your money and get out. Because you don’t wanna go after personally, it’s too much time and effort and very hard to collect. So set up the corporation with a phone call and get the insurance from Ashlin, and you’re safe as can be.
Nathan: This is awesome because you’ve seen hundreds and hundreds or thousands of cases and it’s very minimal. And you know this isn’t meant to talk down to anyone. But Liran often says that the sellers who are the most worried about this issues are the ones who are selling zero dollars on Amazon. Then you got the people selling millions of dollars a year who are like, this really isn’t that big of a deal. Because they know, I just said that to say don’t let this stop you. And I love that you said you’re all about empowering the sellers. That’s what this podcast is about so I think that all makes sense.
Let’s talk about the second thing that I had, involving trademarks.
This is a big talk right now. Because in order to get brand registered now with the new brand registry, you need to have a trademark. However, we often recommend different things when it comes to trademarks. CJ with your experience with different private label sellers.
What would be your recommendation of when a seller should attempt to get a trademark? Then is there anything related to trademarks that you can give some advice on?
CJ: Okay, I think you should probably apply. I’m talking myself out of a lot of work, but sellers can do this themselves. If you go to the USPTO.gov website. The form you need to apply for a mark is really easy. You just do the name that you developed. You don’t have to have your drawing yet, you don’t need your logo yet. Just mark pilot trademark application just for the name. And the filing fee is like $225 per category. That’s it. You can do the form yourself. You can also search it yourself to see if anyone else already has the name in your category of products. Or anything even close to it and pick another name.
But I would say, as soon as this podcast is over, check out USPTO.gov. It’s a website from like 1996. You can file it yourself. If it gets kicked back for one reason, give us a call. I’ll hold your hand, we’ll walk you through the problem. We help sellers all the time for no money. But as soon as you have the name that you’re developing, go ahead and file for the mark.
It’s going to take like 3 months to get assigned to an examiner. Probably another 3-6 months before you get your approval if there aren’t any bumps in the road.
And if you decide to pivot, go with another name like 2 weeks later, you have another epiphany, file again. It costs you so low and the form is that easy. There is nothing wrong with more than one mark for yourself so I would do it as soon as you start developing a name. Don’t worry if you get it later, you can always do it again.
Nathan: Great advice and that makes it sound easy. I would definitely echo that because Brand Registry is important.
Let’s get into some good stuff, CJ. I think you deal with more every day in your business–Intellectual Property.
Then we’ll talk about some suspension related stuff like that but first. We are all afraid of getting an IP claim. So what would be the best course of action for a seller to go through if they receive an IP claim? Maybe if they feel like it’s unjustly received. Could you talk about that? Then what if you feel like you need to send out an IP claim because someone has
stolen your images? Your copy or your product design?
CJ: Alright, if you receive an Intellectual Property right complaint, you really should not freak out. Don’t get too nervous. I used to say about 98% of the complaints were entirely baseless. Brands are getting a bit savvier. So now probably like 98- 90% of the complaints that they’re still asserting on Amazon are entirely baseless.
In the United States, we have what’s called the first sale doctrine where you can literally buy and sell anything you want.
You don’t need the brand’s permission. You don’t need to comply with that price or be authorized. And as long as the consumer is getting it. It’s not materially different than what the brand or an authorized seller would deliver, you’re not violating anything.
The brands are getting a little bit more savvy like they’re changing the warranties a bit. Identifying other avenues of the law where they can actually assert some good claims. But for the most part, most of the claims are baseless. What you do is as soon as you get it, I believe in courtesy, I believe in respect, it’s good business. As soon as you get it, you should write back whoever made that complaint and say you received it. You take it very seriously and you’re on top of it. And you’ll get back to them.
And then do some research and figure out are you really violating their IP rights. If you are, you want to try and resolve so they would withdraw the complaint. A lot of deals can be made where you can sell out your inventory. A lot of deals are made where you’re going to pay a licensing fee or a distribution fee where you raise your prices.
That’s really what the brands are concerned about. Other times they just want you to stop selling. So if you have minimal inventory, maybe that’s a good deal. “I got 50 units left, withdraw your complaint, I will just get rid of ’em someplace else.” Most of the complaints are baseless. If you do receive a complaint and it’s a really valid complaint, your tactics are really the same thing. Your goal is to get that complaint withdrawn. That’s what we do whether our complaints are valid or invalid. We negotiate, get the complaints withdrawn to maintain the health of the Amazon account. Or to get the account back if you were suspended.
Nathan: Andy, why don’t you tell us a little bit about your story. I can’t remember if we talked about this on the podcast before or not. I know you’ve talked about it at conferences. Why don’t you tell us about the negative experience you had?
Andy: Sure, this was early on. I didn’t know CJ then. In fact, I didn’t know any lawyers at this point. Just came out of the social service field. Where I was working with kids, like a social worker. I entered the world of business, selling on Amazon. I had a product that was doing really well. Actually created this product, made a unique design. It was in the baby category and got it into Amazon.
Then within like 3 weeks, it shot down to under a thousand rank. I was absolutely crushing it. There was really one main competitor of this product. Snd about week number 4 I thought I was gonna be a millionaire. I was gonna be rich. I was gonna buy a house on the beach. Then I received an IP infringement letter through the Amazon system.
Up to this point, I have never received one and I, unfortunately, did what you recommend people not to do. I got really nervous, really scared, looked up a law firm. It was a legitimate law firm. The company sent to me, even though technically maybe you can talk about this CJ, technically it’s not a real letter if they sent it through the Amazon system. Because they’re sending it like as basically as an Amazon buyer. The letter said that I was infringing on their patent. And that if I did not remove my product, they were gonna sue me for 3 times my profit.
So I reached out to a lawyer within a week. Unfortunately, he did not know Amazon and he wasn’t a good lawyer. So he was like, he looked at it, he said send me the product. So I sent him the product. And he said, send me your competitor’s product. So I sent him that. Then he started billing me for hours. Opening up the product and comparing them and all of this.
Then he said, “Look, Andy, I think that you should take it down.” This was his words to me CJ. He’s like “we couldn’t fight this case, Andy, because I want you to know. It would be like we’re hanging on a dingy and that law firm is a battleship. And they are coming at us. So you know we can fight them but that’s how it is.”
So I ended up taking the listing down.
And when I say “crushing it”, I was netting $8,000/month on this product. And it had become my number 1 product. I ended up taking it down. So for 2 weeks that product’s off and I’m just like “Man, what am I gonna do?”
I finally started pursuing the owner of the brand that had their lawyer send it out. So it took me like another week. I left like 4-5 messages with her and finally got a hold of her. She called me back and she said “Andy, you know what I’m sorry, my lawyer shouldn’t have sent you this. We sent it out to 8 different brands, your brand should not have been included in that list. You’re not infringing on ours and you can put your listing backup on Amazon.”
So at the end of the day, it ended up being a good story. However, if I would have had a lawyer.
If I would have known you CJ, it would have really saved me. It would have saved me a ton of grief because I’m sure you’re going to tell me what the proper steps I should have taken were.
CJ: First of all, thank you for allowing me to be on the show. Even after I revealed I was a trial lawyer. A lot of people would have shut down the monitor and were out. Since most of the claims are baseless, it’s not going against the battleship. For sellers, you don’t want to be in the battle. Instead, you want a resolution to get back to selling.
#1 – The first thing we do is reach out to a lawyer.
We reach out to the brand manager and we don’t do it like guns blazing. You know a lot of brands we already have relationships with. But I just introduce myself. We take it seriously. “Let me get back to you, let me just look at the product.” And we’re all about resolving this in a way that makes everybody happy. If we’re infringing we will stop, if we’re not we will work it out. And in terms of lawyer’s fees and that kind of stuff, we boil most things down. Especially for the smaller sellers to like flat fees so the seller knows exactly what they’re going to pay.
There’s no clock ticking in the background, you’re not afraid to email me or call ‘cuz you’re afraid I’m gonna bill you for the phone call. So we kinda really focus on this in a way of resolving issues because you never want to be in that fight. So it’s all about reaching out and resolving.
Of course, your negotiations are a little bit different. If you have a really strong position rather than you’re totally absolutely infringing upon their rights. Either way, it’s all about resolving issues. And you contacting the rights owner directly and bypassing the lawyer was absolutely the right thing to do.
Lawyers can’t do that, once they represent it. I’ve got to go to the lawyer but sellers can contact the other person. We’ve had cases where one of our first cases was a couple in Nebraska – mom and pop who would literally have these routers made in China and slapping a Cisco sticker on it. Cisco didn’t even make like home routers. So they had them by the short hairs and so I reached out to the white shoe lawyer. I was like “Listen, you know, they’ll stop selling, they know they were wrong but does Cisco really need to put mom and pop out of business? They’re going to go out and sell sheets and towels.”
The way to deal with it is I think is being courteous, being respectful. Knowing if you’re right or you’re wrong. But then ultimately with the goal towards just resolving the issue and getting back to selling.
Nathan: Yeah, that’s awesome. Great advice. What if we flip it here a little bit CJ and sellers are concerned with other sellers that seem like they’re you know infringing on their intellectual property.
Can you talk a little bit about that, is the process different? I’m sure the resolution is going to be the same but what’s the process? What should most people do? Should they be going through Amazon at all to get any change? Should they go right to you? What’s the process?
CJ: Well, you know as more and more sellers develop their private label brands, that’s the future of Amazon. Developing your own brand. We then help private label sellers protect their brand. Teach you how to get your own market if you need to. We teach and we write a warranty that really does give you something that somebody else can’t deliver. To take your private label products outside of this first sale doc that we talked about.
So let’s say you have a really great product. You have a warranty that nobody else can match and someone else is hijacking your listing. Now they really are violating Intellectual Property rights. There’s no harm when a seller receives a message. That Cease and Desist email that you get. We send out dozens of them for the private label sellers that we represent. We let them know, “Listen, you’re violating our Intellectual property rights and this is why”. And you say, “Listen, you are violating and this is why.
“We’d like you to stop selling amicably, we don’t want to hurt another seller. Please get off the listing.” And like 75% of the hijackers will voluntarily come off. Sometimes they’ll call and they’ll say ” We got 500 units, can we sell out?” or “How about we pay a licensing fee”. And we always try and resolve things amicably for 2 reasons:
#1 – It’s just kind of who I am.
#2 It’s really good business.
We all live and die by reviews and ODR rates, right? So if you needlessly put somebody out of business. Or you needlessly affect their livelihood, they’re not gonna take it lying down. They’re gonna buy your product and leave a bad review. They’re gonna have their friends, relatives, employees buy it. Leave a really lousy review, break it, send it back in and your ODR rate is gonna skyrocket. Your negative reviews are going to skyrocket because you weren’t kind and courteous and understanding.
This is our livelihood. And I think that even if someone is sort of infringing upon your intellectual property rights, you have to take a step back and sort of stand in the other guys’ shoes. And say “Okay, how do we resolve this so that we all go about and keep doing business and no one really cuts each others’ leg off needlessly”.?
So that will deal with like 75% of the problems. The other 20-25%, you’re gonna have to assert the complaint on Amazon. Which really has some strong effects. Their ASIN’s gonna go down or their entire account is gonna go down. Just like everybody else, their inventory is in FBA warehouse. Amazon is holding their money. If they borrowed money from Amazon, they still need to make their note payments. But we try to leave that sort of as a last resort. That’s how we protect private label sellers. We build in good, strong intellectual property rights. We build in a warranty that other people can’t match, You can add copyright material, licensing, ability to go to a certain portion of your website.
Nathan: Smart! Great information. I also want to say, if you’re part of the brand registry 2.0, this isn’t going to help you from preventing people from selling in your listing. I know there’s a lot of confusion. Brand Registry doesn’t equal Brand-gating necessarily. Liran sends messages to Andy and me about once a week actually. He goes through his listing to brand registry 2.0. And he sees all these people who copy his bullet points exactly. He can just submit these ASINs to Amazon. And they basically take care of it if they’ve copied his images or bullet points exactly.
Now CJ, what if someone does not have brand registry 2.0. Because they’re still waiting on the trademark. But they see that another seller has completely copied their bullets and their images. Is this something that you feel like sellers should handle differently than a counterfeiter? Is it a different process?
CJ: No, same exact process, United States, the UK and most of the world. Unlike China, most of the world is a first to use. So if you take a picture, you come up with verbiage and you write it down. You own that. Whether you filed it or not, it’s certainly easier to enforce if you filed for protection but you don’t need to.
A lot of sellers are now keeping screenshots. And they are separate from what’s on Amazon. They have it in their own computer, on a file system to show. As Liran’s problem has the same exact verbiage, the same exact images and it’s really the same process. Let the other seller know, “Hey listen, you copy and pasted my verbiage, you hijacked my picture. You can’t do that, I own it. If you don’t remove it yourself, then it’s going to compel me to make a complaint. I’d like you to just do it on your own.”
And you follow the same exact process. It certainly has a little more success rate if you have filed. But not having filed doesn’t mean you’re blocked duty. You can still enforce your IP right.
Nathan: Awesome! Cool! Those are some really great topics. Now let’s get into the topic that I think most people are always a little bit fearful about and that’s just suspension in general. We already touched on it with IP claims and that kind of stuff can lead to suspension. Maybe you can just go over, I see you on Facebook and just a few moments we’ll talk about how people can find you and follow you but I see you talking about all the time, changes to Amazon, one of your clients got suspended, for this reason, I see you posting about this stuff frequently so I know you’re really informed on it.
Maybe you can just touch on what are some of the most common reasons you’re seeing private label sellers get into suspension issues? I’m assuming it has mostly to do with reviews. Can you hit on what are the big things that you would recommend people be careful about as private label sellers on Amazon?
CJ: When it comes to private label sellers, you got to stay away from review manipulation. You can’t have your friends, family, neighbors, relatives, all the people on Facebook buy your stuff. And all of a sudden their number of reviews just skyrocket. I forget what the ratio was, it’s like 1:64 give or take 1 review for every 64 purchases on average will actually leave you a review. And all of a sudden if you’re just skyrocketing. It’s just going to trigger an algorithm or something and you’re gonna get hurt. Let it happen organically.
Develop a good product, get it out there in the market. If you do anything like that, you can’t do it in a way that’s discoverable. I don’t know for sure that Amazon is scraping Facebook. I know it’s not really hard to do. There are certain launches that have occurred. Like I think it was January – February, there was just a boatload of review manipulation suspensions then it quieted down. Then April leading into May there was another boatload. Now they’re trickling in again.
Amazon is a long-term business, it’s not a get rich quick scheme anymore. It is a business where you got to think and do a good job and get a good product. So let it happen organically, you don’t get involved. Some of the launch companies are really really good. Have some investigation, read the forms, read the reviews and I would just say, keep your eye in the long term. You give perfect service, the reviews will come.
Review manipulation is a very difficult suspension to come back from.
CJ: But with review manipulation, it is like impossible to get people back on. Amazon, it’s a huge job. I’m not an Amazon basher and they’ve given so many people such tremendous opportunities. It’s anybody with a credit card and a phone who is willing to work hard, you can be successful on Amazon.
There are some warts and we deal with those warts. But I think that review manipulation, you just have to let your business grow organically.
Nathan: That makes sense and any of our regular listeners know that we talk about reviews in some form every single episode. And strategies for trying to get more. And the things to watch out for like the Facebook group review manipulation. The refund with PayPal. All that kind of stuff is definitely exactly what CJ is talking about. When he says review manipulation but some of the stuff that newer sellers don’t think of as much.
So CJ, is there anything else to watch out for? Is it basically review manipulation is what’s going to get you if you’re going to get suspended for the most part.
CJ: For private label sellers, that’s probably up there. At least you know right now it’s constantly changing. If you’re doing other types of business either distribution agreements or retail arbitrage. There are a lot of tips I can give out about what you want to make sure you have on your invoices. Make sure everything matches, emails and account name, that kind of stuff. Private label sellers, yeah that’s it, just be careful what you do and how you do it.
Nathan: That’s awesome! We talk about that all the time but it’s your post on Facebook like I said CJ, I see you often saying “update” we are seeing some kind of change with Amazon. We’re seeing people get in trouble for this, so you want to be careful. So on that note CJ, why don’t you tell our listeners how they can follow you. Because you are in the thick of this, you see these issues on a daily basis, working with your clients.
Tell our listeners how they can follow with you so that they can watch out for these kinds of changes. Amazon is constantly changing, it’s important to stay up-to-date. I know you have a Facebook group I believe. So is there a group, a page, what’s the best way our listeners can get more information from you?
CJ: The main Facebook page and the website are AmazonSellersLawyer.com.
If you don’t reach me, you can reach my awesome staff, another attorney – I am so blessed, we got such a great team here. Email is email@example.com the phone number is 1-877-9SELLERS. So you can watch our Facebook group and the website. We are constantly putting up new videos on YouTube.
Nathan: Awesome! that’s why Andy told me that we had to have you on CJ, we needed an expert opinion. It does help to have someone with that professional experience. So CJ, if you want to wrap up with anything else that you think is important for sellers to know. I know you had something you wanted to mention. An organization that you’re really passionate about, share that. And then I definitely think that if in the future we can have you back for updates.
So here is really what I want to plug. A buddy of mine, whose name is Lou Campbell is a fraternity brother of mine. He and his wife Cindy lost their son Ty to brain cancer a few years ago.
They created this foundation called the Ty Louis Campbell Foundation.
All of us that do business with Amazon or with Amazon or sell on Amazon, we also shop on Amazon. When you shop on Amazon, you can use the Amazon Smiles program. I think it’s smiles.Amazon.com. You register as Amazon Smiles, you need to pick a charity, it costs you nothing as a buyer, absolutely nothing. It costs you nothing as a seller. Amazon kicks in a really small percentage of the sale and they send it to the charity. If you don’t have a charity you’re doing already, one – get on Amazon smiles and please pick the Ty Louis Campbell Foundation.
You wouldn’t believe how small a portion of the budget goes into pediatric cancers. So this organization raises money. All they do is look for better treatment and cures to pediatric cancers. If you’re in the northeast they also have the “Mess Fest” where you jump in muddy puddles and mud paves and you have food fights. Please, Amazon smiles and the Ty Louis Campbell Foundation, just a fantastic foundation.
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