162 Amazon Law Q & A with CJ Rosenbaum
Today we have CJ Rosenbaum with us to do answer some listen submitted answers. I recently sent out a newsletter requesting the listeners to submit their Amazon questions. Be sure to subscribe to the newsletter so you don’t miss the next opportunity.
If you are interested in meeting CJ Rosenbaum and asking him some questions in person or simply enjoying a pint with him, he will be in London from 31 March to April 2. Sign up below so you can get the details.
It’s rare that you can ask a lawyer questions for free so let’s get started.
Q&A with Amazon Sellers Lawyer, CJ Rosenbaum
Clothing and Jewelry Copyrights
I keep hearing about so-called “generic designs” of clothes and jewelry. I keep hearing about it, but after researching into it, I seem to find this doesn’t exist. For example, at some point in time a piece of jewelry must have been designed by somebody. Are they given to the public like open-sourced software? Is there a database where I can check jewelry copyrights?
You can absolutely do a search. You can try it yourself. CJ isn’t familiar with the UK system, but in the US you can go to the United States Patent and Trademark Office, and they have kind of an archaic search engine, that you can use to try and find patented products when it comes to anything at all. If you’re not real skilled and you don’t have a lot of patience, you can hire someone to do a search.
Many designs are going to have been filed for protection and many will not. It could also be that you start selling a product that someone has already been selling for a number of years and since the US is a first to use rather than a first to file country, you may still have some problems.
On the other hand, it doesn’t mean you don’t want to get into that product. It’s all risk vs reward. If you think you can make a couple of hundred thousand of pounds in a short amount of time, with a fairly insignificant risk, it might be a good business decision to do that. Other people may avoid taking that risk. It’s a product-by-product and profit-by-profit analysis as to what you’re comfortable doing in terms of taking a risk with a certain product.
There’s one sort of follow-up part to this question, it says, does design copyrights just run out? And do factories in China just turn out thousands of replicas? Does it work that way?
There are certain IP rights that expire, they become part of the public domain. It really depends on how they’re filed. There are certain designs that are used that have what’s called trade dress, and that does not expire. In generalities, it can’t be answered. You need to look at the product, look at the investment, and if it costs $300-$500 to get an opinion on that particular product, you decide as a business person whether it’s worthwhile to pay that. Or just make your savvy at checking the listings and seeing what the risks are.
There’s a lot of misconceptions about attorney’s fees. You can get good protection and a great amount of information, for a relatively small amount of money in most of the issues Amazon sellers face. It doesn’t hurt to call, they don’t charge to talk to you. You can find out and make the decision yourself. CJ tries to provide every client with a flat fee you know exactly what you’re going to pay and what you’re getting. That way you can make an informed business decision.
Who is legally responsible, in the worst case scenario, someone dies from using my private-label product?
As a trial lawyer, CJ Rosenbaum had a ton of trials and employee cases for many years. Responsible or not, if someone gets seriously hurt and you touched that product, you’re going to get sued. If someone gets hurt or dies and they have enough money that it’s worthwhile to the lawyer, you’re going to be part of the defendants. If you designed it, if you manufactured it, if you’re the middleman, you’re going to have some responsibility. Even if someone isn’t terribly hurt, the attorney may still reach out to you and try and resolve the case or threatened litigation, which is why product liability insurance is important. Under US law, anybody involved in the entire chain of distribution has potential liability.
What kind of insurance do I need to cover all eventualities?
You should have a general liability policy which will have a product liability component to it. One of the other benefits of having insurance is that when a lawyer gets that case and is representing an injured person, it makes settlements a lot easier. Insurance companies want to settle it because they don’t want to pay defense costs. It avoids ever having to go to court and brings professional on board that know how to handle this kind of thing.
Are there international implications of a UK seller, selling in the US, with a US manufacturer?
It is unlikely there is any difference in profitability or risk. In this day and age, working across borders doesn’t mean that much. As far as liability, it’s probably the same.
Are there liabilities as a retail, or online arbitrage? That is someone who buys cheap products in a store, like Wal-Mart or Tesco, and re-sell them online for a profit. It’s not your design, you’re not even wholesaling. Do you still have any liability with that product?
Your liability for the person who was hurt is very minimal as long as you didn’t alter the product in any way or sell it for a different use. You will still be brought into that lawsuit. You’re still going to have to defend yourself. It will take time for it to work it’s way around until you get a chance to ask a judge to remove you from the suit. There will be depositions and documentary discoveries. It’s only after all that will you have a good chance of getting the judge to let you out of the case. At that point alone, you defense costs could be $20,000-$30,000.
If I’m a UK seller and I get sued, would I have to go to New York several times?
Yes. Not as often as you would think. Remember, lawsuits over the products are really few and far between. But yes, if you were sued and you’re a one man show, you would hat least have to come in for your deposition, which is a question and answer thing. You would also want to come in if there was a trial. The lawyers will go to the conferences and file the paperwork.
What kind of protection does a UK Limited company give a UK based seller who sells on Amazon.com? Is the director of a Limited Liability company open to personal liability when selling on amazon.com?
CJ Rosenbaum doesn’t know since he isn’t yet a barrister, though he hopes to be within the year. You would likely have similar protections as a US corporation or an LLC where your liability is limited to the value of that corporation. There are situations in the US called piercing the corporate veil or director of liability. That requires really bad conduct, though. You would almost have to intentionally put something out there to hurt people, and even then it’s very difficult to come after your personal assets.
Branding and Taxes
How do I go about registering my FBA business and getting my unique tax reference code?
It’s a very simple process to get that and is completely separate than getting your tax ID in the US. CJ doesn’t know the exact process of a foreign company getting a tax ID in the US but he knows it’s not terribly difficult.
What’s the cheapest way to protect my brand in the US in general and on Amazon in particular?
To do your trademark application, the Amazon Sellers Lawyer charges $1200, plus the filing fees which is just under $300 per category. Now, when you call them, for free, they can give you a better idea of what it will cost you. The call is free, do don’t be afraid to call them!
As far as obtaining other protections, it really depends on the product itself. There might be some products where you don’t really need to file and you need to do other things. What people used to do, not that long ago, if they had an idea, they would describe it, write it down on a piece of paper, send it to himself via registered mail, and just keep it and never open it. That way if there was ever a dispute about who had the idea first, you could take that sealed envelope with the date, and show the judge.
Is that still effective now?
It’s better than nothing.
Amazon Owes Money
One seller had 25 separate shipments sent to Amazon for his 25 variations. It is recommend that you don’t do that as it could lead to confusion on Amazon’s part which is what likely lead to his situation. To make a long story short, they disposed of some of his units in error after customers were complaining about receiving the wrong variation. Amazon’s argument is that the products went unfulfilled for months and the disposal was automatic. His argument is that he is confident they sent him correspondence saying the unfulfillment was due to a mistake in the bin check. What advice would you give to get this resolved?
It sounds like one of two possibilities. One, Amazon made these mistakes which cost sales which costs money. The only way to get the money from Amazon is to take Amazon to arbitration. You could put in a case which may or may not work out. If you’re an ongoing seller, you may shy away from anything that contradicts or creates animosity between you and Amazon.
There is a consulting company that hasn’t launched yet. He’ll be launching in a couple weeks. He is a long-time seller who is really going to focus on this issue and help seller recoup funds that are due to you based upon errors in Amazon’s system. As soon as it launches CJ will provide us with information about the company. The key is to work with Amazon rather than taking an adversarial role because There isn’t another amazon.com or anyone that comes close where you could sell your products. It may not be the best idea to immediately get the lawyers involved as it could make the relationship with Amazon tenuous and cause issues in the future.
One thing to keep in mind is that the Amazon Sellers Lawyer aren’t going to rush to court. Their goal is to resolve the issues. After 20 years of trying cases and representing entrepreneurs and reaching agreements, it’s about knowing how to communicate with people in a way that makes them want to resolve things. Brand managers aren’t trying to shut down Mom & Pop shops. They’re trying to protect their business. They don’t want the publicity that comes with that. You can resolve most issues amicably.
He recently handled one issue of IP complaint and quote the client at $2500 whereas another lawyer wanted $20,000 up front and wanted to go straight into litigation. Lawyers are very social and CJ know a lot of the lawyers on the other side. It comes down to being able to call up their lawyer and have a friendly conversation. He will ask about the family, and the kids and then he can get into the case and try to work it out. Their goal is always to try and resolve things as quickly as possible and get you back to selling.
Get More Information
If you want to get in touch CJ Rosenbaum, you can find the website at Amazon Sellers Lawyer. You can email him at [email protected]. Same on Skype and WeChat, amazonsellerslawyer. They speak with everyone who reaches out. They offer free consultation so they can identify what the issue is and whether or not they can help you. He has an ethical obligation to not charge unless he can help you. Sometimes that means he can help you help yourself and not have to charge you for it.
CJ Rosenbaum will be coming to London in the end of March, 2017 and as offered to meet with any sellers and answer questions or just enjoy a pint. Use the signup form and I will get you the details about that.